Charter is providing multiple tiers
Why is this latest round of certification so anticipated? Because high-speed data over cable is a proven business. Current estimates suggest that there are 5.5 million high-speed data-over-cable subscribers in North America, paying roughly $40 a month. That's $220 million in revenue. DOCSIS 1.1 was specifically designed to help network providers derive even more revenue by allowing those providers to set up different levels of service. For example, users who want guaranteed high levels of performance can pay more to get it, while those who are happy with "best effort" service can opt to pay the basic amount.
DOCSIS 1.1 will also serve as the platform for PacketCable services, such as IP telephony. Again, because different types of packets can be labeled and identified, they can be treated differently, which allows service providers to offer different classes of service, such as "gold," "silver" and "bronze."
Despite these promises, operators' marketing plans for this new-found functionality seem to be lacking. Maybe the marketing machines haven't been started because they're waiting for certified products. Or maybe operators are waiting until the eleventh hour to capitalize.
Charter Communications is one MSO that's already providing multiple tiers of service, starting at 256 kilobits per second. By offering several service levels, Charter has discovered that at least half its customers will opt for a mid-level, higher priced service. It sees DOCSIS 1.1 as a way to entice non-traditional subscribers, such as gamers, to buy a high-speed service that appeals to them and use that as a baseline service that can be used to upsell customers to a more fully-featured offering. "We could actually provision a managed service at an introductory price level, and then upsell the customer later to traditional cable," says Steve Silva, senior VP of corporate development and technology.
Meanwhile, Cox Communications and Cablevision Systems are both eyeing the commercial and multiple-tenant unit markets as the best places to offer multiple service levels. "It's the smart apartment houses and things like that where being able to fractionalize and control the service with 1.1 is interesting," admits Wilt Hildenbrand, executive VP of engineering at Cablevision. But Time Warner views DOCSIS 1.1 as the foundation for voice-over-IP services, and AT&T Broadband sees it as a way to offer some "neat stuff," but hasn't identified what that stuff is yet.
Cable operators can put a lot of distance between themselves and DSL providers by developing their marketing plans now. While competitive pressures have eased somewhat because of the CLEC collapse, the window won't stay open forever.