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Networks & Infrastructure
Cable sets path for national Ethernet expansion
Network partnerships are key to breaking regional strongholds
by Sean Buckley
Cable’s main story is, and probably always will be, about residential video
services. That video story, however, continues to be threatened by both large
ILECs (AT&T and Verizon) with their respective video rollouts.
Yet the same savvy that drove cable operators to bring TV signals to a
broader audience is being applied to delivering business services, and
increasingly Ethernet services.
Cable MSOs continue gain ground in the Ethernet services domain.
According to Vertical Systems Group’s year-end 2007 market share
results, Cox Communications clocked at the fourth spot with a 10 percent port
share while Time Warner Cable came in at 7 overall with a 4 percent share.
(See Figure 1.) Still, they do face one major challenge with Ethernet: how can they scale beyond their regional footprints?
Similar to the traditional service providers that have developed
effectively pre-MEF (Metro Ethernet Forum) standard Ethernet NNI
(Network to Network Interconnection) agreements, cable will have to do
the same to expand their presence in larger accounts that have major
headquarters with various national satellite offices.
Erin Dunne, director of research at Vertical Systems Group, argues that
while cable operators have a long way to go with their partnership
strategy, developing common Ethernet Network to Network
Interconnection arrangement between the MSOs will be a key first step.
“I think the issue for these cable guys has always been is they need to
figure out a way to work together to develop some sort of backbone, and then you’re going to have this cable consortium of Ethernet everywhere,” she said. “Well, that’s easy to say, but it’s very difficult to do. Those kinds of things are on the horizon because there’s very limited overlap and are using each other’s network as a preferred provider out of region.”
Overcoming regional boundaries
When it comes to offering business and even Ethernet services, cable
has offered up business services and Ethernet in three main buckets:
• Very Small Business: This would be a Small Office Home
Office (SOHO) in where they can support offer up standard digital voice
and cable modem service over their regular DOCSIS and HFC-based
platforms for residential customers.
• Small business: Whether it’s the local jewelry store or maybe
the neighborhood small business opportunity located in the strip mall,
this segment probably would require similar traditional voice and data
services, a majority of which could potentially be delivered over the
existing cable plant.
• Medium-sized business: While cable operators have done well
delivering services in the first two domains, the next hurdle for them will
be in their ability to scale to serve medium customers whose footprints
likely go outside a cable operator’s traditional borders.
To meet the goal in expanding their presence in the medium-sized
business market, cable may have a savior in Level 3 Communications.
Leveraging its well entrenched play on the residential voice termination
market for cable MSOs, Level 3 Communications believes it can be a
neutral helping hand for the cable operator to expand their footprint to
fulfill the needs of the medium enterprise market.
“As cable operators move up market where Ethernet becomes the
universal jack for the enterprise’s local area network and to expand is
where we see a big opportunity for Level 3 in the cable Ethernet space
especially as those enterprises have multi location networking needs,”
says Rich DiGeronimo, vice president and general manager of cable
markets for Level 3. “If a cable company is targeting a bank with multiple
branches, the cable industry’s footprint does not cross state lines or
county lines, which means from a coordination perspective to solve multi-
location type opportunities all within the cable operator’s footprint.”
To help cable operators resolve their growth issues, Level 3 will help
cable operators in various regions make interconnections with its own
network and other cable operators possibly for multi-site deployments.
Initially, DiGeronimo believes the initial action for their service would be
with the larger cable operators.
Of course, every operator is at a different point. Leading the initial
charge for carrier Ethernet services in cable has been Cox followed
closely by Cablevision’s Optimum Lightpath subsidiary, while Comcast has
mainly focused on serving Small to Medium Businesses (SMBs).
Already, Level 3 works in a reciprocal relationship with Cox
Communications where each provider provides capacity to one another in
a wholesale basis.
Ultimately, Level 3 wants to establish a meshed nationwide solution with
all of the major and minor cable operators to exchange traffic.
Such a solution would have an interface with all of the aggregation
points within each MSOs network and set up NNIs to pass traffic
between Level 3 and each cable operator’s point of choosing.
“With Level 3 being the neutral player between all of the operators is to
put together a community of cable operators to support a meshed
nationwide cable operator commercial services Ethernet solution,” says
DiGeronimo. “Where Level 3 does not have build on net, we could
leverage another cable operator’s footprint and have all of the systems
and processes whereby we would be that wholesaler in the middle to
connect together the nationwide cable footprint to deliver that
ubiquitous Ethernet solution to medium and large enterprises.”
Cable takes action
Even though cable operators are limited by their geographic reach,
they’re not sitting pat either when it comes to expanding their Ethernet
footprint.
In addition to building out their own national footprints, cable MSOs are
starting to partner with one another to expand their respective Ethernet
footprints.
Case in point is Cox and Charter Communications. The two operators
recently set up an NNI-like agreement whereby each operator will
provide one another a direct optical link between metro areas outside of
their respective footprints.
In particular, the two MSOs will provide each other with a dedicated
SONET, Ethernet connection or IP transport service in their respective
Las Vegas and Reno, Nev., and Orange County, Calif. markets.
Similar to the larger ILECs and competitive carriers, Cox is finding that its customers want a common service interface. However, since Cox's network is not available everywhere, the only way to provide that common customer interface will be through partnerships with another MSOpartner.
“Now that state franchising is happening in a lot of states, there’s an opportunity to reach our network further than we have in the past,” says Steve Walsh, sales director for Cox Communications. “By partnering with other MSOs, we have the opportunity to go across state lines where we may not have network.”
And while the agreement between Charter and Cox are relegated to two
distinct markets, it is a crucial first step. In order to expand these
arrangements on a more national scale, MSOs would have to get all of
their different entities to work together.
The latest deal with Charter and Cox is “only within certain regions, but it’s a start,” said Dunne.
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