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ASPs Outsourcing Cable's Future

Sun, 09/30/2001 - 8:00pm
Jeff Baumgartner, CED Staff

Occasionally, going it alone in the cable business isn't all it's cracked up to be. Starting large projects from scratch can potentially tax a company's workforce as well as its financial coffers.

When it comes to tracking system rebuilds and upgrades, as well as the launch of nascent services such as interactive television, a legion of application service providers (ASPs) have emerged to give cable operators a helping hand with some of the heavy lifting.

Some have developed Web-based applications that enable cable operators to track the equipment they are using and where and how many miles of plant have been upgraded. Still others have crafted services designed to deliver iTV content directly to cable headends from a central point. No matter what the service being provided may be, the overriding goal of ASPs is to help service operators cut costs and, at the same time, grease the skids of deployment.

Putting the network on a fast track

As with any rebuild or upgrade, cable operators must keep a close eye on a massive amount of data to track the build's schedule and to ensure that their warehouses of equipment are operating at an optimum level. Instead of tracking that data at several points, options are available today to funnel that information to a central point, and allow others in the field and at corporate offices to cull what they need with a few clicks of the mouse.

Hackman

While having access to that data is one of several goals, the overriding benefit of ASPs is the cost savings they offer to service operators, says Tom Hackman, manager of information systems at Erlanger, Ky.-based SpanPro Solutions Inc., which markets a variety of Web-based applications to cable operators.

"It's cost prohibitive for companies to come in and build a really stable Web presence," he says, noting that just a server (sans the software and expertise to run it) can cost in the neighborhood of $100,000.

Those cost savings also reach into volume discounts. When it comes to software, SpanPro can spread the cost of modifications and changes over all users of the software because it's being distributed from a central point.

Service providers that tap an ASP also get access to a set of skilled software developers without having to pay their six-figure salaries, Hackman says. The other choice is to hire a contractor, who may or may not be readily available to solve problems that crop up.

"What we're doing is filling the gap between the two," Hackman says. "We're always available for technical support, always available for upgrades and modifications, but [our customers] are not paying $100,000 a year to cover a developer's salary."

In the case of "Interactive Inventory," a Web-based product that helps MSOs track the equipment they are deploying for specific projects, SpanPro's standard fee is $250 per warehouse per month, which gives the user five log-in accounts.

Hackman estimates that it typically takes about two weeks for SpanPro to deploy a client, plus another week to load historical data.

Adelphia has tapped SpanPro to track 
its upgrades and rebuilds via the Web.

On the cable front, SpanPro has worked closely with Adelphia Communications for more than two years, and, more recently, launched a trial with overbuilder WideOpenWest. SpanPro is also negotiating another deal with a top-five MSO, Hackman says.

In Adelphia's case, SpanPro created "Adelphia Online," an Internet-centric mechanism designed to help the MSO track its myriad projects. Aside from plant extensions, Adelphia Online tracks every physical mile of the MSO's plant. Before it employed that product, Adelphia had tried everything from spreadsheets to off-the-shelf software databases to track what was happening in the field, says the MSO's Corporate Design Manager Don Vought.

"None of them gave the kind of view or picture of where things stood (at) any one time," he says. "It was frustrating, because at the time, we had some major acquisitions, which made it difficult to track everything, because our projects practically doubled overnight. I didn't have a single point to access that information."

Using SpanPro's system as a central data repository, Vought, for example, can query the system to generate a report that tells him what brand of taps or nodes the MSO is using for a given project, or what the homes-per-node figures are in a particular neighborhood. Previously, it would've taken several phone calls and much more time to gather the same data, Vought says.

Having ready access to such information also helps Adelphia market its services to customers more effectively. That's because some areas of the network might still be one-way, while another close by could be geared for two-way, 860 megahertz bandwidth.

Vought says migrating to the new system came with minimal headaches, because it was designed to sync up with the Web using the same forms and templates that contractors and Adelphia employees were using previously. All it required were a few keystrokes and mouse clicks to upload the new data.

Still, with any new road that involves software, a few rough patches are bound to appear. "I'm still feeling like we're just getting to the implementation stages," Vought says. "The program is not always bug free, but [SpanPro's] been good about implementing new features."

A booth pass-by at an SCTE-sponsored cable show earlier this year drew the attention of WideOpenWest Vice President of Technical Operations Tom Jaskiewicz, who was rooting out methods that might help the overbuilder deal with the wearing issue of obtaining and tracking permits for network construction.

Early on, some competitive start-ups had little trouble cutting through that red tape, but later, as a larger influx of overbuilders surfaced and started ripping into neighborhood streets, requirements became increasingly stringent, Jaskiewicz explains. That need has morphed into WOW's current three-month trial of SpanPro's WebWorx application suite for its build-out in Denver. "I saw that we really needed to address the construction side from paper-to-field," he says.

Although WOW's contractors provided the requisite manpower, tracking their movements is more problematic. Using SpanPro's permit-to-construction module, WOW can "block out," in real time, which portions of the network are completed on an electronic wall map, and determine whether a particular project is ahead of or behind schedule.

In the wake of WOW's acquisition of Ameritech's cable properties in the Midwest and the addition of warehouses in cities such as Chicago and Cleveland, the overbuilder may also take a closer look at SpanPro's Web-based inventory application. "We might need something in Denver that we have up to the eyeballs in Cleveland," he says.

Jaskiewicz says that an ASP model for this is appealing for a start-up like WOW because it can cut costs significantly. "With SpanPro, it's a monthly Web-based fee, and no upfront costs on programming and [computer] language," he says. "We're continuing to evaluate this, but it spoils you after you see what it can do."

Outsourcing IP

While one ASP model focuses on network and warehouse data tracking, others target IP services and applications served directly to cable customers.

IP Applications Corp., a company based in the Vancouver area that trades publicly on the Canadian Venture Exchange, is an outsourcing systems company that helps its clients provision, manage and bill for IP-based applications.

Targeting telcos, cable operators and ISPs, IP Applications has developed a proprietary, Web-based technology that enables its customers to remotely manage IP services via the Canadian company's facilities. IP Applications' menu includes e-mail, personal Web page storage and cable modem service authentication. The company also offers registration applications, has the ability to burn that information onto CD-ROMs, and has developed a service level agreement monitoring tool called "ICURO."

Working with equipment partners and subcontractors, IP Applications also helps operators design their networks. "We're not trying to create a brand like @Home," says IP Applications President and CEO Curt Cranfield. "All we do is help [service operators] get to market quicker."

Though it's been in business for about two years, the fledgling company already has managed to turn a profit, says Cranfield. To date, IP Applications serves about 280 clients comprised of both large and small companies. Perhaps surprising is the fact that the Canadian firm has just 18 employees–the majority of them technical–to handle the load. "Our goal is to let our customers run [the service]," Cranfield says. "We're just their IT department."

Though the market is in a major tailspin, "our company is booming," Cranfield explains, noting recently landed contracts with large service operators such as Sprint Corp. "These companies are looking for more cost-effective solutions, so we're in a unique position," he adds.

With Sprint, for example, IP Applications is helping the company rollout broadband services throughout the United States. Though Sprint handles the marketing for those services, IP Applications administers the IT side of the equation, handling customer registration, authentication and billing. IP Applications also takes on a similar role with Dallas-based Excel Telecom, which markets Internet services in Canada.

Cranfield

"They're offering the service, but we're doing the backend," Cranfield says. "We keep the service running, but they maintain the relationship with the customer."

He adds that that IP Applications can help operators save between 14 percent and 50 percent of the capital they would typically spend on IP services when they go it alone.

Cranfield says IP Applications does not license its products, but generates revenue on a per-subscriber basis. The company's standard rate is $2 per sub for a package comprised of e-mail, news content, personal Web pages and subscriber authentication. For additional fees, the company provides additional tech support and virus scanning and billing applications. Video streaming capabilities are also on IP Application's service roadmap. Under this model, operator "costs grow as their revenues grow," Cranfield says.

Sky Cable is IP Applications' lone cable client so far, but the company is starting to put more emphasis on its cable efforts. "The [cable] market isn't new to us...We're working on a number of deals," Cranfield says.

Outsourcing iTV

At June's National Show in Chicago, Scientific-Atlanta said it was proposing a new ASP option to cable operators. Under the initial design, cable operators would tap into a series of S-A servers based in Atlanta to deliver e-mail, interactive games and Web browsing applications to digital set-tops deployed on two-way cable systems. S-A's ASP unit is a branch of SciCare, the company's broadband services arm.

Bradner

At the time, S-A said its ASP data center was ready to roll and the proof of concept was nailed down. Since then, the company has taken several steps forward, and has letters of intent signed with two undisclosed MSOs, says SciCare President Larry Bradner.

Bradner says S-A is ironing out the final business details of those deals, and the names of the first MSO that will deploy S-A's ASP service might be revealed later this month. Another could emerge before the end of the year. S-A's new ASP division is targeting an operational launch by the end of 2001, and hopes to have live cable subscribers on the system the early part of 2002.

"I'd like to get the first couple of sites...proven with confirmed business models, then open it up to a mass marketing approach," Bradner says. "There's still uncertainty because the applications and the ASP [model] are relatively new," he says. "We want to do three-year agreements on these. Everybody's stepping through this carefully to make sure we get it right."

WideOpenWest is testing SpanPro’s 
WebWorx suite to help the overbuilder 
keep a close eye on its build-out in Denver.

Of course, rooting out the potential bugs is a main thrust when it comes to iTV. "People are used to the TV being on and watching the whole episode. As soon as you add an application to the TV environment, you have to match that expectation," Bradner says.

Though iTV, in terms of live deployments, has yet to live up to the hype in the U.S., "we think it's time for execution, and we think the operators are ready for execution," Bradner says. "We're far enough down the road to get the early benefits of the EPG (electronic program guide). MSOs are ready for the next step–the applications."

That suite of applications will advance beyond video-on-demand, SVOD and personal video recording, and enter the less comfortable realm of advanced, two-way interactive apps such as information-on-demand as well as games and e-mail, enabling operators to "take another step in changing the TV experience," Bradner says.

While VOD is heavily dependent on servers in the headend, iTV applications can be offered via a central point, a model that presents its own set of benefits. Content shelf life is just one of them. While VOD and SVOD titles can be switched out week-to-week or month-to-month and still be considered fresh, iTV content must be changed out almost on the fly. "The freshness of content you're carrying can vary by the hour," Bradner says.

S-A will likely tap its CreativeEdge partners to maintain that content. Screaming Media Inc., for instance, is already on board to provide national, regional and, to a more limited degree, local content via S-A's InView "information-on-demand" portal. S-A's role is to retrieve that content and funnel it out to its MSO partners.

"As a centrally-hosted facility, we have the ability to aggregate content and to scale it very quickly. That's tough to do on a local basis," he adds. That's because the hardware and software associated in S-A's ASP model also runs on what Bradner calls "a secure, redundant, bulletproof facility."

"We're running software and managing upgrades and patches for functional upgrades and scanning for bugs routinely," Bradner explains. "We're in a better position here than we would be in 50 locations."

In addition to changing out iTV content frequently, S-A's SciCare unit will also offer technical support 24 hours per day. The company also does its certification in-house to ensure that iTV applications and content flow properly to a given cable platform. "Because no two systems are identical, we test against their uniqueness to test the platform, but also the system and how it's set-up," Bradner says.

On the business front, Bradner wouldn't disclose specifics, but said S-A's ASP unit will drive revenue from a mix of software licenses on the server and client side, as well as a per set-top or per-subscriber model.

Of course, S-A isn't the latest company to make waves with outsourced iTV applications. Headend In The Sky, a wholly owned subsidiary of AT&T, made some iTV ripples in August after it inked a deal with middleware vendor Liberate Technologies.

Under terms of the multi-year deal, HITS said it would distribute Liberate's "TV Platform Compact" software to widely deployed Motorola Broadband Communications Sector-built DCT-2000 digital boxes sometime in the fourth quarter of this year. Using a broadcast, satellite-based platform, HITS would beam news, enhanced TV and games to cable headends. A similar deal between OpenTV Corp. and HITS is also under discussion, but a final agreement did not materialize by press time.

HITS delivers digital programming and interactive program guide data to about 140 cable systems and roughly 6 million digital boxes.

The deal also led to speculation that HITS' involvement with Liberate could morph into a larger relationship with AT&T Broadband, which has said its new iTV strategy is to offer services and applications to its deployed base of thin-client digital boxes.

Like other ASPs, HITS' modus operandi is to keep operator costs to a minimum. "We wanted to make this as simple and low cost and low barrier as we could," said HITS Senior Vice President Rich Fickle, at the time of the announcement.

The HITS-Liberate combination will offer a starter-set of applications that will likely be linked to Liberate's PopTV program, which includes participants such as E! Entertainment Television, Lifetime, Oxygen and The Weather Channel.

Motorola Broadband Communications Sector, which has close technical ties with HITS, also operates Horizon, an initiative that tests and validates third-party applications for the DCT digital platform. The goal there "is to make sure MSOs have a large amount of applications to choose from when they decide to configure their service profile," says Carl Vassia, director of product management for digital set-tops and services for Motorola Broadband's DigiCable unit.

Unlike the two-way apps offered by S-A's model, HITS' initial iTV foray will not require true interactive cable plant, absorbing about 5 megabits of bandwidth, or about 20 percent of a 6 MHz channel. However, future upgrades involving two-way-capable applications are being considered, Fickle said.

 

Evaluating The ASP Model

  • Before making that ASP decision, Danet Inc. says operators should pore over a number of issues:
  • Existing IT capabilities: If you already have strong, in-house IT personnel, you might place less emphasis on an ASP's help desk or technical support.
  • Evaluating company needs: Work with an ASP that understands the cable business.
  • Data control: Know in advance how much control you'll have over your data and how secure it will be.
  • Service Level Agreements (SLAs): A good SLA should include a specified level of customer support, provisions for system and data security, continuous system availability, a designated ASP contact and enforcement provisions that give you the right to terminate the SLA and receive a refund if the ASP does not deliver as promised.

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