Cable Telephony

With increasing competition among communication providers and demand from customers for bundled services at lower prices, service providers face the challenge of growing revenue by introducing new service bundles of voice, video and Internet access without incurring significant upfront capital and operational costs.

While the cable industry has long held to the mission of deploying an all-packet, softswitch-based telephony network based on the PacketCable specification, this architecture is still maturing with respect to features, scalability, reliability and back office integration. Initial deployments will be limited to the largest MSOs who can justify the high costs of the multicomponent PacketCable solution when amortized over their large subscriber bases. This assumes they have the ability to grow their telephony subscriber base quickly to overcome the upfront costs in the network. And while the industry continues to tout the need to deliver new, innovative IP-based services through PacketCable, customers are more interested in receiving existing Class services, such as caller ID and call waiting, bundled with video and high-speed data in a single, value-priced offering.

At the same time, in light of intense competition from direct broadcast satellite providers, most cable operators today are focused on expanding their video and high-speed data business. By choosing to invest their limited capital to enhance their video and high-speed data network instead of building their own telephony networks, many operators are turning to local telecom carriers to deliver and support their voice services to better compete against satellite through a triple play bundle. By partnering with telcos, cable operators receive the higher take rates and reduced customer churn of offering a triple play bundle, but with little upfront costs. At the same time, telecom carriers reap benefits from increased wholesale and long-distance revenue along with better utilization of network assets.

In their quest to deliver voice to cable operators, telephone companies are providing several voice service models depending on the operator’s size and location relative to the carrier’s network.

Ideally, each cable operator would prefer to deploy a PacketCable-compliant, primary line service that provides toll-quality voice service (including battery backup, emergency 911 services and PSTN quality) at less than $200 per subscriber using a pay-as-you-go investment. However, only the largest MSOs can justify these upfront costs. Therefore, CLECs and ILECs (seeking to grow out of region) have the opportunity to use their networks to increase their voice revenue without affecting their existing revenue.

The chart below provides an overview of the various service models being explored by operators and carriers.

For most carriers, the tandem access model is simply an extension of their existing long-distance wholesale services. While this model is acceptable for the largest cable operators with PacketCable softswitch networks, most operators cannot afford the expense to deliver and support local telephony today.

For these operators, carriers are looking toward wholesale PacketCable line control signaling (LCS) and IP telephony to extend local telephony into their cable networks. PacketCable LCS has been defined by CableLabs to provide Class 5-derived VoIP services to PacketCable compliant modems. With an LCS-capable gateway in the carrier’s network, carriers deliver packet voice service into the cable network over a gigE link, which eliminates the cable operators’ requirements for headend equipment that traditionally interworks with the local carrier’s GR303 Class 5 switch. This service provides traditional PSTN service and allows migration of the customer to PacketCable softswitch services over time without the need to upgrade customer premises equipment.

Where carriers do not have the capability to provide primary line voice services through a local switch, IP telephony also is being considered as a fallback/secondary line service. The appeal of this service is the ability to provide telephony to any customer with a cable modem. However, since this service offers no quality of service guarantees through the cable network, it is subject to latency and echo when there is congestion in the cable network and offers no service with power outages.

KMC Telecom is one such carrier that is deploying wholesale voice services for cable operators based on these models. The CLEC offers retail and wholesale voice and data services in 35 markets in the Southeast, Mid-Atlantic and Midwest. Using its Lucent 5ESS switches, KMC has developed a wholesale voice service product for MSOs that also are co-resident in these markets. KMC can quickly deliver any set of Class services and long-distance service to a local cable operator’s network via GR303 and a media gateway for primary line or secondary line residential services.

KMC also operates a nationwide softswitch network. Using this platform, KMC offers wholesale voice services for large regional and national cable operators. Current discussions between KMC and cable operators have focused on use of this platform for tandem access to the PSTN.