The Business of High-Speed Cable Service

Where MSOs Stand in Reaching the Enterprise

Cable companies Cox Communications Inc. and Time Warner Cable have made their mark in the business world, and new developments -- including the implementation of a new cable modem standard that supports quality of service -- could help these companies and other cablecos further their success with enterprise customers.

"Cox and Time Warner have really been forging ahead with it and have really been successful with offering business-class services," says Yankee Group analyst Lindsay Schroth, who did a February 2002 study on cableco business strategies.

"The ILECs have done a good job at ensuring people think that the cable plant is not reliable enough for business, which is completely untrue," says Schroth. "The industry is really trying to figure out how they can spread the word that cable is a fine access technology for small and medium business services," she adds.

Cox offers business customers of all sizes a bundle of voice, video and data services, which also can be purchased a la carte. Data services include connectivity up to gigabit Ethernet and OC48 speeds, ATM, point-to-point circuits, dedicated Internet access, Web hosting, e-mail and a variety of secure cable modem-based options including VPN and transparent LAN services. The company also offers circuit-based voice with a Centrex option. Cable TV, which a business might use in a lobby or employee lounge, is also often part of the mix.

Time Warner Cable wasn't available for an interview about its business services and no details on the company's specific strategy for the enterprise were available on the company's Web site.

Other cable companies haven't made much of a showing with their broadband access in the business market, according to Schroth and other sources. In many cases that probably can be attributed more to a new focus by cable companies like Comcast Corp. on more immediate concerns such as stemming video churn.

Although Cox and Time Warner Cable have seen success in the business market, the cablecos' cable modem-based services for the enterprise are not as fully featured as they could be, says Yankee Group's Schroth. To date, cablecos have employed a tactic called rate limiting to create different tiers of service. Rate limiting puts a ceiling on the amount of available upstream and downstream capacity, but it can't guarantee bandwidth.

However, equipment that is compliant with CableLabs' relatively new DOCSIS 1.1 specification will allow cablecos to guarantee bandwidth levels at various tiers, says Schroth. DOCSIS 1.1 equipment is now available, but, as of mid-April, no cablecos had rolled out services based on the technology, says Schroth.

Coby Sillers, vice president and acting general manager for Cox Business Services, says Cox plans to bring DOCSIS 1.1 functionality into its network toward the end of this year or early next year.

Yankee Group's Schroth suggests cable companies targeting business customers also should define a strategy to expand their reach. That's because even small businesses may have locations spread across the country and might prefer a single provider to serve all their sites. As in all areas of communications, partnerships with other network operators can help address this issue. "Time Warner has gone out to Comcast and others and presented them business," she says.

MegaPath Networks Inc., which aggregates local access services including DSL, T1, frame relay and cable modem services over its 10 gigabit Ethernet nationwide network, is a partner of both Cox and Time Warner Cable in the quest to bring integrated high-speed access to small and medium business users.

While Cox Business Services is focused on selling business services to small, medium and large businesses in its franchise only, the company will lease type 2 circuits from a third party on occasion. However, that's done only as an interim strategy to precede a buildout or if Cox needs to deliver service to multiple customer sites -- including an out-of-franchise location -- as a condition of winning business, says Sillers.

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