Charter Communications Inc. is launching a long-haul Ethernet service on Thursday, knitting together its individual markets in an attempt to cut deeper into Level 3 Communications Inc. (NYSE: LVLT)'s and AT&T Inc. (NYSE: T)'s hides.

Charter got into the metro Ethernet market about ten years ago. The difference now is that it's going to exploit its national fiber backbone (based primarily on Cisco Systems Inc. (Nasdaq: CSCO) gear), so business customers can link to branch offices without having to rely on other operators' long-haul connections.

Charter's already been using its backbone for high-speed Internet and video traffic. It's extending that support to include commercial services after inserting a unified Layer 3, MPLS-enabled core, says Scott Fairchild, the product management director for Charter Business.

"With this [product] introduction, we can get to any Charter location," he says.

The long-haul network of a Level 3 dwarfs Charter's, but the MSO believes it can provide an attractive way to connect Tier 2 and 3 markets, saving customers from having to stitch together links from different carriers. It also announced wholesale Ethernet interconnection deals with CENX Inc. and Equinix Inc. (Nasdaq: EQIX) earlier this year.

But it's early. The MSO started working on metro Ethernet long-haul service last fall and has signed a couple of trial customers in the health care industry, including a hospital that operates in St. Louis and Wisconsin. Charter is also getting interest from other metro Ethernet customer segments, including government and education. "It's a big priority for us," Fairchild says.

Why this matters
Business services is rapidly becoming a growth focus for cable, but the industry has been able to get its mitts on just a smidgen of the available loot so far. Heavy Reading estimates that cable took in about $5 billion in business services revenue, just 4 percent of a market that's valued as much as $140 billion.

Charter believes the business services opportunity in its footprint is about $8.5 billion. Its commercial service unit raked in about $137 million in the first quarter, up 17.1 percent more than in the previous year. Long haul service -- a relatively new area for cable -- could help to stoke that growth engine even more while taking some business away from telcos and other backbone operators.

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— Jeff Baumgartner, Site Editor, Light Reading Cable