Arris: Comcast's Stealth VOIP Vendor

To hear Arris Group Inc. (Nasdaq: ARRS) tell it, the equipment vendor is emerging as a key vendor in Comcast Corp.’s (Nasdaq: CMCSA, CMCSK) voice-over-IP (VOIP) trials. But Comcast isn’t talking about it, except to deny some of Arris’s claims.

Stan Brovont, VP of marketing at Arris Broadband, says Arris has sold over 10,000 of its Touchstone TM402P Embedded Media Terminal Adapters (EMTAs) to Comcast for the cable company’s VOIP trials. “We’re going to get significant business this year from Comcast on EMTAs,” he says. Brovont adds that Comcast has deployed Arris’s C4 cable modem termination systems (CMTSs) for VOIP service in four trial markets: Coatesville, Pa.; Springfield, Mass.; Indianapolis; and Detroit. Detroit? Comcast has publicly acknowledged only three VOIP trials. But Brovont says the cable company is not only trialing VOIP in the Motor City but also billing subscribers there, making “trial” a questionable term. Comcast tells a different story. “We’re not trialing in Detroit,” says Robert Smith, a Comcast spokesman. “And we are not billing customers.” What about Brovont’s claim that Comcast has deployed a gateway from Nuera Communications Inc. for VOIP service in Detroit? Smith says that’s news to him.

But Nuera, a privately held company funded partly by Comcast, issued a press release in December 2002 saying Comcast had indeed purchased and deployed Nuera’s ORCA RDT-8g VOIP gateway in Detroit. A Nuera spokesman says Comcast is still using the gateway there and billing subscribers in the area for VOIP service. “They have customers running on it now, and they’re generating revenue with it,” says Joe Matibag, director of product marketing at Nuera (see Nuera Raises $20M).

Comcast’s Detroit deployment is older and based on different technology than its other VOIP trials. Instead of using a softswitch, the company put Nuera’s gateway in front of an existing Class 5 switch connected to the public switched telephone network (PSTN). Comcast inherited its circuit-switched phone business when it bought AT&T Broadband in 2002 (see AT&T Completes Comcast Merger).

Comcast has been tight-lipped about its VOIP trials -- so much so that any mention of them draws attention. At the company’s annual shareholders meeting last month, reporters pressed executives to confirm a report in The Wall Street Journal that the company plans to offer VOIP service to 40 million subscribers by 2006. Management confirmed the report, but, as Light Reading explained, Comcast is likely to capture only a fraction of those 40 million potential subscribers within two years (see Comcast's Virile VOIP Story).

However, the company’s use of Arris’s EMTAs -- little boxes that subscribers install between a standard phone and a TV cable -- adds a wrinkle. Because the devices come with built-in cable modems, customers don’t need to have high-speed Internet service to subscribe to Comcast’s VOIP service. That means Comcast can offer unbundled phone service at prices that compete with those of the telcos without requiring people to sign up for Internet service.

According to Arris’s Brovont, Comcast’s projections for voice market penetration are represented in a Venn diagram -- two overlapping circles in which some subscribers have only voice service, some have only Internet service, and some have both. “I’ve seen Comcast’s projections,” Brovont says. “At terminal penetration, voice is actually higher than data.” In other words, Comcast expects eventually to have more voice service subscribers than high-speed Internet subscribers. Just don’t ask the company to admit it.

— Justin Hibbard, Senior Editor, Light Reading

lightpimp 12/5/2012 | 1:37:52 AM
re: Arris: Comcast's Stealth VOIP Vendor No shit CMCSK is keepin tight lipped about this. Hmmm, let me see, do I want to pay $40/month for phone service or $10/month?? On top of having that fat 3MB downstream net connection for $45/month, think i'll take the latter :)
optical Mike 12/5/2012 | 1:37:48 AM
re: Arris: Comcast's Stealth VOIP Vendor T0 read entire article

The reason is simple. The venerable FCC, created in 1934, is no longer necessary.

Its justification for existence was weak 70 years ago, but advances in technology since then have eliminated whatever arguments remained. Central planning didn't work for the Soviet Union, and it's not working for us. The FCC is now an agency that does more harm than good.

Consider some examples of bureaucratic malfeasance that the FCC, with the complicity of the U.S. Congress, has committed. The FCC rejected long-distance telephone service competition in 1968, banned Americans from buying their own non-Bell telephones in 1956, dragged its feet in the 1970s when considering whether video telephones would be allowed and did not grant modern cellular telephone licenses until 1981--about four decades after Bell Labs invented the technology. Along the way, the FCC has preserved monopolistic practices that would have otherwise been illegal under antitrust law.

These technologically backward decisions have cost Americans tens of billions of dollars.

5urf5hop 12/5/2012 | 1:37:47 AM
re: Arris: Comcast's Stealth VOIP Vendor AMEN BROTHER!!!

The bureaucrats, greedy liars, and "The Establishment" need to go...
fgoldstein 12/5/2012 | 1:37:44 AM
re: Arris: Comcast's Stealth VOIP Vendor DeclanM's column is full of guano, for any number of reasons, but I've refuted it in three other places so far, and I'm not about to repeat myself here.

I'm sort of surprised at the way the press is treating Comcast. Hell, I've had their phone service since they bought ATTB, who bought it from MediaOne. They did a big phone rollout (5ESSs feeding Tellabs Cornerstone 2300) in the 1990s. Maybe it was the US West influence. Comcast now rents the switching from AT&T. It runs like the Energizer bunny. I think Comcast's nationwide phone count is in the millions already.

So what's new? A different internal multiplexing technology (PacketCable VoIP)? So what? Not that I pay only $10/line -- it's higher than that, but it's cheaper than VZ. I'm on a grandfathered plan, and I don't know how the current ones compare. A lot of the trick is rate structure, vs. rate level -- the old MediaOne plan was a smarter rate structure. VZ's plans are about 90 years out of date.

I do think that the cable industry, with HFC, can offer telephone service at a lower cost than the telcos can -- the problem has been an entertainment mindset. Comcast is largely past that (Malone was another story). They don't need to pull FTTH either; coax has ample bandwidth.
optical Mike 12/5/2012 | 1:37:27 AM
re: Arris: Comcast's Stealth VOIP Vendor I do think that the cable industry, with HFC, can offer telephone service at a lower cost than the telcos can -- the problem has been an entertainment mindset. Comcast is largely past that (Malone was another story). They don't need to pull FTTH either; coax has ample bandwidth.

That may be true today but tomorrow is what we need to concern ourselves with. It's poor planning to deploy a system that is only just adequate for today's needs and will be out of date and unable to compete with the competition in a year
fgoldstein 12/5/2012 | 1:37:21 AM
re: Arris: Comcast's Stealth VOIP Vendor >It's poor planning to deploy a system that is only just adequate for today's needs and will be out of date and unable to compete with the competition in a year.

Okay, I know your handle is "optical" Mike, so your prejudices should be obvious, but why is HFC inadequate for the future? What application is on the horizon that doesn't fit?

Oh, I know that some old TCI or even recent Adelphia HFC upgrades were, say, 1000 homes/node, which is ridiculous. But at 50-250 homes/node, which is where modern systems are, and with DOCSIS 2.0 supporting 40 Mbps downstream/30 Upstream on each of its carriers, what doesn't fit? HFC already does video on demand using digital cable technology. Your average residential broadband data subscriber averages 10-20 kbps; even if you allow 10 Mbps bursting, which is more than the market calls for now, DOCSIS is unlikely to run out of steam for years to come. And you can put more than one DOCSIS carrier onto coax.

Of course HFC puts fiber "near" the subscriber, so it becomes possible to upgrade to FTTH on a subscriber-by-subscriber basis. I just haven't seen a compelling need for mass-market FTTH. In a green field, where there's no coax, the price of ONUs is falling to the point where FTTH may make sense soon. But that's more an issue of its allegedly lower maintenance cost (no sweeping) more than a need for bandwidth.
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