Someone’s knocking at the door
The perception is cable’s still a closed society to telco-centric vendors.
Perception can sometimes be as powerful and as accurate as reality. For example, there’s the longstanding notion that cable’s doors are closed to telephone-centric vendors, unless the MSOs think the supplier might have something neat their traditional vendors haven’t yet developed.
And maybe, finally, they do.
The cable industry for years has denied it’s a closed society, but the perception among some telco-centric vendors is that what the industry says and what its senior engineers do are two different things. They still think cable is a tough business to crack.
“I spent a long time in the cable industry and it is tough for a non-current vendor to get in unless they come up with something so compelling,” said a telecom vendor familiar with the space. “The cable industry is holding back innovation.”
That may be a little harsh, but, again, harsh is how harsh is perceived, and cable is perceived as a harsh environment if you’re not a member of the ancient vendor club.
A LOT OF RELATIONSHIPS
“In the cable industry, it’s a lot of relationships,” said Hilton Nicholson, president of the network solutions business unit at ADC. “There are a lot of walled relationships in that industry and for an outsider to come in, it’s going to take a while, dealing with CableLabs, building credibility with the cable operators; it’s a tough one.”
Of course, not everyone feels the door is locked. Some consider it merely closed, and if you keep ringing the bell and knocking politely, someone will open up and let you in. Alcatel-Lucent, for instance, known as the provider of choice for such telecom villains as AT&T and Verizon, has seen a “softening” in cable’s anti-telco vendor stance, said Tim Krause, chief marketing officer for the Americas.
“They’ve pursued us to become involved in CableLabs around their PacketCable 2.0 activities, what those specs would look like, the influence of IMS on those specifications, how they deploy a wireless asset and integrate that with what they’re already doing in the wireline space,” he said.
Wireless? Cable? Abundant evidence to the contrary, Krause said, “All these guys are looking at some pretty major investments to build wireless networks and they really know that their traditional suppliers don’t have game in building a wireless network. They’re all looking at wireless. They want to invest in a wireless network.”
The wireless investment, he said, would link into cable’s small-medium business strategy where Alcatel-Lucent is trying to grab the brass ring with a product offering it’s honed in the telecom space.
“We can say, ‘Look, if you go into the small-medium business I can build you a wireless network that integrates with your wireline network in such a way that (a small-medium business) could get four-digit dialing off their (wireless) handsets integrated with their IP PBX in their office’,” said Krause.
GETTING TO KNOW YOU
That whole wireless play, though, is another story. This one is about the belief that telco vendors, no matter how qualified, can’t do business with the cable industry.
“It’s a perception battle; it’s not a technology battle,” Krause said. “They want the stuff we make but there’s no getting around the fact that they don’t know us as well as they know their embedded providers.”
Nortel, another true-blue traditional telco vendor that would probably argue that it, not Alcatel-Lucent, is the vendor of choice for AT&T and Verizon, has a bit of an advantage in that cable operators have worked with Nortel people – and maybe they didn’t even know it. The Canadian vendor was, for a while, involved in a convoluted relationship with long-time cable vendor Arris and the inter-breeding between the two companies has spawned some useful relationships according to Cortland Wolfe, director of business development.
“To this day we work closely with Arris; a lot of them are ex-Nortel people and that’s viewed very positively” by cable operators, Wolfe said, adding that the industry also values Nortel’s experience in the small-medium business (SMB) space.
“They recognize that more often than not when they sell a commercial service to a commercial customer there’s a really good possibility that commercial customer is going to have a Nortel key system or PBX,” Wolfe said.
Working with Nortel gives the cable operator “one vendor to go to that can help when they get into interop issues or anything like that with customer premise equipment,” he said. “Chances are they’re going to run into Nortel voice equipment and it makes the game much lower risk when they have a vendor that knows what they’re terminating into.”
SMB and telephone are increasingly synonymous with IP in the alphabet game that telcos love. Cable operators selling to SMBs will need a vendor that knows about IP telephony, said Alcatel-Lucent’s Krause.
Figure 1: Nortel’s Converged SMB Solution value proposition.
FROM TDM TO IP
“The phone companies decided a few years ago to get off the whole TDM thing and build IP networks and make everything IP-based. That’s where the cable companies are too. They both need to have one infrastructure that handles a voice circuit, an Internet circuit or a very high- quality private line type of circuit between businesses,” he said.
Cable companies, he continued, want IP router technology that can manage different tiers of service and subscribers on one common infrastructure and “the technologies we make do just that; they’re not your run-of-the-mill Internet routers, they’re a special class of products.”
Of course traditional cable vendors would argue that their products are special enough that the MSOs needn’t look at an outsider.
“If they (traditional vendors) can come close and provide something that’s not too far off, they’d (MSOs) probably rather do business with the partners they already have,” Krause said. “But if we offer a compelling value proposition they’ll probably talk to us and let us in.”
The door is ajar, in other words, even if there’s a lid on it for anyone who isn’t named Motorola or Arris or Cisco.
“We’re an outsider from a vendor perspective, certainly, because there’s definitely a tendency to populate cable networks with equipment from the main vendors,” said Dave Feldman, CTO and head engineer at Vyyo.
UNDERSTANDING THE DYNAMIC
Still, he said, Vyyo is “in the very early stages of adoption amongst cable operators” with a technology that lets MSOs segment their networks to deliver both residential and high-end business services, obviating the possibility of displacing residential television programming to deliver business services.
Feldman, a former Charter Commun-ications executive, knows a little about the “internal dynamic” that goes into MSO decision-making.
“You need to find acceptance in the engineering and technical operations organizations that are providing their services across all the business units,” he said. “Although small and medium business opportunities certainly create a new revenue opportunity for the cable operator, it really is up to the individual MSO as to whether that opportunity will sufficiently influence the decision-making of the technical operations and engineering organization.”
In other words, it matters to the corporate engineers whether the vendor is a known commodity with a good product that hopefully has worked in a cable system before, or, if not, can work within cable’s infrastructure now. Oh, and it’s most important that what the outside vendor presents is something none of the traditional vendors have already suggested. That’s why it’s always been so tough for anyone new to break into cable’s longstanding video duopoly of General Instrument and Scientific-Atlanta, er, Motorola and Cisco.
“Maybe these guys have been a bit closed in the past around the entertainment service and getting Internet into the home on their coax infrastructure, but they have been opening up a bit and been easier to work with,” said Krause.
ALL THE TV THEY WANT
After all, the Alcatel-Lucent exec said, “the cable companies have about all the TV subscribers they’re going to get.”
What they want now is telco business and, especially, commercial telco business with a company that understands telephony and cable and how to make the two pieces work together.
“I can tell you, we’re making big investments to grow our products,” Krause said. “Rather than try to sell them products that we already make, we’re investing in products that are addressing their specific needs.”
Investing or gambling? Again, there’s that perception issue.
“Anyone who wants to get into the cable industry will have to invest,” said ADC’s Nicholson.
Some vendors won’t put out the money because there is no certainty someone in the cable industry will buy those products.
“There are some really neat technologies that are not in the cable industry today because of that barrier and the lack of relationship and commitment to deploy solutions that are not from their mainstream providers today,” Nicholson said.
The trick, everyone agrees, is to somehow recognize that the telco-centric vendors can be cable-telco-centric vendors.
“I think they appreciate all the experience we can offer,” said Rob Hughes, senior cable solutions manager at Nortel. “Other companies that are perhaps more focused on MSOs may not have the capability to work in the SMB space because this is a fairly new space for MSOs.”
Or is that just a perception from a cable vendor wannabe?