Soap Box

Posted: 2/2002

Soap Box

The Next Millennium Belongs to Cable

By David Greenblatt 

Whether by divine intent, serendipity or strategic design, I consistently have been a champion for voice technology throughout my career.

In 1995, I led R&D for a conferencing product that allowed real-time presentations over the Internet. The viewer saw a live speaker in one panel and could interact with the speaker by
typing in questions.

Such primitive functionality is not terribly exciting now, but back then, delivering live communications was truly “bleeding edge.” Then, we were surprised at the impact live delivery had on the communications experience. It truly made the interaction more rewarding for both parties.

Little did I know this breakthrough signaled the birth of convergence.

Cable Is Ripe for VoIP

Convergence, in my understanding refers to the transmission of data, voice and video over a single IP network. I believe the cable market is where true convergence will happen.

In my mind, as broadband providers look for ways to generate additional revenue, (and who isn’t these days) it’s clearly going to be a lot easier for cable providers to add voice to their offerings than it will be for voice providers to add entertainment to theirs.

Selling high-speed data via cable modem is growing to be an important part of the broadband market, but the market opportunity for cable providers to offer VoIP service to existing subscribers is even greater.

The only item missing from the cable “triple-play” — voice, data and entertainment — has been VoIP. In the past, the different types of networks required to deliver voice and data kept the cable providers from encroaching on the telcos’ sacred hunting grounds. Because the previous generation of equipment was designed specifically to meet the requirements of the phone companies, cable operators that wanted to enter the telephony business needed a new generation of switching equipment designed to work at the head-end.

But IP became the great unifier. Engineers at CableLabs are busy at work certifying the first DOCSIS1.1 equipment that will make IP telephony over cable possible.

This means a certified product won’t hit the shelves until this first quarter. Impatient cable operators are making substantial investments to upgrade their facilities in order to deploy new and innovative services in the future.

For those that don’t want to wait, suppliers such as ADC, Tellabs and Motorola, among others, offer a switched-circuit approach to bridge the gap until an end-to-end IP solution can be implemented.

Impatient, or you might say hungry, cable operators are taking the interim step of using a combination of circuit-switching routing and IP-based gear to employ VoIP.

In addition, IXCs such as Net2Phone have grown through a steep learning curve and skeptical market to prove it’s possible to deliver carrier-quality voice services over IP networks and still make money.

Predictions for 2002

Looking into the crystal ball, I predict 2002 is the year when cable providers will add VoIP to data and entertainment to create the triple play. The following developments point to a bright and shining future for telephony over cable:

Penetration is strong. Nielsen/NetRatings found the number of broadband users in the United States has surpassed the 21 million-user mark, accounting for 20 percent of the 106 million active Internet users.

There’s growth in voice. Frost & Sullivan predicts VoIP will account for almost 75 percent of the world’s voice services by 2007. That’s an opportunity too big to be ignored.

Adding voice adds revenue. About 25 percent to 30 percent of cable subscribers opt for phone service when offered by their cable operators, reports Deutsche Bank Alex Brown.

Broadband is user-friendly. Larry
Gerbrandt, chief content officer for Kagan World Media, points out, “An entire generation of Americans cannot remember a time when MTV, ESPN, CNN, Nickelodeon, HBO and others were not available at a touch of their remote.”

Progress marches on. In November 2001, Cable Television Laboratories (CableLabs) announced it would begin testing and certifying products that meet its PacketCable specifications. Equipment that meets these specs will be able to provide telephony over two-way cable lines.

Finally, the cable industry is no longer a group of small, insular regional service providers. At the 2001 Western Cable Show last December, Ted Turner predicted consolidation in the cable industry would result in just two cable operators and one satellite operator remaining by the end of 2002!

The survivors will be huge, technically savvy conglomerates with millions of subscribers and very deep pockets. They will continue to invest heavily in whatever is needed to go the final round to deliver voice service over broadband and compete head-on with the Baby Bells.

The key for cable operators, claims Franklin R. Bowers, head of Cox
Communications’ cable operation in Hampton Roads, Va., is to package the trio of voice, video and data and market them relentlessly.

Bowers should know. Two years ago, under his direction, Langley Air Force Base moved all of its 16,000 phones over to Cox’s broadband operation.

David Greenblatt, CEO of Adir
Technologies and former COO of Net2Phone, created Adir Technologies with Cisco Systems Inc. to market the IP network management Voxis suite currently used by Net2Phone to manage its own global IP network.

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