Experts: DOCSIS Won't Cut It in the Enterprise
NEW YORK -- The Future of Cable Business Services -- There's no question that cable companies see commercial services as a major growth opportunity. Cable revenue in the sector is still growing more than 15% annually in some cases, and both Comcast and Charter are each set to go over $5 billion in revenue for business services in 2016. (See Charter Challenges Comcast's Commercial Rule.)
Perhaps even more importantly, there's room for further growth. Cable operators currently claim about 10% of the commercial services market, which means there's significant opportunity to poach more business away from telecom providers.
There is a catch, however. The cable industry has largely focused its efforts in the small and midsized business market, and as it tries to move upstream into the enterprise, the rules of engagement change.
For Andrew Smith, distinguished engineer and chief architect for cable MSO networks at Juniper Networks Inc. (NYSE: JNPR), the fact that the requirements for enterprise customers differ hugely from their SMB counterparts begs the question of whether cable companies are truly serious about investing the necessary resources. The C-level suite wants the revenue from enterprise services, but are cable companies willing and able to do what it takes to earn that income, particularly if it means changing the way they architect their networks?
"It's clearly very, very important from the top, but then you turn the crank, and from our perspective, where cable invests, what they deploy [and] how the network is architected is still fundamentally residentially oriented," says Smith. "And the challenge with that is, a couple of things, one, you may be conditioning that commercial customer base to expect a residential-class product just branded as commercial. And while that's okay, you won't ever go up market with that."
Smith adds, "If you're going to want to expand the revenue you can capture in commercial, then you have to build these networks a little differently than [cable companies] do today."
For Smith and others on a Light Reading panel covering enterprise services, one of the fundamental things that needs to change is cable's reliance on DOCSIS. At the enterprise level, some experts, including Smith and Interactive Broadband Consulting Group LLC (IBB) 's Lucas Binder, believe cable companies can only compete if they deliver all-fiber connectivity.
The issue goes further as well. Smith argues that cable companies need to figure out how to monetize their last-mile networks more effectively in order to justify the necessary capital spend. For example, cable operators need to figure out how to maximize bandwidth capacity across multiple services. That likely means using the same fiber networks in the future for a combination of business, residential and even wireless services, much the way Verizon has talked about doing as part of its NG-PON2 trials taking place outside Boston. (See Next-Gen Calix OLT Gives Verizon an Edge.)
Beyond network architecture, another major challenge for cable companies in the enterprise market is the need to offer a national footprint -- and not just a national footprint for connectivity, but a national footprint where offerings look consistent across different geographic regions.
"If you're going to try and offer a 100-Meg Ethernet product from your network but also be able to match that up with something out in LA or Chicago ... it has to look the same. It has to be the same kind of product that you're buying from the other cable providers or Level 3 or AT&T or any of the others," says IBB's Binder.
Collectively, cable operators can deliver national reach, but to address the enterprise market, they also need to work together in order to provide a smooth, consistent experience.
"It's not just interconnectivity," notes Mark Finch, Mediacom Communications Corp. 's senior director for commercial markets. "It's interactivity, like actually sharing data, delivering information back and forth between all carriers. It sounds so blocking and tackling, but it really is the difference."
Kyrio, says Finch, is bringing a lot of players together for information sharing. "I think that effort is moving forth," he concludes. "I wouldn't say it's complete yet, but I think it's a work in progress and it probably will be for some time."
Cable operators will need to make more progress soon, at least if they want to keep up their growth rate in commercial services and extend their successes into the enterprise market.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading