Technology arms MSOs to hunt bigger enterprise customers

In the hunt for more lucrative commercial subscriber business, cable operators are finding that the mid-sized enterprise animal is not just fair game—it's desirable game.

With estimates that mid-sized businesses make up a solid majority of the total enterprise telecommunications market, cable operators are starting to take notice and are targeting businesses beyond small office and home office within reach of their hybrid fiber/coax networks. While the goal may be to avoid costly new fiber lines, to extend services to this segment may require some turbocharging of the DOCSIS platform or, in some cases, other technology alternatives altogether.

It's not too hard to see why there is growing interest in enterprise's meaty middle. Echoing other studies, technology provider Narad Networks' market research indicates that 70 percent of the total potential business market is in medium-sized businesses. In addition, these businesses are concentrated on 20 percent of the nodes and about 8 percent of the lengths of cable plant.

Chuck Kaplan
Most of the cable operators are now acknowledging this concept and are looking to refocus their commercial services strategy, according to Chuck Kaplan, Narad's chief operating officer.

"They have been operating on the fringes—meaning the low-end using DOCSIS, and the high-end doing the odd fiber run here or there, which in itself is not a particularly scalable business," Kaplan says. "So the question is, if you want to get serious about commercial, you've got to hit the sweet spot."

Targeting businesses beyond SOHO is not new for Cox Communications Inc. Arguably the most aggressive cable entrant in business services, it has been targeting medium business markets—defined as companies with 20 to 100 employees—for several years, says Christine Faulkner, vice president of product development and management at Cox Business Services.

"That's been a longstanding goal and not a recent phenomenon for Cox," she says. "I think that we actually started in the business delivering more fiber, private line, transparent LAN-type services. But certainly there is a natural tendency to think that as the MSO community dives deeper and deeper in terms of their interest in capitalizing on the commercial space, that naturally we hover to that small (business) space because it is an easy jump from basic cable modem service."

While it does provide direct fiber-based service, the MSO is working to funnel more business services onto its coax last-mile lines. That is driven by sheer potential—its coax networks span 124,000 miles compared to just 25,000 in fiber line miles.

"The bottom line is we have five times the amount of coax in the ground than we do fiber, and thus we hit a lot more businesses with coax than we do with fiber," Faulkner points out. "And so a business has a demand for a T-1 and I hit them with coax versus building and having that investment and cost. I'd much rather serve them over the coax. So that's what we are distinctly oriented toward, and I think we'll have activity there this year."

To do so, Cox is looking to DOCSIS-based technologies because they are a natural tie-in to existing network monitoring and backoffice systems, but it also is considering proprietary schemes, Faulkner says.

"We're nearing our final partners in our space. I think the key point is, there isn't one shoo-in vendor that's going to be able to do this. I think it depends on the service offering that you are trying to deliver," Faulkner says.


Among the options Cox and other cable operators can tap are technologies offering an overlay of spectrum above the cable plant's existing range—a particularly useful option if the operator wants to upgrade only portions of the network but doesn't want to reshuffle the existing residential services spectrum to accommodate new commercial customers.

One such player is Narad Networks, which is hawking a proprietary technology that taps spectrum above 860 MHz, providing 400 Megabits per second upstream and downstream on each fiber node. It runs underneath the level of the taps, so much of the network physical element doesn't need to be disturbed, Kaplan says. Ethernet switches set up alongside the existing amplifiers on the critical lines provide the bandwidth boost, able to supply about 80 T-1 connections per node, with half of the bandwidth still left over for Ethernet-switched service.

It does require installation of new gear in the cable network, but not everywhere. The fact that commercial areas tend to be clustered near specific nodes means operators don't necessarily have to look at wide-scale plant upgrades to reach them, Kaplan notes.

In return, the cable operator can offer T-1 based service, and that is important, given the large base of existing T-1 termination gear in place at these target businesses.

"So when the cable operator comes to them, they don't have to just throw that out," Kaplan says.

Narad also offers a wireless last mile extension option, for areas where the operator's HFC plant is separated from a target business by a road or other unmovable infrastructure.

"It is yet another tool in the toolkit of the MSOs. They'll use cable where they can, but we'll pop on the wireless where we need to, and we can backhaul all of that stuff over the existing HFC plant," Kaplan says.

The upgrade cost varies somewhat, but it averages out to about $5,000 per potential customer. That may seem steep, but Kaplan argues each customer can supply $1,000 in revenue monthly, meaning the payback is in less than six months.

"This is why the cable operators are getting excited about the mid section of the market," he says. "These are not the $300-a-month customers; these are the $1,000-or even $3,000-a-month customers."

So far, Narad has landed seven deployments, six of which are in North America with mostly unnamed cable operators. One that is announced is Vancouver provider Delta Cable, which is using the Narad technology for a commercial voice-over-IP service.

Narad also has about a dozen more operators that are planning field or market trials, Kaplan says.

XMTS (top) and XHub
Xtend Networks' XMTS (top) and XHub
(bottom) can pump coax up to 3 GHz
But not all of the out-of-band players leave the DOCSIS platform behind. Xtend Networks, an Israeli startup recently acquired by Vyyo and an announced technology provider for Cox, offers a block division multiplexing technology that can boost total plant bandwidth to 3 GHz and multiply the upstream bandwidth tenfold. It still funnels this bandwidth through to standard DOCSIS-based cable modem equipment, but unlike most residential services, it offers dedicated bandwidth and quality-of-service guarantees.

Xtend's XNode architecture adds amplifiers on the network to provide a spectrum overlay from the top end of the existing plant capacity—say 750 MHz to 3 GHz. As with Narad's product, these overlay amplifiers and associated headend equipment can be added to specific nodes in the network where the capacity is needed.

MSOs "can go city-by-city, network-by-network, leg-by-leg," says Bill Keating, CEO of Xtend Networks. "They have more than 6 million businesses, and they can take them one by one."

The Xtend equipment can generally be installed without interrupting the existing plant traffic, Keating says. Although the actual cost per node depends on the number of splitters, amplifiers and customer premise equipment a given network leg will need, Xtend's technology will generally pay for itself within six months, he adds.


Out-of-band technology isn't the only way to create higher-bandwidth, QoS-based business services. Scientific-Atlanta Inc. markets BroadLAN, which uses technology that carves out dedicated bandwidth within the existing HFC network. Able to link to a customer premise device via a coax drop, it uses a dedicated bandwidth channel to the business.

It's an architecture akin to a standard cable modem service. A Transport Modem Termination Unit is placed at the headend and a specialized modem unit is placed at the customer premise. One or two 6 MHz channels are set in the forward path using Ethernet protocols to deliver the signals to multiple commercial customers, providing dedicated data rates of up to 28 Mbps symmetrical per connection.

The current BroadLAN product supports coax plants reaching 860 or 870 MHz. An updated version now available will be able to tune to coax networks supporting 1 GHz.

access switch
Narad Networks’ access switch can
boost connections on coax lines.
"If you decide to do a 1 GHz expansion, one of the products that you could put beyond 870 would be your commercial traffic and leave all of your residential stuff below 870," says Mark Palazzo, vice president and general manager for S-A's access networks, transmission network systems.

Unlike much of Scientific-Atlanta's cable technology product line, BroadLAN is not based in DOCSIS technology. The reasoning behind that lies in the peculiar economics of the DOCSIS platform—while it can be upgraded to provide higher data rates and even quality-of-service guarantees, the media access controller scheme used was never designed with dedicated bandwidth in mind.

"That technology was developed with statistical multiplexing or over-subscription, where you can have a maximum of 100 people on it at a time, but you will sell that to 1,000 people, knowing full well they will never all be on it at the same time," says Todd McCrum, director of the commercial services business unit within S-A's transmission network systems group. "If you amortize that over 1,000 users, the cost works out quite well."

But when an operator looks instead at offering dedicated bandwidth to business customers, over-subscription goes out the window. Given a handful of customers providing revenue against that same expensive MAC technology and "the economics do not work out at all," McCrum says.

DOCSIS also is finicky about its reverse path. Set up in the 5 MHz to 40 MHz range, the 3.2 MHz reverse path channels are usually limited by noise requirements to the upper end of that range.

"The reality is DOCSIS can probably only reside in the 22 MHz to 40 MHz [range]," McCrum says. "So you may be able to get three channels there. One of those channels is going to be dedicated to voice-over-IP. One is dedicated to residential customers today, and you then may have one more channel that you might be able to deploy to go after commercial, if that was the case. That is insufficient bandwidth to go after many commercial customers."

In contrast, BroadLAN "kind of takes the best of DOCSIS—from being a coax-based solution—and also pulls in technology that you need to do nailed-up TDM-type services such as T-1s. And you can do that over HFC plant," Palazzo says.

While there still may be debate over whether DOCSIS or proprietary technology fits better for this business middle-of-the-road, there isn't much doubt among the players that the interest among cable operators is accelerating.

"It's happening," Narad's Kaplan says. "I would say we are in the period just preceding the hype."


For business service, you must cross the 'T's

Aiming for the mid-sized business market these days is a matter of fitting the product literally to the "T."

The mid-sized enterprise market is dominated by T-1 business, with many of those customers opting for single or multiple T-1 connections. Scientific-Atlanta's research indicates that while fewer than 10 percent of the business connections are from T-1 type service, they account for 60 percent of the commercial connection revenue today.

At first, S-A thought this skew toward symmetric 1.5 Mbps T-1 services would be a boon to cable operators because they could go after the business with standard cable modem technology.

"What you'll find after you get beyond the SOHO market is most of those small-to-medium enterprises have an infrastructure built up, and those infrastructures are things like the public branch exchanges—the PBXs—and all of their voice calls, as well as key systems for doing just simple on-hook, off-hook voice dialing," says Mark Palazzo, vice president and general manager for S-A's access networks, transmission network systems. "And so those devices only historically came with TDM interfaces."

That reliance has created a problem for cable operators, according to Narad Networks COO Chuck Kaplan.

"What the cable operators have done for lack of having a technical solution on their own network is that they have been leasing T-1 lines from their competitors and then trying to resell them," he notes. "And that is not a good business."

Even worse, they realize the money they are paying to the telco may well be used to fund fiber-to-the premise (FTTP) initiatives that will only erode their competitive stance.

"That light bulb has come on in the industry," Kaplan says. "Most cable operators just haven't played in the midsection, and the ones that have played have been using telco facilities, and that is a problem."

Narad's fellow out-of-band technology provider Xtend Networks also sees the dominance of T-1 connections in the mid-sized business market, so last year it rolled out a product offering that option. Driven by an Xtend modem termination system in the operator's headend—similar to a cable modem termination system (CMTS)—the product supplies a maximum of 24 T-1 connections per unit.

The Xtend product works with any existing T-1 switches the business may already have, according to company CEO Bill Keating. "They simply add our T-1 modem," he says.

But the T-1 domination may be coming to an end. Christine Faulkner, vice president of product development and management at Cox Business Services, says the enterprise reliance on T-1 lines also may be shifting, particularly as businesses look to consolidate their voice and data services on one pipe with options to change the amount of bandwidth on the fly to suit their needs.

"That's a different concept than your typical channelized T-1 that doesn't utilize and maximize your efficiency, [but] requires some more IT management complexity at the customer end versus the one-pipe scenario," she says. "So I think a lot of our development effort is focused on the theme of convergence, the advantages of IP and how can we serve those customers from a one-pipe, dynamically allocated offering where we are delivering a combined data and voice experience as well as other layered-on, value-added solutions."

For now, Cox is aware that many businesses will be reluctant to junk their existing T-I based equipment.

"I think that is a valid concern, so I think we are going to have to straddle this area for a while," Faulkner says. "I think we'll especially see this in our mature market where we traditionally had circuit-switched voice, and as we begin enabling the advantages of IP moving forward, it will be a straddle. We know customers well enough to know that shifts do not occur drastically, and, depending on the segment, it will take some time, depending on their needs and when they are willing to make that shift, and when it makes sense for them."