Google, Skype Put Cable Biz Phone Service at Risk
“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