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Comcast: 'The Cloud Changes Everything'

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
11/29/2012
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NEW YORK -- The Future of Cable Business Services -- Delivering services to commercial customers via the cloud is having a transformational effect on Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s approach with business customers.

"The cloud changes everything," said Kevin O'Toole, the senior vice president and general manager of new business solutions for Comcast Business Services, in his keynote here. "It's transforming how businesses consume IT services."

The unit's first big moves into the cloud is Business Voice Edge, a hosted PBX service that is partly born out of Comcast's acquisition of New Global Telecom. For that, Comcast is supplying the modem, the router, the firewall and the phones. Everything else, including the supported apps and services, resides in the cloud. (See Comcast Rolls Business Voice Into the Cloud.)

Comcast hasn't revealed how many customers have signed on for Business Voice Edge, but the product is becoming increasingly popular with multi-site businesses, O'Toole said.

But the popularity for cloud services is also driving up demand for more bandwidth -- something that Comcast is addressing with its Docsis network and with its newer, fiber-fed MetroE platform that is being used to target larger business customers. "Small businesses need bandwidth that a T1 and copper can't provide ... and they need it right now."

Growing business revenues
Comcast is tying those pieces together as revenues in the business services category continue to climb at a rapid rate, now representing 26 percent of the company's total cable revenue growth. The MSO pulled in $621 million in business services revenues in the third quarter, putting it just shy of an annual run-rate of $2.5 billion, up from $1.9 billion at this time last year. (See Cable's Cut of the Biz Services Pie to Eclipse $7B .)

Comcast started off by serving small business users, but has since deployed Metro Ethernet into more than 20 markets to help it pursue businesses with between 20 and 500 employees, a group that includes area hospitals, school districts and government customers. That mid-market section now represents about 15 percent of the group's revenues. (See Comcast Makes Hay With Metro Ethernet .)

"Metro Ethernet is the center of gravity" for this mid-market group, O'Toole said.

When all targeted business sizes are factored in, Comcast sees business services as a $20 billion to $30 billion market opportunity. "We're about 10 percent penetrated in that opportunity. We've got a lot of room to run," O'Toole said.

And Comcast is making progress with its plan to extend Ethernet services on its widely deployed hybrid fiber/coax (HFC) plant. According to O'Toole, Comcast has deployed Ethernet-over-coax services in eight markets, admittedly "without much fanfare." That strategy, he adds, will "dramatically expand" Comcast's addressable Ethernet services footprint. (See Ethernet Expo 2012: Ethernet Gets Comcastic.)

— Jeff Baumgartner, Site Editor, Light Reading Cable

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Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 5:16:48 PM
re: Comcast: 'The Cloud Changes Everything'


A good debate at the event dug into the discussion about whether cable, despite some recent efforts and buys, is 'behind' on their cloud strategies. We'll have more on that later today, but the cable guys, obviously , think they're pretty well-positioned for how they will target their particular corner of this market. JB

AESerm
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AESerm,
User Rank: Light Beer
12/5/2012 | 5:16:47 PM
re: Comcast: 'The Cloud Changes Everything'


...or which flavor? There are many varieties of EoC. 

joanengebretson
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joanengebretson,
User Rank: Light Beer
12/5/2012 | 5:16:47 PM
re: Comcast: 'The Cloud Changes Everything'


The Ethernet over coax revelation is interesting. Did he provide any details about who's buying it, what speeds they're buying, etc? Seems like it would mostly target small to medium businesses that aren't in metro centers.

Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 5:16:46 PM
re: Comcast: 'The Cloud Changes Everything'


I'll see what i can find out in terms of flavor and customers they're getting with it so far... but as flavor goes, my guess is it's gotta be an Ethernet-over-Docsis implementation.  The speeds will obviously be less than what Comcast can deliver with the fiber-fed MetroE product, but the other feature sets should be pretty much aligned (actually Kevin O'Toole did get into that a bit in my LRTV interview with him, which will post on Monday).  JB

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