More Major MSOs Unveil VoIP Rollout Plans
Charter, Rogers, Mediacom & RCN All Target Major Service Launches
MARCH 01, 2004
By Alan Breznick, Editor, Cable Datacom News
Just two months into the new year, the cable IP telephony parade is turning into something of a stampede.
During the past month, five more major North American cable operators -- Charter Communications, Rogers Cable, Mediacom Communications, RCN Corp. and Shaw Communications -- unveiled plans to launch Voice-over-Internet-Protocol (VoIP) service in a big way over the next year and a half. They will join a growing list of large and small MSOs that already includes Time Warner Cable, Cablevision Systems, Cox Communications and Comcast Corp.
Of the five latest cable operators to outline their VoIP plans, Charter appears to be the most aggressive right now. Charter, which staged early VoIP trials in its hometown St. Louis market and Wausau, Wisc., quietly started offering a pilot product to 15,000 homes in Wausau in September 2002 and quickly signed up 1,500 customers. Now, 18 months later, the MSO is gearing up to offer IP telephony service to 500,000 to 600,000 households in Wisconsin, Missouri and New England by the end of this year using PacketCable technology.
"We'll have a 500% increase in homes passed (this year)," said Mark Barber, vice president of telephony for Charter. He noted that the MSO, using Nortel and Arris products, has already expanded its Wausau pilot to encompass 125,000 homes passed. So far, nearly 1,500 homes in the Wausau area have signed up for the service this year, giving Charter a total of nearly 3,000 subscribers.
Beyond this year, Charter intends to broaden its VoIP rollout to at least another 500,000 to 600,000 homes in 2005. Although the MSO has about 25,000 circuit-switched customers, mainly in the St. Louis area, it doesn't intend to pad that total.
"All future market development will be VoIP," Barber said. "It's more efficient and more cost-effective." In fact, he estimates that IP telephony generally is "about 30% cheaper than a constant bit-rate solution (circuit-switched service)."
Currently, Charter's IP telephony subscribers receive local phone service for less than $20 a month. For an extra fee, they can also opt for long-distance service. Following the lead of Time Warner, Cablevision, Cox and most other cable operators already in the IP telephony market, Charter aims to introduce packages of unlimited local and long-distance calls by early April.
Charter is positioning its VoIP product as a primary-line service, not a secondary household line for teens or others. The MSO is filing for regulatory approval as a telecom carrier in each state that it serves, providing emergency backup power to both its headends and phone customers, and meeting emergency 911, federal wiretapping and other regulatory standards.
"It's a PacketCable-based service," Barber said. "Most of the major MSOs are going that path." But Charter is also exploring a SIP-based service geared more for high-speed data users down the line.
Similar to officials at other MSOs, Charter executives see VoIP as a potentially mass market service that could prove to be even more popular than high-speed data. They're shooting for 10% penetration within 60 days of a market launch and then 30% penetration within five years.
"Slightly over 98% of the homes in our footprint have already made a buying decision on phone service," Barber said. "But only 30% of our base has committed to broadband. All we're trying to do is get them to switch service from their current provider."
Not too far behind Charter, RCN is getting ready to break into the IP telephony market. The alternative cable provider, which competes against incumbent cable operators on the East and West coasts and in Chicago, has been testing VoIP in the Philadelphia suburbs for more than two years. Now it plans to launch commercial service in one, undisclosed market this spring.
RCN, which already offers circuit-switched phone service as part of its bundled video, voice and data packages, figures that VoIP will cut its customer premise equipment costs by more than 50%, slashing the price from about $300 per home to no more than $100 to $150 per home. The company also expects to see a reduction in call termination costs for a variety of reasons.
At Mediacom, officials are looking at staging a marketing and technical trial in a yet-to-be-determined area this spring or summer, after just completing a lengthy technical trial in Des Moines, Iowa. They're now evaluating vendor proposals to supply the equipment, software and public switched telephone network (PSTN) connections. Plans then call for launching commercial service in that market and possibly others sometime in the second half of the year.
"We're very excited with what we're seeing in the whole VoIP space," said John Pascarelli, executive vice president of operations for Mediacom. "We'll be making our announcement in the next 30 days."
Like their MSO counterparts, Mediacom executives aim to deliver a primary-line service that meets PacketCable specifications. They also intend to file for telecom regulatory status in their six biggest states -- Iowa, Illinois, Missouri, Florida, Alabama and Georgia. Plus, they plan to provide emergency backup power batteries to customers as a premium option.
Mediacom officials are planning to charge about $40 a month for an "all-you-can-eat" package of local and long distance calls, if customers buy it along with other cable services. The VoIP package, which will also include such popular features as caller ID and voice mail, will cost more if bought separately.
At first, Mediacom will market the service to high-speed data subscribers, just as other MSOs are doing or plan to do. But, over time, company executives see no reason to limit the IP telephony offering to just the broadband market.
"We think we can go to our whole footprint," Pascarelli said. "It's a whole new reason to talk to non-subscribers or even satellite TV customers. We see the combined bundle as a real good reason to come back and consider cable as a competitor."
While they decline to make specific projections, Mediacom executives believe that VoIP can scale the current penetration rates for high-speed data. "We think it's a very competitive product in the marketplace," Pascarelli said. "We don't think 15% to 20% is farfetched in the early stages."
Turning to Canada, Rogers said it's targeting a VoIP launch to 1.8 million homes in the greater Toronto area in mid-2005. Rogers, which already has a wireless telephone business, envisions rolling out the new IP telephony product to most of the rest of its service area in the following year.
Known as Rogers Digital Phone, the primary-line offering will provide such standard features as directory assistance, enhanced 911 emergency service, call waiting, caller ID and voice mail, as well as new services. In a news release, the MSO said it will leverage its existing DOCSIS broadband cable network and adhere to PacketCable standards.
Rogers said its fixed capital costs to deploy IP telephony to its initial launch footprint should come to about US$150 million, including $105 million to $130 million in capital expenses this year. The company calculates that its variable capital costs to hook up phone subscribers should run from US$255 to $300 per customer. Of that total, Rogers expects to pay at least $110 for a PacketCable E-MTA and back-up battery, with the balance allocated for capitalized installation labor and material costs.
Similar to their cable colleagues in the U.S., Rogers officials view VoIP as a potential mass-market service. Although they'll start by offering it to high-speed data customers, they intend to expand beyond that pool.
"Everyone has a phone but not everyone has a computer," said Michael Lee, vice president of product management for Rogers. "VoIP has an opportunity to have even broader appeal than dataÉWe'll market it to everybody."
However, unlike U.S. MSOs, Rogers says it has no plans to use aggressive price cutting to promote its service offering.
"We have no intention of deeply discounting on price," said Rogers Communications Inc. CEO Ted Rogers. By maintaining premium pricing, he estimates the service "will be EBITDA positive in the third year of operations."
Also in Canada, Shaw Communications announced that it registered with the CRTC, the country's communications regulatory agency, to operate as a competitive local exchange carrier (CLEC). CLEC status will enable Shaw to interconnect with incumbent telephone companies and long distance providers on an equal basis, as well as provide E911 service and local number portability. Shaw is also reportedly conducting an initial IP telephony technology trial.
"We intend to be a provider of reliable, primary line telephony service using Voice-over-IP technologies," said Shaw Communications CEO Jim Shaw in a statement.
The moves by these five latest MSOs follow the initial wave of pilot and full-fledged VoIP launches by such PacketCable telephony pioneers as Time Warner, Cablevision, Cox and Comcast. Cablevision and Cox have both introduced commercial service in one major market. Comcast is now conducting a large field trial in one market and plans similar trials in three other markets. And Time Warner, the cable VoIP leader, is offering full service in one market and starting to roll it out in three others -- Kansas City and Raleigh and Charlotte, N.C.
...
cabledatacomnews.com |
