Three More MSOs Tap Sprint For Quick VoIP Rollouts
Charter, Mediacom & USA Companies Join Time Warner in Securing Deals
OCTOBER 01, 2004
By Alan Breznick, Editor, Cable Datacom News
Cable Datacom News
[Charter: Evidently, it's still the case Charter may tap other vendors as they move along --
"We chose to align with more than one carrier to maximize the benefits of each agreement on a market-by-market basis and achieve the maximum cost savings and flexibility," said Tom Cullen, executive vice president of advanced services and business development for Charter. "We'll continue to look at other potential partners in order to further gain critical competitive advantage."
--- (Ntop responded to Charter’s cable telephony RFP)]
Several more cable operators, including two major MSOs, have struck deals with Sprint Corp. to jumpstart their planned system-wide rollouts of voice-over-Internet-protocol (VoIP) service.
In the past two months, Charter Communications, Mediacom Communications and USA Companies have all signed agreements with Sprint to support their PacketCable VoIP deployments across the U.S. The three deals follow the twin landmark pacts that Time Warner Cable inked with Sprint and MCI last December to back its nationwide rollout of IP telephony this year, as well as a much smaller, less noticed deal between Sprint and Sunflower Broadband (formerly known as Sunflower Cablevision) in March.
Under the deals with Charter, Mediacom and USA, Sprint will help the three cable operators with local and long-distance telephone provisioning, connectivity, switching and routing services. Instead of building their own costly, time-consuming public switched telephone network (PSTN) infrastructure, the MSOs will rely on Sprint's nationwide lines and switches to route calls across the block and across the country.
"Basically, Sprint is enabling cable companies so they can provide ILEC (incumbent local exchange carrier) quality service," said Mike Smith, director of business development for Sprint. "We will give them a speed-to-market advantage."
Indeed, thanks at least in part to the deals with Sprint, Charter will accelerate its ongoing deployment of VoIP service. The MSO, which has rolled out IP telephony to about 500,000 homes passed on its own so far, aims to boost that total to 1 million homes passed by the end of the year and more than 4 million homes passed in its top eight markets over the next couple of years.
Likewise, Mediacom will now roll out VoIP to virtually all of its 2.3 million homes passed in 23 states, starting with several markets in the first half of next year. The MSO previously planned to start introducing IP telephony this past summer but then delayed the move until it picked a national telephony partner.
"Their experience in the telephone industry will help us because we don't have any," said Calvin Craib, senior vice president of business development for Mediacom, which tested VoIP in a technical trial in Des Moines, Iowa nearly a year ago but hasn't staged a market trial yet. "We considered doing it ourselves early on. But we concluded early on that we needed help."
Similarly, Sprint's involvement will enable USA Companies to proceed with its IP telephony plans. The small MSO, which passes about 62,000 homes in California, Montana and Nevada, has signed an exclusive five-year deal with Sprint for voice services.
"This enables us to launch voice services at the same pace as major cable players and better position USA Companies to retain customers and attract new subscribers with the complete bundle of products that today's consumers desire," said Chris Hillard, president of USA.
Sprint will also help at least Mediacom and USA with such advanced functions as enhanced 911 emergency services, federal law enforcement wiretapping capability, number portability, and operator and directory assistance services. In addition, Sprint will assist the two cable operators in offering such desirable features as caller ID, call waiting, call forwarding and voice mail to prospective VoIP customers.
"We will do all the customer-facing relationships," said Craib, who expects many smaller MSOs to follow the lead of Mediacom, Charter and USA. "The [telephone] switch is their responsibility."
Sprint executives said Charter's case is somewhat different from the other two MSOs' situations because Charter's relationship with Sprint is a more limited, traditional wholesale arrangement. While Sprint will give Charter long distance and local connectivity and support in some markets, Level 3 Communications will supply these services in other markets and consulting giant Accenture will provide the automated phone provisioning processes in all markets.
"We chose to align with more than one carrier to maximize the benefits of each agreement on a market-by-market basis and achieve the maximum cost savings and flexibility," said Tom Cullen, executive vice president of advanced services and business development for Charter. "We'll continue to look at other potential partners in order to further gain critical competitive advantage."
Sprint's three latest cable deals also differ a bit from the trail-blazing agreement that it struck with Time Warner late last year to provide telephony support in 17 of the MSO's 31 divisions. Unlike Charter, Mediacom and USA, Time Warner owns and manages phone switches to link VoIP customers in the same market.
"By and large, the other companies don't have their own switches," Smith said. "So we'll connect directly to their headends."
Like Time Warner, though, Charter, Mediacom and USA will all pay Sprint a flat, monthly fee for each VoIP subscriber they sign up. Although none of the companies would disclose the fee, it's generally thought to be in the monthly $10 to $15 per-subscriber range.
Besides getting the monthly payments, Sprint executives said their company will gain access to loads of cable subscribers. Although Sprint won't be selling the VoIP services to cable customers, company officials see other, even more promising sales opportunities not far down the line.
"We're getting access to the 95% of homes passed we don't serve as an ILEC today," said Mark Chall, director of service deployment for Sprint. "It's a very nice business arrangement."
Specifically, Sprint has high hopes of leveraging its new VoIP alliances to sell wireless phone services to cable subscribers. Sprint, a leader in the wireless market with 5 million subscribers to its advanced Sprint PCS Vision service and a total of 17 million cell phone customers, would love the chance to integrate wireless and VoIP service and co-market the combination to the nation's estimated 73 million or so cable homes.
"That's where we want to take these relationships in the long term," Smith said. "That's the silver bullet for meaningful differentiation at the product level."
In a sign of where it hopes to go, Sprint has already started meshing its wireless service with Sunflower Broadband's circuit-switched cable telephony service in Kansas. Under the agreement signed in March, Sunflower, which passes about 50,000 homes not too far from Sprint's headquarters outside Kansas City, will offer wireless voice and Sprint PCS Vision services as part of its growing product portfolio.
"They understand the importance of mobility services in communications," Smith said, noting that Sunflower competes against regional Bell giant SBC Communications. "They recognize that they need to offer mobility services."
Sprint officials are now pressing their case for wireless services with other MSO executives. Industry sources indicate that both Time Warner and Mediacom have expressed interest in the wireless offering so far. |
