When I started out as a telecom reporter about 20 years ago the most interesting thing going on in the industry was signaling system 7 and Bellcore’s Advanced Intelligent Network architecture. The muted excitement was fueled by the idea that, rather than piling all calling features onto the Class 5 switch, telco switches could now tap into enhanced services residing on platforms elsewhere in the network.
Of course, SS7 and AIN didn’t hold the spotlight for long.
Things got real interesting real fast with the rise (and fall) of interactive TV, the rollout of DSL- and HFC-based networks, and the commercialization of this thing called the Internet. At the same time we witnessed the opening match of the telco-cableco bout that goes on to this day.
As you may recall, the cablecos got the upper hand early on with the rollout of broadband networks and then voice services. That meant they had all the pieces of the triple play in place earlier than their telco competitors. But then they were considered the cowboys of networking, and cowboys are more big picture folk than the slow-moving Bell heads, as some referred to the big incumbent telcos.
Several years and gray hairs later, the balance seems to be shifting again. Analysts tells us that the cablecos are seeing their customers churn as a result of the economy, over-the-top video and more attractive video services being offered by their rivals in the satellite and telco IPTV (News - Alert) arenas.
"Considering that revenue from video services will rival that of voice services by 2014, one of the more interesting trends going on in the residential services market is the number of video subscribers that are jumping from cable to satellite and telco IPTV,” says Diane Myers, Infonetics Research's directing analyst for VoIP and IMS.
In 2010, residential cable video subscriber numbers were flat while satellite video subscribers saw a slow increase over the past few years, according to Myers. Meanwhile, she says, telco IPTV subscribers were up 40 percent in 2010 from 2009.
“While cable operators have a legacy in North America, they have been unbending in their pricing policies, and as a result are losing a record number of subscribers to less expensive alternatives," she adds.
Of course, what happens with over-the-top video entrants – and how telcos and cablecos market, package and price their video and other services going forward – will have a big impact on which service providers are able to capture and keep customers in the months and years ahead. But one thing that could help decide which service providers are most successful on the triple and quad play stage is who gets to higher access speeds faster.
Given the cableco rollout of DOCSIS 3.0-based broadband services already has begun, enabling MSOs companies to deliver Internet access at rates above 100mbps (although companies like Comcast (News - Alert) and Cox are starting out by delivering premium broadband more in the 50mbps downstream range), the MSOs seem pretty well positioned for the next round of the telco-cableco throw down.
John Gleiter, senior director of marketing for set-top box system on a chip outfit Broadcom, says DOCSIS 3.0 will serve the cablecos well as they move from broadcast to IPTV technology, which will enable them to make more efficient use of their network capacity so they can deliver even more services (and more affordably).
DOCSIS, of course, is the CableLabs’ standard upon which big U.S. cableco broadband networks are based.
John Chapman, CTO of access and transport at Cisco (News - Alert), explains that DOCSIS 1.0 delivered best effort services over a single channel; DOCSIS 1.1 added quality of service to allow cablecos to offer voice services; DOCSIS 2.0 enhanced upstream bandwidth from 10mbps to 30mbps; and now DOCSIS 3.0 allows for channel bonding to deliver even higher rate access.
According to Chapman, cablecos both in the U.S. and abroad are aggressively deploying DOCSIS 3.0. He adds that while DOCSIS 3.0 will enable cablecos to deliver very high bandwidth for top-tier services, these service providers will still retain DOCSIS 2.0 to support other service tiers.
The telcos, meanwhile, are gaining on the video services front and have fiber deployed to homes in select areas, but are still using copper elsewhere. The preference, at least according to my sources, is always to go with fiber, but sometimes fiber to the home is tough to justify. But copper still has plenty of gas left.
To get big bandwidth to areas that are difficult to justify FTTH builds for, ADTRAN (News - Alert) recently unveiled Ultra Broadband Ethernet technology to outfit service providers with a relatively low-power, pure Ethernet solution that delivers 100mbps of symmetrical bandwidth per home. ADTRAN says this solution is more affordable, particularly in existing neighborhoods, than GPON-based FTTH solutions, which today deliver about 78mbps per subscriber.
“Telcos and cablecos are in the equivalent of a mixed martial arts fight,” says Cisco’s Chapman.
While cablecos’ media in the downstream still has a lot of growth potential, telco technology like VDSL can theoretically deliver 100mbps on a twisted pair. Of course, Verizon also is doing fiber-to-the-home as part of its FiOS (News - Alert) effort, which today delivers up to 10-15mbps downstream, although FTTH has the potential to go much higher, Chapman notes.
He says that indicates that this race in which telcos and cablecos are leapfrogging each other is likely to continue. But Chapman adds that’s a great thing for consumers, who will eventually see gigabit-rate services from the cablecos and the telcos, even in some cases over DSL connections.
And although everybody talks about the need for more bandwidth, Chapman says that these kinds of advancements in broadband access actually will require tech companies to backfill consumer need for that kind of capacity. What kind of applications fill the void remain to be seen, he says, but he talked about wanting to be able to access TV content from all 20 screens (including iPads and computers as well as his two TVs) in his house. Chapman says his home telepresence system is also pretty good at banging out the bits.
Edited by Stefania Viscusi