There's been a fair amount of discussion in the industry recently about the role voice will play for the cable industry. Much of that debate centers on how realistic it is to believe that cablecos can deliver a product that is competitive in quality and price with the voice services offered by the former Bells which are old hands at delivering extremely reliable networks.
All the work the cable companies have done jointly through CableLabs to create the PacketCable specification, which is a blueprint for voice over cable, is a clear indication of just how important the MSOs (multiple systems operators) believe voice is going to be as the final major component of their "triple threat" strategies. Indeed, as Fred Dawson writes in xchange's cover story, the revenue growth cable companies need to win back tens of billions of dollars in lost share values heavily depends on an aggressive move into voice services.
On one hand, it appears that cablecos are positioned pretty well to move into voice. They have the vast majority of cable plant (80 percent is the number I'm hearing) upgraded for two-way communications. So the first order of business is resolved as far as readying the cable plant for voice.
The fact the cableco plant already is broadband and that PacketCable voice will be IP-based, in most cases, also positions cablecos well to bring to market quickly new enhanced services with a voice component. And a package including cable TV, high-speed cable modem and feature-rich voice services could be pretty attractive to consumers.
On the other hand, standards, desire and technology are only a portion of what's needed to create a successful network service. Obviously, the key issue is ensuring there's a clear voice payoff vs. investment formula.
Another of the table stakes is delivering quality voice service. That will require not just getting relatively new IP telephony equipment, which to date has been used primarily for long-distance arbitrage and Internet offload, to work in local voice environments, but also entails the smooth operation of all the support systems and processes that exist -- a huge undertaking.
Then there's the issue of trust. That is, to what extent will customers trust cablecos to deliver their voice services? Of course, trust could be less of a concern in cases where cablecos are providing a secondary vs. a primarily voice line. That, however, leads to a second question, which is: How many customers need -- and want to pay for -- a second phone line, especially if they already have a broadband cable modem or DSL connection for Internet access, a telco-supplied primary line for voice and, probably, a cell phone? (Refer to voice payoff passage above.)
The third potential hurdle, as I see it, is customer service. Although cablecos several years ago launched a campaign to improve their customer service, the cowboys of communications have yet to overcome their tarnished reputation on that front. While this could be a nonissue if cablecos are up to the customer service task or if consumers, who are no strangers to shoddy customer service, are willing to put up with less than star treatment, lousy customer service could result in unwanted churn. The potential problem of customer service could be an even greater hurdle if cablecos begin targeting businesses more heavily, as they say they are.
That said, the cablecos clearly realize what's at stake. So if they're as smart as they look, they already are putting significant effort into their voice initiatives beyond what the technologists are handling. If they don't, it will be at their own peril.
Until next time,
Paula Bernier
Editor in Chief
