Cable Slowly Starts to Fill Voice Void

Operators reluctant due to high costs, waiting for IP.

As the pool of telecommunications service providers shrinks, equipment manufacturers are looking to cable operators to inject competition into the entrenched telephone market.

Analysts doubt, however, that cable companies will be ready to serve the business community on a wide scale before more extensive standards are developed for packet cable delivery, which are not slated for more than a year.

Despite a green light from regulators more than six years ago, cable operators have not rushed to compete against local exchange carriers, even in the lucrative business space, primarily because the cost of investing in carrier-grade voice switches is too high. However, as VOIP (voice-over-IP) standards evolve for the existing cable infrastructure, operators will find the economics favorable, experts say.

At the end of last month, IBM, of Armonk, N.Y., and Narad Networks Inc. partnered to deliver a standards-based architecture for cable operators to provide new services to businesses. Narad, of Westford, Mass., is developing a delivery platform that lets operators carry IT services with transmission rates of up to 100M bps over existing cable lines. Combined with IBM services, the package is slated to help cable companies target the small and midsize business market.

In the same way that cable companies were able to generate new revenues by offering segmented premium cable TV channels, they are expected to segment IT services from basic high-speed data, virtual private networks and leased lines to managed services— including storage, disaster recovery and application outsourcing—and high-quality, IP-based business video services.

But while vendors are eager to stimulate new demand in the cable sector, cable operators might not be ready to spend. "A lot of vendors had been targeting [Competitive Local Exchange Carriers], and theyre now really pushing at the cable market. But that doesnt mean cable operators are buying," said Lynda Starr, an analyst at Probe Research Inc., in Cedar Knolls, N.J. "Cable operators are waiting for IP. You dont want to spend your money on a big Class 5 switch when you know that in a couple years you can buy a softswitch."

Advent Networks Inc. and General Bandwidth Inc., both of Austin, Texas, recently partnered to ensure that their technologies work together to enable cable operators to offer trunk voice lines over existing cable. Advents Ultraband technology delivers dedicated 5M-bps to 40M-bps access over hybrid cable telephony networks.

The interoperability of the technologies will help cable services scale more efficiently because General Bandwidths platform lets operators deploy packet telephone services on a mass scale. Cable operators can offer dedicated switched IP connections over existing networks, allowing businesses to migrate to packet-based services such as IP telephony.

In addition to the technological hurdles facing cable companies, there are regulatory requirements. "Becoming a telephone operator requires a new set of qualifications and a new way of thinking for them," Starr said.