You Say, “Digital Voice”, I Say, “Cable Telephony”

By: Richard “Zippy” Grigonis

Early on, the marketing guys in the cable business came up with the neat, sexy term, “digital voice” to replace the definitely clunkier term, “cable telephony”, that brings to mind a vision of two cans with a vibrating cable between them. (Ironically, a few so-called mechanical phone systems — complete exchanges with operator switchboards — were in fact deployed in the 19th century, such as Lemuel Mellett’s “Pulsion Telephone”.) But whatever you call it, cablecos have taken the lead in telecom innovation.

Cable is always seen as a residential phenomenon, but more and more businesses are availing themselves of cable’s increasingly exciting bundled services. And don’t forget that, with rising gas prices and commuting costs, home offices and teleworking are becoming commonplace. Cable currently “owns” over 70 percent of the VoIP market, or just over 13 million customers. AT&T, Verizon (News - Alert), Qwest and Embarq lose about 2.6 million landline customers per quarter, with about half of those users switching over to cable VoIP, despite the fact that cable tends to charge more for their services than telcos.

SinglePipe Communications (News - Alert) is a CLEC (having its own carrier-grade network and facilities) that works with various cable operators. It provides residential and turnkey business class VoIP phone services for wholesale, channel resale and private label.

Matt Phillips, CEO of SinglePipe, says, “We started SinglePipe in October 2006. There was an existing CLEC that had interconnections with the PSTN and had the ability to provide local service. Doing that via UNI-P or any of the other CLEC platforms obviously wasn’t the direction to go. Still, we acquired that CLEC with the intent of overlaying a very high quality feature switched platform on top of it and thus be able to provide a complete, managed service to cable operators from a wholesale perspective. We’re able to come in and not only provide the feature platform but can set up our own network local connectivity into the PSTN and do all the things on the back-end, from a regulatory perspective, to be a full-blown telecom provider. We do 911, support law enforcement requirements, number porting, and so forth, and we can package everything together on our network and deliver it cost-effectively and seamlessly to the cable operators.”

“The space on which we decided to focus was really the Tier-2 and smaller markets,” says Phillips. “Every cable operator — outside of the top five of six — may have multiple systems but they’re all really in Tier 2 and smaller markets, where they compete against the Verizons, BellSouths and large RBOCs who’ve had triple-play product offerings or bundles for a while now. The cable operators experienced very intense competition. Despite rolling out high-speed data services, they were still losing basic subscriptions, mostly to the triple-plays. So there was a great need at the Tier 2 and smaller level for somebody who had telecom expertise and could deliver a complete, managed product. So, that’s what we focused on.”

“We also realized other players were starting to do what we were doing,” says Phillips. “And some of the troubles these providers encountered involved being able to bridge the gap between IP and the public switched network. They would install a feature server platform, but then they ended up having to go buy all of their connectivity to the PSTN from some other provider, such as SinglePipe, Level 3, Global Crossing (News - Alert), or Verizon, then package it with their product and try to deliver it to the cable operators. Doing that just puts another level of cost and complexity into the solution. That’s why we at SinglePipe bring everything together ourselves. The challenge with the Tier 2 cable space for providers is that it’s still more costly to be able to interconnect as well as provide local origination and termination. That’s why that market was not only underserved but had a higher cost model than the Tier 1 markets where you find players such as Comcast (News - Alert), TimeWarner and Cablevision.”

“So cable operators found it difficult to put together a cohesive strategy to delivery voice because they were in a bunch of small markets and they had to interconnect with different operators,” says Phillips. “They were desperate for a comprehensive, managed product, and we came along and provided it. Even the smallest operators really understand the value they get in bundling products and being able to deliver a quality voice product. Many of these cable operators were just beginning to deliver high-speed data and were learning how to do it well, and they also wanted to roll voice over the top of their network too. This led to challenges such as Quality of Service [QoS], but we help our operators with managing that. We help cable operators test their network and connect to them via the public Internet or private MPLS or VPN connections, or even direct connections.”

“What we provide is based on the BroadSoft (News - Alert) platform,” says Phillips. “We chose BroadSoft early on because we knew it was a carrier-grade, scalable platform that allows other, different products, services delivery companies and software to interconnect and tie-in, so that as the cable companies acquire voice and their customers get used to having a VoIP product in their home for their landline, even if it comes from Verizon or AT&T, these customers are going to demand more and more features. Operators in a few years will be forced to provide a new, higher level of service, just to keep their existing customers. For us, the BroadSoft platform allows us to have a carrier-grade platform that’s been chosen by 13 or the top 25 carriers in the world, and all of the outside groups can continue to deliver products to use through the BroadSoft platform without major problems.”

“We want to continue with voice as our first and premier product out there,” says Phillips, “but also to be able to take all of those smaller cable operators and their aggregate ‘power’ underneath us and be able to deliver products that they otherwise couldn’t deliver themselves across an IP network. That’s where SinglePipe fits in, and that’s our vision — to provide a complete, managed voice product and then being able to add other products and services to that. For example, perhaps we could aggregate and add a wireless integration product. And we’ve been doing a lot more portal integration for our cable operators that can’t afford or don’t have the scale to do it on their own. We continue to move up the value chain for our cable operators.”

“With SinglePipe, cable operators from Cadiz, Kentucky to Atlanta, Georgia can now have access to similar types of products and services,” beams Phillips.

A Whale of a System

Whaleback Systems (News - Alert) is a managed broadband IP telephony service provider for Small and Medium Businesses (SMBs). Their CrystalBlue Voice Service includes a separate “voice only” broadband connection inclusive in the monthly price, and the entire service is monitored and maintained 24x7.

Mark Galvin (News - Alert), Founder, President and CEO of Whaleback, says, “You’ve probably seen that residential services offered by cable across the board have been fairly successful. Early entrants included Time Warner (News - Alert) and Cablevision. Later players in terms of the IP-based services were Comcast and Charter. But once the big guys like Comcast got going, they began to run rings around everybody, if only because of the size of their ‘footprint’ — the number of homes passed by their infrastructure and existing customers to whom they could market their residential voice offerings. Cable services work very well and cablecos have advantages over providers such as Vonage (News - Alert) and others that try to run over the top of their networks, since they can invoke CableLabs’ PacketCable technology to reserve and guarantee transmission of voice packets over the access network on a timely basis when a phone call is invoked by a cable voice subscriber.”

“Recently many of the early triple-play-for-$99-a-month offers for the first year have expired and there have been some activities to transition out some of the older TDM-over-cable residential product offerings,” says Galvin. “So, they’ve had a bit of challenge in terms of churn and maintaining growth, but they’ll get through it. Many guys have had a vibrant business for commercial voice. Cablevision had its Optimum (News - Alert) Lightpath division which was provisioning commercial voice services on TDM, and Cox had — and has — a pretty good business involving TDM-based T1s, PRIs and similar commercial voice services. Both those companies continue to work on introducing and transitioning to a pure IP-based solution where they can leverage their hybrid fiber coax in the cable network, rather than having separate fiber and TDM overlays. Both companies have been fairly successful with their voice products. I call the current Cablevision commercial IP-based offerings the ‘duct-taped EMTA [Embedded Media Terminal Adapter]’ — you get a device for your home with an RJ-11 jack for your phone. In 2007 Cablevision began offering residential Optimum Voice customers up to four phone lines on a single device, so now SOHOs can have some phone lines and they can be fed into a small key system or PBX (News - Alert) as analog trunks. [Cablevision’s Optimum Voice for Business is $34.95 per line per month for one to three lines and $29.95 per line per month for four to eight lines.]”

“As for net neutrality, I don’t think you’ll find that anybody in the U.S. is going to deliberately penalize the overlay vendors’ packets,” says Galvin. “The only question arises in high-density areas where many people take a voice offering from the cable operator during busy calling hours using DQoS [Dynamic Quality of Service] which allows in-band voice calls to actually reserve the bandwidth they need to guarantee the packets will transit the access network. If you get too many of those going in one neighborhood at one time, it will create a packet transfer latency issue for all of the users in homes attached to that fiber node. So if you’re using a service that doesn’t have DQoS and many others in your area are making calls with DQoS, then you could start to hear problems with speech quality on your call. But it’s not as if the network operator treats your packets any worse than they would treat your Internet browsing data packets. They just don’t give it the DQoS that the other voice packets receive. They obviously supply a higher quality of service to premium-paying customers.”

“Other cable voice products in the works are IP Centrex-like offerings, sometimes with fancy SIP phones as endpoints,” says Galvin. “I don’t think any of those have appeared yet. Also, as PBXs start to appear with RJ-45 Ethernet ports on them, these will allow direct IP connectivity into what we call ‘SIP Trunks’. Cable operators would like to provide the equivalent of a T1 or PRI to customers but now in the pure broadband sense.”

“At Whaleback Systems, we’ve successfully sold side-by-side in terms of lead sharing and in terms of helping customers with a number of cable operators,” says Galvin. “We have a fully-managed, pure broadband-based IP PBX and we basically have an end-to-end management system that monitors, manages alarms, and can route around failures. We’ve brought a lot of capabilities to customers, both riding over the top without operators necessarily knowing about it, as well as in cooperation with the local operator — a great broadband network working with a great commercial telephony-to-the-desktop provider.” IT

Broadsoft (www.broadsoft.com)

SinglePipe Communications (www.singlepipecom.com)

Whaleback Systems (www.whalebacksystems.com)

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