Tim Hermes, BGR CEO

A press release hit my in-box March 1 where UK-based STB provider PACE announced it was now the second largest set-top provider in the world. Wow. I woulda never guessed it because in my usual way of thinking, if its not used primarily in a US system it must be, well, riding the bench for a reason. Oh, how wrong I can be. It’s interesting to see PACE do so well and I am happy for them. Knowing many of the PACE US guys I can tell you no group of employees works harder, so I am sure that is reflected across the pond.

Which leads me to the bigger point. When it comes to US cable TV, what I see in systems is pretty much red-white-and-blue. I think its cool that our industry seems to conscientiously go “America First” when it comes to buying gear for their systems. Certainly, if you look at BGR’s ad roster, nearly all of our sponsors are American companies.

But it also tells me how myopic we can be. The world doesn’t end at the US borders. In fact I was pleasantly reminded of that this week at the SCTE’s Canadian Summit when I saw some great technology from up North and met the technologists and engineers that created it. (Side note: The Canadians are THE nicest people on earth.)

The bottom line? Its a big world, Sparky. PACE has looked beyond our borders for their growth. They’ve done some nifty maneuvering and partnering here in the states to develop a solid revenue stream, and developed technology operators abroad want. My take-away from this little lesson? There’s still a big piece of the pie out there for US vendors. There’s only 300 million or so Americans. But there are BILLIONS of people on this rock we share.

And many of them have cable.

Laura Hamilton

After all, many of these SMBs depend completely on their voice and data services to ensure they really get their business done every day. So, while there’s not denying that cable ops are expanding into this market from their residential base, this is not residential service. If you think your residential customers are unforgiving, then imagine what a small business sub would be like if his voice or data went down for several hours.

Reaching Out to Businesses

But the bottom line is that MSOs currently have solid networks in place to supply a huge variety of business customers with a wide range of quality voice and data services. They’re sitting right along cable’s networks, and perhaps the best proof that cable understands the vast potentials of its networking prowess to serve SMBs comes from recent reports that it plans to beef up its workforce to reach out particularly to those customers.

Take some of the latest word from Comcast CFO Michael J. Angelakis at a Morgan Stanley Technology, Media & Telecom conference earlier this month wherein he said the op could hire 500 people this year in business services (according to an article in the Philadelphia Inquirer). Angelakis said the new hires would mostly take aim at companies that have about 20 employees. “There’s [also] a very large market with some real pent-up demand, with real need for high-bandwidth, really good services, and that’s in the zero-to-a-couple-hundred employee companies,” he said at the confab.

Of course, making those kinds of proclamations to the financial community generally means you had better have the engineering muscle to back it up. The good news for Comcast, and really, cable operators in general, is that doesn’t look like a problem.

Robust Systems

John Dahlquist, vice president of marketing at Aurora Networks (www.aurora.com) is quick to point out to BGR that cable operators already have robust networks in place to support a vast array of commercial services to companies of many sizes. “With the right solutions in place, such as GEPON and RFoG for fiber infrastructure or fiber deep and digital return for increasing bandwidth, cable operators can offer affordable yet very high speeds to businesses through networks that provide reliable and scalable services,” he says.

“Cable operators don’t need to build, maintain and manage separate networks or multiple platforms and backoffice software to deliver commercial services. Cable operators can have the greatest impact by providing reliable, advanced commercial services at competitive prices. They can do that best by utilizing the network resources they already have in place.”

Dahlquist explains that this not only minimizes the cost to deploy, but also reduces the time to deploy given that so much of the needed solution is already in place today.

Also calling out cable’s unique current positioning in the business services arena is Rafael Fonseca, VP of systems engineering and technical marketing, at Cedar Point Communications (www.cedarpointcom.com) in a recent conversation with BGR. As cable converges its networking capabilities with IP technology and builds further on its capabilities of a single network for all services, it leverages its technical advantages against competitors from both an OPEX and CAPEX standpoint, he says. Add in the converging nature of backoffice technologies, and cable gains even more distinctive advantages, he believes.

Keeping Costs Down

In the end, SMBs – and companies of any size for that matter – progressively want more bandwidth, but they increasingly demand it at a lower cost. So a key factor in all this for any cable operator is going to be providing that while keeping its own operating expenses down as well.

“If cable operators can keep their operating costs low, they can pass any savings on to the customer,” Aurora’s Dahlquist points out. “Reducing OPEX and gaining greater efficiencies within the network also frees up cable operator resources for other services or areas of operations that can benefit customers.”

Dahlquist puts it simply when he says that cable operators can win commercial customers with services that are robust, reliable and competitive with similar services offered by competitors. He believes that inherently, by eliminating amplifiers from the network, cable operators are driving fiber deeper, ultimately passing more potential commercial customers. This increases the commercial footprint that can be served from their residential network, providing a lower capital cost for signing up a new commercial customer, he concludes.

“As cable operators study how they can evolve their networks for the delivery of commercial services, they can look to cut costs and improve efficiency, such as eliminating amplifiers in the network,” Dahlquist adds. “And by reducing active network elements, cable operators minimize plant maintenance and gain significant savings with a reduction in network power costs.”

And of course, those savings can be passed on to the business customer, who’ll be very happy to take those dollars, thank you very much.

Stress Tests

An obvious gorilla in the room you need to immediately address when talking about business services involves resiliency and redundancy in the cable network. “Businesses generate revenue by having services up all the time,” Cedar Point’s Fonseca stresses. “Outages translate directly to their bottom line.”

To that end, Fonseca describes an interesting point that some operators may not think of when first addressing any one particular SMB, and the unforeseen stresses that customer could ultimately place on the cable system. That is, at certain times, there could be a significant increase in network traffic based on the type of business being served. The operator must engineer its business services with the reality in mind that it could be serving a subscriber that has exploding voice and data needs around a particular time of year or a particular event – say Mother’s Day or the holiday season, for example.

Those kinds of issues are the reason that all the different entities within a cable op must be in alignment before it gets its feet wet in business services, points out Cedar Point Director of Marketing Jim Gayton. So, sales, marketing and training all need to work together closely from Day 1 to anticipate these potential problems and prepare for them before they’re experienced by the customer.

By many accounts, U.S. MSOs are making all the right moves to attract more and more small- and medium-sized business customers, and that could ultimately lead to even bigger commercial customers. In fact, a good indicator of all these kind of potentials is perhaps just over the Atlantic. Cedar Point’s Fonseca recently sat on a panel at the Cable Congress in Brussels, and reports that during that session, Virgin Media said it was getting around 10% of its total business from commercial customers. The opportunities behind those kind of numbers certainly has to appeal to U.S. operators, which already have powerful networks in place to reach a large mass of currently underserved business customers.

Laura Hamilton is editor-in-chief at BGR. Email her at laura.hamilton@comcast.net.

Pirjo Tuomi

Pirjo Tuomi joined Aurora Networks (www.aurora.com) as vice president of worldwide sales. Tuomi, who has 20 years experience working with telecom and cable equipment companies around the world including Vello Systems, BigBand Networks and Nortel, will lead Aurora Networks’ global sales efforts.