The VoIP Void, and Other Vocal Burdens8/25/2002 8:00 PM Eastern
Nothing is easier than making a phone call — and it had better stay that way. But everything points toward a more complicated back-end telephony process. That's slowing the dreams of some cable operators eyeing the vast voice market, who must decide if they should plunge ahead.
In particular, the looming world of voice-over-Internet protocol — much discussed, but so far, awkwardly deployed — threatens to change the nature of telephone service. But that doesn't necessarily mean it'll be made easier.
As cable and enterprise communications providers head into that gaping VoIP void, circumstances continue to become more complex. For example, a new global electronic-numbering (ENUM) concept, promoted by the International Telecommunications Union, envisions a single customer number for voice, fax, electronic mail, fax messaging and other applications.
Such plans — not yet endorsed or adopted by U.S. agencies — could raise the opportunity for unified messaging and give new competitors, such as cable, an edge on legacy providers, such as the adolescent Bell companies. The ENUM plan could establish new structures to bypass the chaos of number portability.
Or ENUM could just leave everyone numb: the U.S. agencies exploring ENUM are far from any decision, as was evident at August roundtables in Washington.
Anyway, such bureaucratic maneuvers are the least of cable telephony's obstacles. Even local regulatory greed — via franchising authorities who want a piece of telephony revenue — is not insurmountable, although Insight Communications Co. might disagree after its experience in Lexington, Ky., where local officials tried to put the squeeze on voice revenues.
WHERE'S IT GOING?
More than 1.7 million U.S. homes now take voice service from cable operators, with AT&T Broadband reaching nearly half of those homes and Cox Communications Inc. serving about one-third. The remaining several hundred thousand cable telephony customers are spread among dozens of operators.
Both of the giants have largely used conventional circuit switches in most of their implementations, which doesn't really test the mettle of futuristic voice services. Post-merger, Comcast Corp. — which is plunging ahead with VoIP telephony on its flagship Philadelphia systems (and presumably in other locales) — faces the additional burden of integrating AT&T Broadband's legacy telephony technology into the new combined operation.
The telecom industry meltdown has discouraged cable operators from rushing ahead with voice services, some industry observers have noted. It is easier (there's that word again) to stick with what cable knows — video, in all its new video-on-demand and networked digital video recorder forms — and then add some data services, rather than plow into the competitive voice business.
The Yankee Group, whose forecasts are notoriously overoptimistic, expects that by 2007, there will be 25 million cable-modem customers but barely 14 million cable-telephony users. That equation, of course, depends on how aggressively cable operators deploy voice services. It also hinges on when, and whether, they move to the VoIP process.
Those timetables will be affected by the development of standards. This autumn, Cable Television Laboratories Inc. is preparing for its first certification tests of PacketCable 1.0, a technology which includes voice capability.
Version 2.0, which will enable multimedia features — such as teleconferencing and video mail — is not yet on the agenda.
Yet those advanced features, which leverage broadband capability, are what will give cable an edge over the legacy architecture of the adolescent Bells.
Meanwhile, cable operators wrangle with the shifting vision of what makes a good telephony offering. For the last few years, the industry has talked up the value of distributed solutions, drawing on a variety of new vendors such as TollBridge Technologies Inc. and Sonus Networks Inc., along with the components from the usual suspects in the cable supply chain. Now, there's a push toward integrated solutions, such as the one peddled by Cedar Point Communications Inc.
As the decision to move toward total-IP systems is made, reversing the industry's assumptions will be hard, but it might be essential. In the meantime, some operators continue to settle for hybrid set-ups, levering the existing circuit-switching capacity at the headend, but delivering the solution to customers as an IP stream.
That's not easy — and if it glitches, customers will long for the slow old days of reliable, dull telco provisioning.
The predictably slow telcos are taking a different route toward full service, burdened by their legacy architecture. Nonetheless, as more regional Bell companies are authorized to offer long distance, they are bundling all voice services — IP or otherwise — into a package which customers can embrace.
Combining local and long-distance service enables the adolescent Bells to become even more entrenched — especially as they begin to make sense with their DSL packages, now that they have effectively destroyed those pesky competitive local-exchange carriers.
All this hubbub (with an emphasis on the "hub") comes as cable operators look for ways to postpone and reduce capital expenses. Inevitably, the cost of IP switches will drop, making telephony more attractive. But will the opportunity to lure customers away from the legacy phone service providers still exist by the time those prices come down?
That's the gamble now confronting the cable telephony devotees. Their decisions won't be easy — which is what phone service is supposed to be.