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Getting More Out of Coax

Alan Breznick
12/24/2008

While being courted by cable operators, businesses often demand fiber links for telecom services. And who could blame them? Fiber offers greater bandwidth, broadband speeds, and service reliability than either coaxial cable or copper phone lines.

But fresh fiber lines are still expensive to install. In the Northeast U.S., for instance, the average short fiber drop to an office costs an estimated $1,200 to $1,600. Aerial fiber extensions cost about $5,000 per mile, while underground fiber lines can run $8,000 to $9,000 per mile.

Plus, fiber is simply not necessary to deliver many basic commercial telecom services, such as higher data speeds and multi-line voice-over-IP (VoIP). Fiber especially doesn't make much sense for smaller companies with limited budgets, few locations, and moderate bandwidth needs. Indeed, experts figure that most SMB needs can be met by platforms delivering symmetrical data speeds of up to 10 Mbit/s – well within the reach of cable's HFC plant.

Plus, despite all the hype around fiber, most commercial buildings still don't have direct fiber connections. In fact, Kristine Faulkner, VP of product development and management for Cox Communications Inc. 's Business Services division, estimates that just 14 percent of commercial buildings have fiber links today. The rest are passed by coax, copper, or both.

So, with cable already passing up to three quarters of the nation's SMBs with coax, MSOs are increasingly pushing coax's technological prowess. They're stressing that they can offer symmetrical Ethernet services at speeds as high as 5 Mbit/s, as well as much faster downstream speeds, with their existing HFC architecture and Docsis 2.0 technology. That 5 Mbit/s max equals the capacity of more than three telco T1 circuits.

As noted at our recent Future of Cable Business Services event in New York, cable operators are already introducing this "Ethernet over Docsis" service. In one prominent case, Time Warner Cable Inc. (NYSE: TWC) has begun offering three levels of metro-Ethernet service in a dozen markets – including New York City, upstate New York, Ohio, Wisconsin, and Southern California. With symmetrical data speeds as high as 2 Mbit/s, this "Business-Class Ethernet" service is aimed at midsized companies with 25 to 100 employees. Pleased with the reception so far, Time Warner plans to expand its rollout to all divisions by the spring.

Similarly, Cox now offers metro Ethernet service in at least 10 markets throughout the country, with symmetrical data speeds as high as 3 Mbit/s. Plans call for Cox to boost its symmetrical speeds to 10 Mbit/s over the next three years.

With the expected widespread introduction of Docsis 3.0 over the next year or two, cable operators should be able to deliver much greater speeds and bandwidth to commercial subscribers, as well as new Ethernet services. Most notably, MSOs will be able to offer symmetrical speeds of 100 Mbit/s or more over the same infrastructure, thanks to virtual channel-bonding technology.

In fact, Comcast Corp. (Nasdaq: CMCSA, CMCSK) is already using Docsis 3.0 to offer such maximum data speeds as 50 Mbit/s downstream and 10 Mbit/s upstream to business customers in its early markets. Other top MSOs will likely follow Comcast's lead over the next year.

If these endeavors bear fruit, coax may turn out to be more useful for commercial services than once thought.

— Alan Breznick, Senior Analyst, Heavy Reading

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