Re: Cable Telephony - Is it for real? Yes-Circuit Switched Today / Maybe-Packet Voice Tomorrow
Thread- Finally an article that IMVHO paints a fairly accurate picture of the current state of telephony over copper. It has a few minor errors and leaves out the rest of the world. Other than that, I would say it's an accurate story.
If you link back through the urls above, you'll clearly see who is the king of cable telephony today- Antec(Cornerstone). It's competitors for 'here and now,' circuit-switched cable telephony are Tellabs(Cablespan) and ADC Telecom(Homeworx).
From ANTC's last CC, the take rate on certain of Cox Communications markets was 20%. Well over anyone's forecast at this point in time. And ATT has well over 235,000 cable telephony subs today(from memory only). And not the 175,000 figure listed below. But the rest of the stats appear to be accurate to me. I would even guess there are a total of 400,000 cable telephone subs in the USA today. Maybe up to 500,000 if you count worldwide.
And the other point the article didn't mention, which it should have, is the local telephone revenues which were the exclusive domain of the twisted pair incumbents are in the neighborhood of $100 billion per year in the USA alone(again from memory). So IMVHO, this is a primary driver of the MSO's wanting to get into the game. And especially a strong driver for ATT since they are in the LD business and have to pay huge access fees to the telcos today.
Both ANTC and TLAB are incredibly volatile and ADCT is getting lofty. So DD is definitely needed before making any investments based on cable telephony rollouts of the circuit-switched variety. -MikeM(From Florida)
PS Ken- Thanks for the story.
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Cable Telephony Gains Momentum
Voice-over-HFC overcomes perception problems
By Dan Sweeney
Anything’s possible. At the turn of the century, people made telephone calls over the barbed wire fences surrounding the great cattle ranches. People made calls from offshore ships over natural circuits exploiting the conductivity of water. But phone calls over the cable television system? As recently as five years ago, many engineers believed that such a service was simply infeasible. But clearly it isn’t. Not with several hundred thousand subscribers already signed up by the estimates of most analyst groups that have tracked the phenomenon. And since that’s at least ten times the number of subscribers at the first of the year, again by the tabulations of most industry statisticians, the technology clearly bears watching. After all, what other communications service has ramped up this quickly? Possibly direct satellite broadcasting, but almost certainly nothing else, including the Internet itself.
Centers of Infection
The cable telephony phenomenon has been building for some years, with isolated trials abroad going back to mid decade, and Cox and MediaOne taking an early lead in establishing service here in the United States two years ago. Independent published market assessments and feasibility studies go back at least as far as 1994, and the larger cable operators are said to have begun eyeing the market almost from the moment of the Bell breakup in 1984. Notes Michael Schwartz, senior vice president of communications at Cable Labs, the CATV industry’s certification and standards body in Denver, "We made a major announcement in 1994 of our intention to develop a telephony function along with a range of other nontraditional services, so what you’re seeing today shouldn’t come as any surprise."
Concerted efforts to build a market have been very recent, however, and reasons for the cable industry’s tardiness in introducing telephone service are fairly apparent to the careful observer. Prior to 1998 the great majority of cable plants were still analog and were still entirely one-way. They simply wouldn’t support telephony except by telephone return, which would have defeated the whole purpose of offering phone service in the first place. The subsequent rapid conversion of the cable plants to two-way operation – both to support pay-per-view services and to provide high-speed Internet access over the cable plant – laid the groundwork for cable telephony in terms of the physical layer, if not in terms of the actual application, and it is no accident that pilots began to proliferate in the midst of the race to upgrade plants over the last two years.
Cable telephony remains a fairly isolated phenomenon, with availability of the service restricted to a small minority of local markets
Still, for all of the unprecedented subscriber growth, cable telephony remains a fairly isolated phenomenon, with availability of the service restricted to a small minority of local markets. While quite a number of cable MSOs (Multiple System Operators) and even a few single market independents have trialed cable telephony, actual commercial deployments are chiefly the province of just a handful of the largest multi-system operators. AT&T and MediaOne, recently merged, have clearly been the leaders, and now AT&T enjoys a position of unassailable leadership, at least for the time being.
"The last time we counted we had 175,000 subscribers," says Steve Lang, vice president of external communications for AT&T. "About 100,000 of those were ours originally, and the rest were MediaOne’s. We figure we have over half the total market in the United States."
Ben Sauter, an analyst with Parks & Associates in Dallas who recently completed a study of cable telephony, agrees with AT&T’s self-ranking. "They’re definitely the biggest, and they’re continuing to roll out services rapidly. From our conversations with individuals within the company, we believe that they’re on track with their own predictions and that they’ll have somewhere between four and five hundred thousand subscribers by year’s end. Cox would be next, and the rest are far behind."
Of the other major MSOs, Adelphia, Cabletron, Time Warner, Comcast and Charter have all announced multiple system deployments, but even in aggregate they can’t claim many customers yet by most accounts.
"We put the current overall subscriber base at a little over 400,000," says Michael Harris of Kinetic Strategies, a well-known source of cable industry statistics. "Cable telephony is currently in its infancy," agrees Bill Pikarsky, a spokesperson for Adelphia Cable, headquartered in Atlanta.
Agnes Imregh, vice president of marketing at TollBridge Technologies, a major supplier of voice gateways for broadband service providers, offers a caveat, however. "The numbers aren’t that great today, but every major MSO is looking to provide voice, let me assure you."
As a matter of interest, the online "Broadband Bob Report" (www.catv.org), which publishes regular updates on cable telephone penetration, lists dozens of deployments in local markets around the US but gives no figures for number of subscribers or take rates in most of them, or even whether they represent pilots or full commercial rollouts. But given the prominence of a relatively few MSOs in the business today, and the fact that even in aggregate they’re active in a relative handful of metropolitan markets, one is forced to conclude that take rates are relatively high where the services have been rolled out aggressively – and remarkably so given the novelty of the service.
"We don’t generally talk about take rates," says AT&T’s Lang, "but I will mention that we sold 18% of our customers in one market in just 170 days, and that the 75,000 customers we had prior to acquiring MediaOne were distributed over just ten markets." And notes Mark Komaneck, vice president of marketing and business development for Broadband Access, a manufacturer of cable telephony hardware, "We’ve seen take rates as high as 30% in some of Cox’s markets. Anyone who thinks cable can’t rob market share from the ILECs is fooling himself."
Keith Ingram, vice president of technical operations for Utilicom, an "overbuilder" providing converged services over a hybrid fiber plant that to some extent parallels that of the incumbent CATV operator, but which makes use of right-of-way obtained in partnerships with local utilities, adds another perspective on the penetration of the new service, one with fairly ominous implications for incumbent local exchange carriers (ILECs) facing the challenge of cable telephony. "We’re frankly aiming to 7% of the residences passed to sign up for our phone service. Since we’re not the incumbent for either telephone or cable television service, we’re not talking about a percentage of people who already have television, but 7% overall. We don’t have that now, but we’re still building out, and we’ve stopped promoting because we’re getting more subscribers than we can handle."
And lest incumbents assume that the 7% figure represent the limits of network capacity and suppose that scaling problems will constrain the ultimate growth of cable telephony, at least in the near term, Ingram has a forthright response. "There are no scaling problems in our network. We could accommodate the phone traffic of fully 100% of the houses and businesses we pass. Seven percent merely represents a business goal."
Michael Harris’s researches lend some credence to this statement. "We think the cable operators generally will be able to provide telephone service for as many as 30% of their television customers. We see this potentially as a very big business."
But is this in fact true in light of the fact that cable is a shared bandwidth system where the actual physical circuit is common to multitudes of customers in the much same manner as an office Ethernet? Especially in as much as the network is profoundly asymmetrical by design, and committed for the foreseeable future to dedicating practically all of its considerable bandwidth to television programming?
Trying to be something it’s not
Cable television networks in their traditional form, that of pure coaxial plants with strictly unidirectional traffic flow, could never have supported telephone services on any scale. And even the most advanced physical plants are challenged in this regard today, though whether they will remain so is a matter of debate.
The most obvious limitations have to do with their fundamental asymmetry and the problematic return path imposed by the basic design. Cable television networks have historically followed a basic tree and branches network architecture, where the equivalent of a central office – known as a "headend" – serves for signal origination, and the signal subsequently travels down coaxial trunks that tap into shorter lengths of coax known as distribution cables, which in turn tap into subscriber drops. Along both the trunks and the distribution runs, linear amplifiers are regularly spaced to regenerate the signal, and in a large network as many as forty such amplifiers may be cascaded between the headend and the least fortunate customer. However linear these amps may be, they all add noise and distortion to the signal and were the primary factor in the poor video quality for which older cable plants are notorious.
Up-to-date hybrid fiber coax systems eliminate the coaxial trunk cables and substitute a hub and spoke arrangement of optical fiber out to a series of optical termination nodes, where the optical signals are converted back to RF. The broadband amplifiers still infest the system, but only along the distribution runs, and in the better-engineered systems will not exceed seven or eight in number per run.
Anyone who thinks cable can’t rob market share from the ILECs is fooling himself
Such hybrid fiber coax systems are much quieter and lower in distortion than pure coax, but are still ill-suited to phone traffic because they’re still one-way, and, more significantly, are entirely unswitched. Content is distributed to individuals entirely through analog filtering and scrambling schemes, and there’s no practical way to direct a message to a single individual.
So how do you make this into a phone system? You start by replacing all of the older amplifiers with new two-way designs, which you’ll have to do anyway to support high-speed data traffic without a telephone return. Then you buy a Class 5 switch to put in your headend. Then you reserve at least one video channel for phone service. And finally, you install customer premises equipment from companies like Arris or Tellabs which converts the analog output of an ordinary deskset to a TDM digital transmission and simultaneously provides power and dial tone for the in-building line and generally emulates the characteristics of POTS over twisted pair.
Not that making a cable system telephone-ready is either simple or cheap. In every case the operator must contend with a very vexatious return path phenomenon known as "noise funneling," where electrical noise introduced at individual subscriber connections adds together, significantly degrading the signal-to-noise ratio. In order to minimize such noise funneling, an operator will frequently have to perform a massive overhaul of the entire plant in addition to swapping out amplifiers.
When all this is accomplished you can begin to offer phone service – on a limited scale. At a 64 kbps toll quality vocoding rate and a conservative throughput rate of something slightly over one bit per hertz, a single 6 MHz video channel will yield some 96 voice channels. Obviously, lower vocoder rates and advanced modulation schemes will yield more, but most of the pioneering MSOs are concerned about voice quality and have opted for the lower number. And here one inevitably gets into questions of trunking efficiency right at the individual subscriber level, since those 96 lines might be shared among as many as a couple of thousand subscribers, that being a not unusual number for an individual distribution cable.
So how on earth is Mr. Ingram going to support a 100% subscription rate with a conventional hybrid fiber plant? It turns out he’s not. "We distribute to only a hundred and fifty subscribers per optical node and use only a single amplifier for each distribution cable." In other words, over half his subscribers could be calling simultaneously and they still wouldn’t stress the capacity of the system.
Ultimately, any cable operator could do the same, i.e. drive fiber deeper into his systems and shorten the distribution strings, but unlike Utilicom most lack partnerships with utilities and access to vast quantities of underutilized dark fiber. The only other solutions are to sacrifice video channels and jeopardize the core business or by some means to improve enormously the efficiency of the network.
The IP solution
According to all respondents, the entire commercial cable telephone traffic in the US is currently carried on TDM circuit switched overlays. "In essence the operators have built whole new networks to handle voice," says Keith Conklin, who heads TollBridge’s cable voice project. "Voice has to be rigidly segregated from video and data, and separate devices are required throughout the signal path including at the subscriber premises. It’s extremely inefficient." Significantly, none of this first generation telephone equipment is standards-based, and the cable industry is famously obsessed with standards. Which might lead one to suspect that current cable telephony activities are little more than a dress rehearsal.
"It’s all about gaining initial market share at this point," says Agnes Imregh. "They’ll never do big numbers with current equipment.
"But," she adds, "they might if they adopt an IP solution." But will they adopt IP voice en masse when no one else has? Imregh, who sells such a solution, is obviously biased, but the fact that Cable Labs’ own specifications, DOCSIS (data over cable service interface specification) 1.1 and PacketCable 1.0 both specifically support IP voice with extensive quality of service provisions, suggest that she may be right.
No packet voice equipment for cable has yet been certified, but both TollBridge and Broadband Access are readying components for testing. Their claim is that IP will provide cable operators with the network efficiencies to offer voice to mass subscriber bases without impacting Internet access or video distribution. And surely, IP will provide some increment in efficiency, though whether anything like 30% take rates will be supported remains to be seen. Ultimately full packetization of dominant video traffic might be required to make the cable system truly dual or triple use, and standards aren’t even in development to meet that eventuality.
But Imregh for one is undeterred by doubts, feeling that mass IP voice offerings are absolutely inevitable. "The farther up you get in a cable organization, the more terrified the executive staff becomes at the thought of becoming mere brokers of commoditized bandwidth. They simply have to offer a greater and greater range of services, and to do that they’ll require a combination of IP gateways and softswitches. Voice telephony is just the first step."
But will such service ultimately win mass acceptance and seriously challenge incumbents? Ben Sauter isn’t so sure. "The biggest problem cable providers face in introducing telephony is the perception among the public that they offer poor service. Unless they can overcome that perception they won’t threaten the incumbents any time soon, and we don’t see that happening even in the midterm."
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