The cable industry is poised to take its competitive challenge on the high-speed data front to a new level, where multiline packet voice and other performance-sensitive services will finally be offered commercially and wide-scale availability of cable-modem equipped PCs combined with streamlined service is likely to put subscriber growth on a much faster track.
It has taken the industry longer to get to this breakout point than many leaders anticipated, but, from a cable perspective, the good news is that modem penetration of U.S. households has grown in pace with various analysts' projections to about 3 million with signups topping 20,000 per week through the course of 2000, according to reports from the leading providers of cable data services. Now, if the industry can parlay the latest developments into the more ubiquitous market presence it seeks, the signup rates could begin to soar well beyond the current level.
"A lot of the hard knocks associated with deploying a service over standardized modems is behind us, so we're able to move ahead to a more streamlined approach with more advanced services," says Richard Green, president and CEO of Cable Television Laboratories Inc. (www.cablelabs.com). "We're a long way from where we started."
Get It Out and Get It Right
The two biggest areas of progress concern new developments surrounding industry attempts to break through to the retail distribution level for its standardized DOCSIS (data over cable service interface specification) modems and, as of Oct. 30, the beginning of certification testing for the next generation of modems, DOCSIS 1.1, which are meant to support voice and other services that require guaranteed levels of QoS.
On the retail front, one key development concerns the success of two companies, Zoom Telephonics Inc. (www.zoom.com) and GVC Corp. (www.gvc.com.tw), in obtaining CableLabs' certification for internally installed DOCSIS 1.0 modems on peripheral component interface (PCI) cards, which allows computer manufacturers to deliver PCs that are ready to hook up directly into cable lines. In addition, among the 90 or so modems from 36 manufacturing companies that have now been certified compliant with the DOCSIS 1.0 standard are several that are designed to plug into the USB (universal serial bus) port that comes with all recent vintage PCs, further simplifying the process of connecting service, which, without such modems, typically requires a visit from a service technician to install an Ethernet card in the subscriber's computer.
"This [PCI certification] is a real milestone for consumers who want their cable modems pre-configured inside their PCs and ready to use right out of the box," says Brian Roberts, chairman of CableLabs' board of directors and president of Comcast Corp. (www.comcast.com). "This should further increase the momentum of the cable Internet business."
Now that such computer-ready modems are being marketed by several manufacturers, including major names with significant retail presence such as Toshiba Corp. (www.toshiba.com), 3Com Corp. (www.3com.com) and Thomson Consumer Electronics (part of Thomson Multimedia S.A., www.thomson-multimedia.com), CableLabs has begun what it calls the "Go2Broadband" project, which provides a central, online clearinghouse that manufacturers and retailers can use to determine whether a given customer can get cable data service in his or her neighborhood. "With this system, a PC manufacturer like Dell Computer Corp. [www.dell.com] can immediately tell a customer calling in to order a PC whether service is available and supply the customer with a built-in cable modem if it is," Green notes.
Cable companies representing 95 percent of the U.S. cable household base have joined in the G2B project, Green adds. "This is a big database that we're managing, and it takes a lot of cooperation and trust, because we have to be able to tap into and protect sensitive, privileged information to determine exactly where [data] service is available on a system-by-system, neighborhood-by-neighborhood basis," he says.
At this writing, the G2B system was going through verification testing in preparations for wide-scale availability to the retail outlets and manufacturers who are signing on to participate. CableLabs was slated to release the names of participating companies once verification was completed, which, according to informed sources, include leading retailers such as Circuit City, Best Buy and RadioShack as well as PC manufacturers like Compaq Computer Corp. (www.compaq.com), Dell, Toshiba and Sony Corp. (www.sony.com).
Broke a Logjam
Adding to the retail momentum, the leading supplier of cable Internet service, Excite@Home (www.corp.excite.com), has broken through the long-standing dealmaking impasse between retailers and cable companies in an agreement with RadioShack for nationwide distribution of modems and self-installation "startup" kits wherever local service is available. Through nearly two years of negotiations, the two industry sectors had been in a standoff over retailers' insistence that they receive residuals for such support beyond the initial modem sale revenues. While there are many instances of cable/retail cooperation within certain service footprints, this is the first deal with a major outlet that supports nationwide retail distribution of the modems.
But more are on the way, industry sources say. Excite@Home and its cable partners have deals in place for retail distribution of the startup kits, which are priced at $29.95, with CompUSA and Circuit City. Negotiations for sale of modems at these and other retailers are said to be moving to completion, possibly in time for the holiday selling season.
Excite@Home has also cut a deal with Sony under which all Sony VAIO PCs are equipped with a pre-loaded demonstration of the @Home service. Customers who have a dial-up Internet connection can click on a link within the demo that takes them to the @Home site, allowing them to check if their home is @Home-ready, learn about subscription program options and sign up for preferred times for a visit from a cable technician, which is typically required to extend in-home coaxial wiring to where the PC is stationed. "We think this relationship will undoubtedly help accelerate broadband awareness and usage," says Byron Smith, chief marketing officer for Excite@Home.
Paralleling the progress on the retail front, the round of cable modem certifications that got under way Oct. 30 for the first time includes submission of DOCSIS 1.1 modems for testing. Four companies, unnamed at press time, submitted 1.1 modems for certification, a year beyond the point at which the protocols for this type of modem were adopted and six months beyond the date which CableLabs had originally anticipated 1.1 certification would begin.
"Many vendors told us they were well down the road on these modems, but, when we did the dry-run tests that we do before actual certification, it was fairly clear that they weren't as far along as they thought," Green says. "We've been working for about two years on [1.1] and it has turned out to be far more complicated a process than we envisioned."
'Optimistic' on 1.1
Even now Green hesitates to predict certification of 1.1 modems is at hand, given the complexity of the tests that vendors must complete. "There are about four times as many tests for 1.1 as there are for 1.0, reflecting the fact that there's a huge addition in capabilities," he says. "But, based on how the dry runs went this time, we're fairly optimistic."
While the delays in getting 1.1 modems to market have been problematic for cable companies who want to proceed with launching IP-based packet telephony services, MSOs (multiple system operators)--who have been conducting prelaunch tests and market trials of IP voice--have had their hands full with other problems that remain to be solved before anyone will be able to offer a first-line quality service at significant scales. Canada's leading MSO, Le Groupe Vidéotron Ltée (www.videotron.com), for example, is still struggling with technical issues as it proceeds with a market trial to a few thousand homes in Quebec, acknowledges Alec Henderson, manager of product marketing for packet voice at Cisco Systems Inc. (www.cisco.com), the lead supplier in the Vidéotron project.
"The problems are with scalability rather than on the core functionality side," Henderson says, adding that this is an issue that plagues all efforts to get IP voice services under way over not only cable but traditional telephone loop as well. "We can demonstrate a perfectly good quality call over the packet infrastructure, but now we're into finding out whether we can support that level of quality with technical people operating ordinary truck rolls to tens of people per day."
Some MSOs are considering lowering the bar to packet voice by offering the service as a second/multiline supplement to POTS, which, with availability of 1.1 modems, should be an implementable service fairly early in the year ahead. Time Warner Cable (www.timewarneraustin.com), for example, has been testing such a service over the Road Runner (www.roadrunner.com) data pipe in Portland, Maine, and is now moving to the market trial phase with an offering to a small segment of the market that's priced at about $10 on top of the Road Runner service fee, says Michael Luftman, vice president of communications at Time Warner.
"We'll soon expand to another [geographical] division to test additional vendor options and then move to broader rollouts over the next year or so," Luftman says. Tests to date, as with other MSO packet voice trials, have been sufficiently limited in scope to allow the company to use 1.0 modems, which can accommodate voice QoS requirements as long as not too many people are contending for the voice bandwidth.
Another company waiting for the pieces to fall together in the standardized framework for voice that the industry calls "PacketCable" is High Speed Access Corp. (www.hsacorp.net), which is the third largest provider of Internet access with services offered over cable systems passing more than 3 million households. The company recently contracted with Lucent Technologies Inc. (www.lucent.com) for supply of up to $100 million worth of systems support for rollout of IP telephony over the next three years, but it acknowledges that full-scale toll-quality service won't be its first line of attack.
Instead, HSA envisions offering second-line and other specialized services with a limited number of popular features like caller ID and call waiting, using Lucent-supplied interfaces with legacy switches and their support for intelligent networking capabilities to support the provisioning and other operational requirements, says J.R. Anderson, vice president of voice services for HSA. "We're desperate to get into delivering integrated data and telephony services," Anderson says. "Whatever access technology you use, you've still got to provision, administer and bill for services, and that's what Lucent has been a leader in doing for a long time."
Nonetheless, without 1.1 modems, all bets are off, he adds, which means the company won't meet its goal of getting commercial services under way before the year is out. "We're still at very basic levels of connectivity," he says.
"Right now we could not deliver the necessary levels of quality of service if we had to," he adds. "We've got to be in a position to handle a flood of demand once we start rolling this out, and that means accommodating all the operations systems management issues as well as basic signaling and provisioning."
Offramp to PSTN
HSA has been working with Charter Communications (www.chartercom.com) to test packet telephony using the Lucent technology in one of the MSO's Georgia markets since the start of the year. Earlier this year Lucent announced its implementation of the PacketCable protocols for interfacing with the PSTN under the product line labeled "iMerge." Employing PacketCable's NCS (network-based call signaling) Gateway, which is an adaptation of MGCP (multimedia gateway control protocol), the technology enables cable operators to deploy a converged IP solution in their access networks while still leveraging their existing switches for connection to the PSTN, says John Slevin, director of strategy and business development in Lucent's cable group.
"We're trying to emphasize that there's much more to being able to deploy IP telephony than installing DOCSIS 1.1 CMTS [cable modem termination system] and modems," Slevin says. "Modular expansion of the OSS, such as we've developed in the PSTN, in the cable realm is critical, and iMerge is designed to allow that to happen."
The iMerge gateway sits between the CMTS and the router, serving to separate voice signals from the cable modem data stream so that the data proceeds on through the router out over the Internet and related backbones while the voice components are siphoned off into the PSTN environment beyond the cable domain. For the cable industry, which is still a long way from being able to connect and operate packet telephony independent of the PSTN, this handoff process is likely to be the primary means by which packet voice happens for some time to come.
"Some of our customers already have Class 5 switches in place, so this doesn't impose a big barrier," Anderson says. "But the ideal is to break away from that dependency, especially for those companies that don't have ready access to the switch resources."
Some cable entities who do have such switches are beginning to consider an interim approach in the transition to IP telephony that the vendor TollBridge Technologies Inc. (www.tollbridgetech.com) is supplying to the VoDSL market. In contrast to the general state of commercial deployments of VoDSL, TollBridge has had some early success in getting commercially operating systems under way, starting with the CLEC Mpower Communications Corp. (www.mpowercom.com), formerly MGC Communications, which is delivering multiple line packet voice services to DSL business customers in five states. "We have three more customers who are deploying the technology now," notes Agnes Imregh, vice president of marketing at TollBridge.
Opportunity Right at Home(s)
TollBridge's cost model suggests that CLECs can deliver eight lines of voice together with high-speed data over DSL to small business customers for $300 per month vs. the $600 or more per month it costs for a similar number of voice lines and dial-up service. But it's the residential market, where cable has 64 million customers, that is the biggest opportunity for TollBridge, Imregh says. TollBridge uses interfaces with the telephone industry's GR-303 standard to deliver the call setup and feature provisioning capabilities of Class 5 circuit switches into the packet voice domain. GR-303 is the digital signaling protocol telcos use to extend the reach of their switches into remote locations over digital loop carriers.
TollBridge employs a customized version of IP packets for its voice payloads. By using an advanced version of frame relay layer two rather than IP technology to provide support for the QoS requirements of voice service, TollBridge avoids the traffic flow problems of basic IP while preserving the use of IP as the voice payload format, Imregh says. "This allows us to offer a platform that addresses immediate deployment needs that are compatible with DOCSIS while establishing a migration path to full PacketCable capabilities in the future," he notes.
TollBridge is working with one unnamed cable operation in preparations for a trial that's slated to get under way this summer, and has been invited in for talks with several others after responding to cable requests for proposal (RFPs) on voice technology, says Greg Hutterer, director of product marketing. "You'll see full commercial deployments of our platform over cable network starting in the first quarter," he says.
That, of course, assumes at least some 1.1 modems pass certification by then. If they do and if operators are satisfied with vendor solutions to issues like OSS and interoperability with the IN feature network, the cable industry could find itself leading the pack in the transition to packet telephony. As big as those "ifs" might be, they're nothing like the uncertainties that have held things back through this long year of waiting for DOCSIS 1.1 to solidify.
