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Optical/IP

Time Warner Delivers Phone Service

Time Warner Cable said Monday it will tap two long-distance carriers, MCI (Nasdaq: WCOEQ, MCWEQ) and Sprint Corp. (NYSE: FON), for help with the nationwide rollout of its Digital Phone VOIP service (see Time Warner Picks MCI, Sprint for VOIP).

If Time Warner Cable (TWC) prices its offering low enough, the news will shake up Verizon Communications Inc. (NYSE: VZ), SBC Communications Inc. (NYSE: SBC), Qwest Communications International Inc. (NYSE: Q), and BellSouth Corp. (NYSE: BLS), which are already under attack from wireless operators and standalone VOIP providers like Vonage Holdings Corp.(see Analysts Prod Verizon on Portability, Cable's Voice Getting Louder).

Digital Phone is expected to cost Time Warner Cable customers $39.95 a month for unlimited local and long-distance service, on top of the $100 a month they're paying for broadband Internet and cable TV. Those who aren't TWC customers will pay $49.95 a month.

Time Warner Cable has been conducting VOIP trials in Portland, Maine, since the beginning of the year and launched its first residential IP phone service in North Carolina in the spring. Its biggest markets include New York City; Houston; Raleigh, N.C.; and western Ohio (see Time Warner Finally Takes VOIP Plunge).

It's not hard to see why TWC wants to expand its phone service. A study released Monday by Multimedia Research Group (MRG) Inc. says the cable telephony market will reach over $3.9 billion in service revenue worldwide and $386 million in systems revenue by 2007. If outsourcing deals like Time Warner’s tie-in with Sprint and MCI take off, those figures could grow to $8.1 billion and $700 million by 2007, MRG says.

TWC's multiyear deals with MCI and Sprint will speed up its rollout throughout next year, company execs say. "Capitalizing on their local points of interconnection, our broadband cable system, and the efficiencies and flexibility of IP technology,” means Time Warner can get to market faster with phone service, says Glenn Britt, the company’s chairman and CEO.

Analysts point out that, while the deal could mean additional revenue for all parties, it isn’t quite as state-of-the-art on the technology front as it appears. Lisa Pierce, telecom analyst with Forrester Research Inc. notes that it’s only voice-over-IP on the cable access side, it’s not end-to-end VOIP.

“It’s a good start,” she says. “The call begins as VOIP, but is turned into regular TDM voice traffic as it is carried over the PSTN [public switched telephone network] to the caller at the other end… We are going to live in this hybrid world of part VOIP, part TDM, worrying about backwards integration and compatible directory and 911 services for some time.”

In fact, TWC rivals Cox Communications Inc. (NYSE: COX) and Comcast Corp. (Nasdaq: CMCSA, CMCSK) have yet to endorse VOIP for the cable market. Both these companies have been offering phone service for some time, but using traditional Class 5 telephone switches, believing that VOIP is still not ready for prime time.

MCI and Sprint will assist Time Warner in the provisioning of Digital Phone service to customers, termination of IP voice traffic to the PSTN, delivery of enhanced 911 service, local number portability, and carrying long-distance traffic.

"It makes sense as an alternative to cable operators' building their own voice infrastructure to leverage our existing networks, management experience, and technical knowledge. Our intent is to fulfill as many of their telecommunications needs as they want -- from basic transport to a fully outsourced solution that includes network design, implementation, and management and support,” says Paget Alves, president of strategic accounts, Sprint.

For the consumer it means local and long-distance voice services, high-speed Internet, and video in one package, on one bill, from a single provider. Of course, the one-bill Utopia scenario only applies to the 27 states where TWC offers cable TV and other services.

— Jo Maitland, Senior Editor, Boardwatch

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lr_fanny 12/4/2012 | 11:11:28 PM
re: Time Warner Delivers Phone Service One main point here that is skipped over, and I challenge the author to investigate. The telephony offering from Time Warner must be Second Line. How does it work when the power goes out? Can the phone be fixed from the outside of the premise as with all standard 1st Line telephony offerings.

The author mentions offering voice, data, and video at the end of the article like it is something new. Cox has been doing this for nearly 7 years and ATT Broadband/Comcast for 5 years. Cablevsion dabbled in it. Knology offers all of these services, as well as other smaller operators. And these services are all 1st line which is on-par with the RBOCs.

Time Warner is getting to the show late, but I am glad they are joining the party. COMPETITION IS GREAT!
fgoldstein 12/4/2012 | 11:11:20 PM
re: Time Warner Delivers Phone Service I agree that they're late to the party, but it's better late than never, I suppose. I do note, however, that if they're using the PacketCable standard, which is almost certain, then they *can* offer primary-line service. While cable modems are normally locally powered, it's probably possible to get line-powered PacketCable devices. Not that I can name the vendor. I have however seen PacketCable telephony CPE with built-in battery backup. So the customer retains phone service for up to around 12 hours, if local power goes out. And even without that, the home user can use an external UPS.

I work with a CLEC that does home VoDSL with local power. It works fine. I'd rather have line power myself, but subscribers can stick in a little UPS (they're quite cheap; power draw is low) if they feel the need. Many don't care any more, since they have a battery-powered cell phone.
IPee 12/4/2012 | 11:11:09 PM
re: Time Warner Delivers Phone Service Does anyone know what the VoIP architecture looks like for this deal.

The link early in the artile implies that they are using Cisco Softswitches.

Later in the article, it implies that only the 'access' is VoIP and Sprint/MCI are assisting with provisioning. This later piece (to me) implies some sort of VoIP access (CMTS/MTA) that gets converted to TDM (say convcerted to TR303) so that the TDM switch can provide provisioning.

The basic question I am wondering is if this solution is using softswitches or a TDM switch?
lr_fanny 12/4/2012 | 11:10:59 PM
re: Time Warner Delivers Phone Service I do not know for sure, but I am confident that TWC cable can not operate a phone company. So, that means, as you state, that they are handing the packet traffic from a CMTS to Sprint/MCI who convert to TDM and handle appropriately.
dljvjbsl 12/4/2012 | 11:10:41 PM
re: Time Warner Delivers Phone Service
Prices will force technological change, not the reverse


Technological change can force prices downwards.

They can also crate new items of expenditure for consumners. Some people are willing to pay more for higher bandwidth connections. We will see if there are people who are willing to pay more for higher connectivity.
materialgirl 12/4/2012 | 11:10:41 PM
re: Time Warner Delivers Phone Service What this really does is set a price limit on voice. No matter how you do it, customers will only be willing to pay $39.95 or $49.95 for telephone service. If a phone company charges more for that, they know they risk losing the customer. How users get it, they do not care as long as it works as well as their cell phone.

Prices will force technological change, not the reverse.
lastmile 12/4/2012 | 11:10:40 PM
re: Time Warner Delivers Phone Service "This is true, but what's also true is that the PSTN has set very high expectations for quality, uptime and ease of use".
technonerd: No one denies your view but even the very low expections of a cell call does not stop the consumer from dropping their fixed telephone service which works astoundingly well as compared to their cell service.
In terms of quality a VOIP call is far superior to a cell call. The controversy surrounding VOIP is what a consumer would do to POTS if he/she has a broadband connection for their Internet service.
Does it mean that they will subscribe for Internet broadband in addition to their cell fees and still continue to pay for POTS?
Ask anyone and they will tell you that they would never like to pay for redundant services.
Even without the cell socket, people are ditching their land line phones in large numbers. VOIP will fill the gap of a traditional phone. Now Moms and Dads do not need a computer to use a VOIP phone.
In a few years from now, VOIP (like E mail) will be free and only broadband charges will apply. POTS will continue to cost big bucks and a few foolish customers will still use it 'cause PSTN has set very high expectations for quality, uptime and ease of use.
JMHO.

technonerd 12/4/2012 | 11:10:40 PM
re: Time Warner Delivers Phone Service No matter how you do it, customers will only be willing to pay $39.95 or $49.95 for telephone service. If a phone company charges more for that, they know they risk losing the customer.

This is true, but what's also true is that the PSTN has set very high expectations for quality, uptime and ease of use. This is where VoIP doesn't cut it. Voice quality is less than that of the PSTN; it's not easily compatible with inside wiring, if at all; it's complicated; and it's not anywhere close to as reliable as the PSTN.

The only time VoIP works as a commercial product is when there's a huge price gap, as with what we seen in a fair amount of international traffic, or when a large enterprise has a rock-solid data network and a staff full of geeks who can set it up and maintain it.

In the mass market, VoIP will go nowhere. The next big landslide is going to be the wireless NID, a la CellSocket, which allows the cellular network to cannibalize local and LD landline while preserving enough of the features of landline telephony to satisfy mom and dad who don't really thrill to the idea of programming a computer device.
aswath 12/4/2012 | 11:10:40 PM
re: Time Warner Delivers Phone Service ...(VoIP) is not easily compatible with inside wiring;... wireless NID, ... preserving enough of the features of landline telephony

If VoIP is not compatible with inside wiring, then tell me how wireless NID is. Conversely, if you can easily install wireless NID to handle all the phones in the home, then I will imitate the same steps to install VoIP "NID".
sanjose 12/4/2012 | 11:10:37 PM
re: Time Warner Delivers Phone Service Your dollar figure is too high. I have service from Packet8. $20 per month / unlimited local and long distance calling - all 50 states and canada.

No contracts / plug and play / portable - I can take it with me when I travel. You can order and install Packet8 - before an RBOC can even take an order.
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