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Google, Skype Put Cable Biz Phone Service at Risk

NEW YORK -- The Future of Cable Business Services -- The ability to sell commercial phone services to small and medium-sized businesses (SMBs) represents a big growth engine for MSOs, but open-source and over-the-top products such as Google (Nasdaq: GOOG) Voice and Skype Ltd. pose a threat to cable operators, executives warned here today. (See FCC Seeks Google's Voice.)

“For Comcast Corp. (Nasdaq: CMCSA, CMCSK), their worst fear lurks just around the corner -- being reduced to a dumb pipe subject to commodity pricing, while someone else makes all of the money,” Chris Carabello, director of marketing at Metaswitch Networks , said here at a panel focused on cable's budding business phone service market opportunity.

“Google and Skype and Apple Inc. (Nasdaq: AAPL) and some of the open-source players pose a threat,” Carabello said later on the panel, which also featured executives from Cedar Point Communications Inc. , Cisco Systems Inc. (Nasdaq: CSCO), CableLabs , and Empirix Inc.

Despite those threats, panelists said commercial phone service remains poised to see rapid growth. Cisco director of sales business development Joe Fernandez pointed to an internal study finding that 50 percent of the market for commercial voice and data resides with customers that have fewer than 24 phone lines and a broadband Internet connection of 5 Mbit/s or less.

Fernandez said the average small business has 2.7 or 2.8 phone lines, and that cable operators are positioned to help owners expand to broader phone services for their employees as their businesses grow. “We believe MSOs could be that trusted provider,” he added.

But in order for cable operators to compete with incumbent telcos in the commercial phone market, they must ensure quality and reliability. “The other challenge that business brings is higher customer expectations,” said Empirix director of product management Patrick Quigley. Commercial phone customers "want to make sure they are not putting spam and marketing calls into the enterprise.”

Cedar Point vice president of systems engineering and technical marketing Rafael Fonseca said operators should focus on delivering converged telephone, high-speed Internet, and video services to commercial clients. An obvious target is the healthcare industry, he noted, echoing comments that Cox Business vice president Phil Meeks made during his morning keynote here. (See Cox Targets $2B in Biz Revenues.)

“We believe at Cedar Point that fused service is the way to go,” Fonseca said. “You can start combining Internet access and data services with content.”

A wideband game changer?
CableLabs director of business services strategic assessment Glenn Russell said the rollout of Docsis 3.0 will also drive growth in the commercial services sector. “That’s a game changer for the industry, wideband -- 160 megabits downstream, 120 megabits upstream."

He also said operators would rely in the future on cloud computing to deliver phone services. “What we’re trying to do here is develop this fast pipe and smart cloud combination."

Asked by moderator and Heavy Reading senior analyst Alan Breznick for an update on the rollout of PacketCable 2.0, Russell said CableLabs has been testing “end-point devices” that would run on the platform. In April, the first two such end-points -- called embedded digital voice adapters (E-DVAs) and made by Ubee Interactive and Thomson S.A. (NYSE: TMS; Euronext Paris: 18453) -- won CableLabs certification for PacketCable 2.0. An E-DVA client bakes in a Docsis cable modem and SIP client. (See Vendors Post PacketCable 2.0 Firsts and PacketCable 2.0: Back on the Front Burner.)

— Steve Donohue, Special to Cable Digital News

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paolo.franzoi 12/5/2012 | 3:51:46 PM
re: Google, Skype Put Cable Biz Phone Service at Risk

Phil,


Most of voice problems historically have been access related or provisioning related.  There are relatively few switching center fires like Hillsdale.  So, here is the thing:


Is Skype or Vonage or any other voice measurably less reliable than VoIP over cable?  So, I think an old fogey like you might be less willing to rely on Skype but a young buck might try it to save some dollars.  Now there are businesses of a scale that require features (like ACD) for which Skype is not going to cut it.


My question is a bit different.  Given all the unlimited cell phone plans out there why not just give everybody a cell phone and not a wireline desk phone at all.  There are the feature issues from above, but if that is a minority of users and many of the rest need cells, then why 2 phones at all?


seven


 

DCITDave 12/5/2012 | 3:51:46 PM
re: Google, Skype Put Cable Biz Phone Service at Risk If the provider isn't AT&T and the phone is not an iPhone, the cell only idea is a sound one for small businesses.
DCITDave 12/5/2012 | 3:51:46 PM
re: Google, Skype Put Cable Biz Phone Service at Risk If you're business wants to be taken seriously, are you actually going to depend on Skype or something that has no service assurance whatsoever?
Stevery 12/5/2012 | 3:51:45 PM
re: Google, Skype Put Cable Biz Phone Service at Risk

their worst fear lurks just around the corner -- being reduced to a dumb pipe subject to commodity pricing,


Bad news for you guys:  Cable is in fact just a dumb pipe subject to commodity pricing.



What seven said about cell-phone only:  Absolutely true.  And VOIP services?  I've already seen that they are equal to cable POTS.


For small/medium companies?  I've already seen VOIP via Asterisk displace several Avaya/Cisco purchases.


Anybody whose expecting phone revenue had better be planning on a legacy-type biz plan.

mgardner750 12/5/2012 | 3:51:44 PM
re: Google, Skype Put Cable Biz Phone Service at Risk

I work for a multibillion $ international compnay. Our PBX uses Skype as the first choice for any long distance call. A large company trusts its calls to Skype. I don't see why a small company couldn't.


Each of our locations has VoSKY server connected to the PBX and then to Skype. The user doesn't know if it is a Skype call over the internet or a call tranditional public telephone network.  With VoSky there ais a higher level of service compared to a free Skype call from your PC.

paolo.franzoi 12/5/2012 | 3:51:43 PM
re: Google, Skype Put Cable Biz Phone Service at Risk

Phil,


I get your point.  The only thing I am saying is - ignore the PDA bit for a second.  Why build out a wireline desktop infrastructure at all?  Give everyone a cell phone and use WiFi to connect the desktops.  Servers would have to be on fiber plant but I think that this would be the modern way of connecting up an office.


On to the iPhone comment.  At the moment, you are probably right - iPhone only.  In a year or two, Verizon/Google may get there.  Blackberries are just not good enough as phones in my experience.


seven


 

^Eagle^ 12/5/2012 | 3:51:43 PM
re: Google, Skype Put Cable Biz Phone Service at Risk

Phil, sounds like a sour grapes personal problem to me re your post: "If the provider isn't AT&T and the phone is not an iPhone, the cell only idea is a sound one for small businesses."


iPhones are working quite well for us, thank you very much.  


Also, re your comment on SKYPE / Google Voice and the "no service assurance and being taken seriously as a business": the company I work for utilizes SKYPE extensively.  We do have some number of phone lines provided by the "phone company" for calls into and out of the company for the 20-30% of the calls where that is important.  However, over 70% of calls are either internal or with close partners.  We save substantial money on not adding extra Direct Dial lines and extra trunks.  I would say, based on personal experience working for several start ups over the years, that our telephone calls costs are about 1/3 those of the industry norm.


In much the same way Light Reading's own business model was entirely enabled by HTML, XML and the cheap widely available broadband internet; many companies are now using the newer tools provided by SKYPE and Google to dramatically lower their costs and increase productivity.


yes, for certain calls, a "good old landline" with service assurance is best.  However, as Brookseven pointed out, the biggest issue with true service quality is often at the access layer.  I would say that "IF" your T1 or other connection to the outside world is up, you have good voice service... but if it goes down, no voice service.  However, since the SKYPE calls run over the same T1 or equivalent, as long as that T1 is up, SKYPE tends to have equivalent call quality.  Again, we do have regular phone lines.  But our growth in adding lines is much slower than the growth in our head count.  


sailboat

Stevery 12/5/2012 | 3:51:42 PM
re: Google, Skype Put Cable Biz Phone Service at Risk

One addition:  As more VOIP service companies enter, the larger the probability that an ATT (or equiv) fails to terminate to a VOIP phone.


ATT probably thinks that by failing to properly complete a call that they are convincing folks to get traditional phone service.  The funny thing:  I'm now seeing folks driven away from ATT because they fail to properly complete calls.

DCITDave 12/5/2012 | 3:51:37 PM
re: Google, Skype Put Cable Biz Phone Service at Risk re: "We do have some number of phone lines provided by the "phone company" for calls into and out of the company for the 20-30% of the calls where that is important."

That's a pretty interesting statistic. I guess it depends on your how often a business deals with the outside world as to whether it makes sense to choose best effort vs. a reliable (expensive) phone option -- or, as you note, a good mix of both to keep costs down without giving up quality.

still, phone companies reading that should be somewhat alarmed. they'll still make money on the T1 service, but not much else.
DCITDave 12/5/2012 | 3:51:37 PM
re: Google, Skype Put Cable Biz Phone Service at Risk that's a great point. if you design your phone network to work with skype, then that's a much better experience than telling employees with 5 year-old laptops to use Skype to conduct biz calls so they can save $$.

So I can temper my negativity toward Skype for business to say it really does depend on how you implement it and whether it is designed as an option or an ad hoc/consumer use.
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