Eager to lure more business customers away from the incumbent telcos, Time Warner Cable is rolling out SIP trunking throughout the US as part of its drive to expand beyond the smallest firms and target more midsized companies.
Time Warner Cable Inc. (NYSE: TWC) began the rollout of SIP trunking service last week, introducing SIP trunking in its "legacy east" markets of New York City, upstate New York, Maine, and the Carolinas. Plans call for extending the new VoIP-based service to the MSO's western regions, including Ohio, Kentucky, Wisconsin, Kansas City, Texas, and California, in February. (See TWC Introduces SIP Trunking.)
The move by TWC comes at the same time that its fellow large MSO, Comcast Corp. (Nasdaq: CMCSA, CMCSK), is also starting to roll out SIP trunking. Speaking at Light Reading's Future of Cable Business Services event in New York last month, John Guillaume, vice president of product management and strategy for Comcast's business division, said Comcast will deploy SIP trunking nationally by the end of 2014 after testing it in three undisclosed regional markets. (See Comcast Plots National SIP Trunking in 2014.)
In its press release announcing the launch, TWC said the new SIP trunk product "offers a flexible and cost-effective alternative to traditional TDM-based voice trunk services for those businesses with IP PBX equipment." Delivered over the MSO's "fiber-rich network," the service also offers dedicated bandwidth for voice calls so that voice and data traffic will no longer compete for bandwidth on the cable operator's network.
Specific features of the SIP trunk service include: unlimited local calling, caller ID, inbound/outbound call blocking, calling name and number delivery, alternate routing, a web portal for managing service features, and flexible options to buy as few as six call paths initially and then add more paths one at a time.
TW Cable officials say the SIP trunk service will complement the PRI trunk services they already offer to commercial customers. In an interview with Light Reading, Parimi Satyanarayama, Group VP of Time Warner Cable Business Class, said they also view SIP trunk as a replacement service for PRI as companies get larger or seek to upgrade to IP-based phone service.
"We think it's a replacement play," he said. "We have PRI. People like it but they want to future-proof themselves."
With the SIP trunk product, TWC executives are initially targeting companies in what they term the "lower middle market," or firms with 25 to 99 employees. They then plan to expand it to the upper middle market, or forms with 100 to 499 workers, as well as larger enterprises.
"The sweet spot initially is the lower middle market, people who want to buy 10 to 12 trunks and want to buy data with it," Satyanarayama said. "The target market for us is people who already have IP-PBXs but still use PRI, or people who are looking to go to IP-PBXs." He estimated that the market opportunity for the initial SIP trunking release is now about $200 million in TWC's footprint, rising to $350 million later this year when the MSO comes out with its next version for larger companies.
While those amounts are dwarfed by the current market opportunity for PRI, TWC and their counterparts at Comcast and other MSOs see SIP steadily picking up steam. Satyanarayama, for instance, said TWC officials expect the SIP Trunks market to grow at a 20% to 25% annual clip over the next three years while the total trunking market stays relatively flat or declines slightly.
The SIP trunk rollout is part of TW Cable's grand plan to greatly expand its role in the commercial telecom market. Phil Meeks, COO and executive VP of Time Warner Cable Business Class, has set a goal of doubling the company's annual business services revenues to $5 billion over the next four to five years. (See Meeks Sees Business Boom at TWC.)
— Alan Breznick, Cable/Video Practice Leader, Light Reading