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Partnering for success

Thu, 05/31/2001 - 8:00pm
James Careless

Broadband to business: it's the next logical step for the cable TV industry. In fact, it's a must-do, unless cable TV MSOs intend to surrender this market to telco-delivered DSL.

But is the fight worth it? That's a good question.

After all, breaking into the business market will force MSOs to leave their residential comfort zones. Such a move won't be cheap, simply because the drops aren't in place. In fact, in some ways it will seem–and cost–like "starting over" for some MSOs; at least where establishing networks is concerned.

So what's the turf worth? "Well, if you consider that there are about 11,000 cable TV systems, and there's one potential $2,000-a-month circuit in each one of them–and that's very, very, very conservative–then what you get is $22 million a month," says Doug Marlowe. He's executive vice president of Dark Fiber Solutions (www.darkfibersolutions.com), a company that sells broadband access to business.

That's just one circuit, remember. Granted, each cable TV system varies in size: an AOL Time Warner can thus attract a lot more business broadband customers than, say, Edna's Bait and Broadband in Weedsport, N.Y. (OK: We made up the "Edna" name. However, there is a country store near Watertown, N.Y. that sells–no lie!– "Guns, Guitars, Gas and Groceries.")

But just imagine how much 10 business broadband customers could add to an MSO's bottom line. Or 100. Or 1,000.

So what do MSOs have to do to bring broadband to business? Who's already doing it? And who's out there to help those MSOs that are standing on the sidelines? It's time to tackle these questions, before the ILECs end up owning everything. Again.

BROADBAND TO BUSINESS 101: IT'S THE LAST MILE, STUPID

For cable TV systems to supply broadband to business, they've got to have a last-mile connection between the two. That's where things get sticky because, unlike the telephone system, cable TV plants have been deployed with only residences in mind.

So what to do? Is it really affordable to start hanging cable drops to every Mom-and-Pop shop, particularly in the midst of an apparent recession–oops, "economic slowdown"? Or are there other solutions to be considered?

The answer depends on who you talk to.

For instance, Cox Business Services (CBS)–the business arm of Cox Communications–believes in installing drops to business, as long as the installation makes economic sense.

"It's really a matter of trying to intelligently approach the market," says CBS Vice President of operations Clayton LiaBraaten; "trying to target as many small, medium, and large-sized businesses that are as close to our network as possible."

The key is proximity: the closer these business customers are, the cheaper it is for Cox Business Solutions to log them on. Clearly, this approach makes more sense "than just going out with a 'shotgun approach'," LiaBraaten observes; "having to spend tremendous amounts of capital building out to customers that are fairly far away from our network....(In today's market), you cannot have an 'if you build it, they will come' mentality.

Comcast Business Communications (CBC), Comcast Cable's business division, takes a similarly pragmatic approach. However, this MSO's emphasis isn't so much on proximity to network, as it is proximity combined with potential revenue per business subscriber.

Tongue

"We did the economics and basically said, 'look, it's no different from any other business'," says Ron Tongue, CBC's senior vice president of marketing, sales, and product management. "You analyze where the customer-rich areas are first, and you begin to deploy your network into those."

In the case of Comcast Business Communications, "we've invested very heavily in augmenting the Comcast network to provide a wide variety of broadband services to business customers," Tongue adds. "Those investments have been in the form of DWDM, Sonet, PON (passive optical networking) access methodologies; in some cases, DSL-integrated access devices.

"We've also been investing in an intercity network, focusing on super-clusters that we're [already] in."

NO ONE WANTS TO BE ALONE

Dark Fiber Solutions (www.darkfibersolutions.com) has come up with a different twist on the last-mile deployment issue. Think of DFS as a sort of "marriage broker": one who lines up wary business broadband brides with eager MSO grooms.

"Our main niche is expanding the revenue streams for cable TV," says Marlowe. DFS does this by finding clients for MSOs' unused or excess fiber optic capacity. "Hence the 'Dark' in our name," Marlowe quips.

But why would MSOs trust their business sales to DFS, rather than setting up their own sales units and keeping all the revenues for themselves? "We offer them an infinite knowledge of the health care, financial, municipal, and educational markets," answers Marlowe. "We understand the needs of these marketplaces; as a group of people, we've been servicing them for well over 25 years."

As for results? The Southeast Nebraska Distance Learning Consortium (SNDLC) just signed a deal with DFS and Nebraska Cablevision. The goal is for DFS/Galaxy to supply a multi-gigabit IP broadband network for distance education. When completed, it will provide 100 Mbps service to 71 K-12 schools, community colleges, universities, and educational service units throughout Nebraska.

Needless to say, the SNDLC is happy with the deal. "This network will allow us to break through the bandwidth bottleneck our schools are experiencing," says Al Schneider, the administrator for Nebraska's Educational Service Unit #5. "It will allow us to easily set up high- quality video connections, and support our growing membership for distance learning programs.

"We're doing this for the kids," Schneider adds. "Rural education is one of the biggest challenges in the USA today, and we're doing something about it."

For DFS' Marlowe, this deal underlines his message to the cable TV industry: now, not later, is the right time for MSOs to launch business broadband. "Communities want competition to the local telco," he says. "The only group that has the reach and the physical infrastructure right now is cable."

YIPES! ANOTHER POSSIBILITY!

Yipes Communications–which bills itself as "the defining provider of scalable bandwidth on demand"–also offers MSOs a partner-based solution to the last-mile quandary.

Yipes (www.yipes.com) already offers broadband over fiber services to business. As a result, they could be seen as a competitor to cable TV in the business sphere; that is, unless cable MSOs co-opt Yipes' strength by doing a deal with them.

"Cable tends to be laid in residential areas, not in business areas," says John Marshall, Yipes' senior director of public relations. "The footprint of our fiber is explicitly and precisely laid in business-dense areas, so we are optimally positioned to provide last-mile access to business customers."

To date, Yipes has yet to forge any alliances with MSOs. However, it has signed a similarly-styled arrangement with Genuity, a Tier 1 fiber optic carrier that delivers OC-48 (2.488 Gbps) high-speed service to business.

"There are backbone providers like Genuity who don't have good last-mile access," Marshall says. "We've entered in a partnership with them: we may resell some of their services, but they're likely to be reselling our last mile access–it's a natural fit for their backbone."

If Yipes is good enough to solve Genuity's last-mile problems, perhaps it's worth consideration by MSOs with similar headaches.

GO WIRELESS, YOUNG MAN

There's another way to solve the last-mile problem, and that's wireless. In other words, an MSO can bridge the "digital divide" by deploying fixed broadband transceivers between high-speed business customers and the MSO's fiber optic backbone. This gives business customers the speed they need–with rapid deployment–while letting MSOs avoid the time and expense of installing new drops.

Adaptive
Broadband's antenna

In such a scenario, Adaptive Broadband (www.adaptivebroadband.com) could help MSOs. That's because Adaptive Broadband specializes in broadband wireless networks. Connect its plant to a cable plant, and you could have a business broadband winner.

"We can deliver 25 megs," says Francesca Walker, Adaptive Broadband's vice president of marketing. Her company's equipment can also handle Ethernet at 10 Mbps, and ATM (Asynchronous Transfer Mode) at 25 Mbps. So if MSOs can accommodate "those kinds of interfaces on their Point of Presence, then there are good synergies there."

THERE'S MORE TO BUSINESS BROADBAND THAN THE LAST MILE ...

Even when MSOs solve their last- mile issues, there are other concerns to be addressed when serving broadband to business. Without a doubt, the most important is quality of service.

Cable TV broadband networks are essentially shared LANs. As a result, the more people who are added, the slower the service.

Inconsistent speed isn't something business is likely to buy. This is why Leonard An, Adaptive Broadband's marketing analyst, has doubts about business broadband via cable TV.

"One of the inherent limitations of cable TV Internet access is that it's based on the DOCSIS standard," says An. "One thing that is inherently flawed about it is that, as more users come on, you can't guarantee any kind of quality of service." Such guarantees, he notes, are "pretty mission-critical to business users."

However, Cox's LiaBraaten says improvements to DOCSIS technology–especially equipment based on the new DOCSIS 1.1 standard–should address these limitations. As for MSOs signing quality of service agreements with their clients, just as other carriers do? "That's what our hope is," he replies. "We're a way from doing that in terms of our back office...but the idea is to design the network not only to have some guaranteed bandwidth, but also to provide bandwidth on demand."

With DOCSIS 1.1 equipment–which LiaBraaten is waiting to receive and deploy–cable TV systems will not only be able to offer broadband to business, but also support telco-style value-added services like virtual private networks (VPNs). In fact, he says that "VPNs" are a natural for an MSO like Cox Business Services," based on the company's network capacity.

Meanwhile, Comcast's Ron Tongue says his company already provides the quality of service business customers demand. "We proactively manage every single element that's in our network," he says. "So we're able to deliver the performance levels our customers look for."

THE BOTTOM LINE: FOR CABLE MSOs, BUSINESS BROADBAND BOFFO

In these days of post-dot.com doom and gloom, business broadband is a bright spot for the cable TV industry.

How bright? Well, "we certainly think its growth potential over the next several years is a hockey stick curve," says Cox's LiaBraaten. "We think there's a lot of business out there to be had."

Of course, hockey stick growth predictions aren't being taken too seriously these days. However, given business' relentless hunger for broadband–the Internet is still growing, despite the stock market–if any sector's inspired to pull it off, it's business broadband over cable TV.

As long as the last-mile problem is solved economically, that is.

E-mail: james@tjtdesign.com

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