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Router-Modem Pushes Next Generation

9/27/1998 8:00 PM Eastern

Cable operators are beginning to exploit next-generation
modem functionality to meet pent-up demand for high-speed-data services from the
small-business sector.

While vendors are still waiting for the certification of
products meeting the interoperability requirements of the baseline DOCSIS (Data Over Cable
Service/Interoperability Specification) standard, more than 20 cable companies have begun
making use of a DOCSIS-compliant integrated router/modem supplied by Cisco Systems Inc. to
support small-business services, said Paul Bosco, general manager for cable products and
solutions at Cisco.

Moreover, the system supports services that require
implementation of quality-of-service features that go beyond the baseline DOCSIS spec, he
noted.

While cable operators have taken intermittent stabs at
serving the business market, the commercial-services arena largely remains an untapped
market with explosive revenue potential, said Ron Pitcock, president and chief operating
officer of High Speed Access Corp.

"You can argue that there's a much bigger
opportunity, especially in the near term, in the small-business sector than in
residential, but it's not an area that MSOs are used to serving," he noted.

"Commercial services are a major opportunity, but
frankly, there's only so much that you can handle at once," noted Jay Rolls,
director of multimedia technology at Cox Communications Inc. "We're in a much
better position now to move on this front than we have been."

Even so, Cox has been in the vanguard of cable companies
offering commercial services, having become the first MSO affiliate of @Home Network to
use its hybrid fiber-coaxial plant to deliver services supplied by @Home's @Work unit
in a service rollout in Southern California earlier this year.

In addition, Rolls noted, Cox's Hampton Roads, Va.,
system has been quietly offering commercial services for some time, and it now has about
80 employees devoted to what has become a $20 million-per-year business involving more
than 500 commercial sites.

Pitcock stressed the need for third-party assistance to
provide MSOs with the support that they need to interact successfully with the business
community.

"This is a highly specialized arena that requires an
understanding of niche needs and strong customer-service support," he said, noting
that HSA's MSO clients in some regions have now begun exploring entry into commercial
services.

"In some areas, we've seen potential customers
coming to the operator and asking for service, kind of drawing the operator in before he
was even thinking about providing service," Pitcock said. "There's
tremendous demand, but it's a long sale cycle that, with a major client, can take six
months to complete before you have a contract."

While operators will need sales support to make a serious
play in the small-business market, the availability of a product like the Cisco
router/modem vastly simplifies the provisioning of services, Bosco said. This is one
reason why sales have been brisk for the company's uBR904, which is list-priced at
$900, even though the product was not announced until last week, he noted.

There are now more than 2,000 units of the 904 in the
field, operating in conjunction with Cisco-supplied DOCSIS-headend units, Bosco said. He
noted that these new headend units come with a number of QOS features, such as: fairness
maintenance, which prevents any one user from hogging bandwidth; committed access rate,
which assures users a minimum access rate; and the ability to provide a fixed rate of
guaranteed access at higher-priced tiers.

The first iteration of the router/modem unit supports the
connection of four personal computers in a small local-area-network arrangement, providing
Internet-protocol routing support, fast switching and network-address translation, among
other features, Bosco said.

Additional PCs can be added by using more hubs, although
contention by ever more users can reduce individual access rates.

The next version of the system, due out by year's end,
will add a second layer of security mapped to the Internet Engineering Task Force's
IP SEC standard, along with IP tunneling and fire-wall support, he added.

The new security layer, coming on top of the baseline
DOCSIS privacy system, will provide support for virtual-private networks over the
cable-data system, allowing telecommuters LAN-like access to their corporate LANs, Bosco
said.

"This system supports a much more robust connection
for these types of applications over the HFC network than you can get over other types of
access options," Bosco added.

Operators are also using the 904 to provide services to
public-school systems, which have emerged -- along with the small-office/home-office and
telecommuter sectors -- as a big opportunity for cable, he said.

One of the early users of the Cisco DOCSIS system was
Comcast Corp., which has begun using the 904 router/modems in its Chesterfield, Va.,
system.

The 904 "integrates extremely well with our existing
infrastructure and allows us to deliver advanced data, voice and video services across the
Comcast network," said Richard Rasmus, vice president of Comcast Online
Communications, in a prepared statement.

While the cable industry's PacketCable initiative is
moving toward completion of draft specifications that envision full implementation of
DOCSIS 1.1 as a means of supporting primary-line IP-voice services, the new Cisco
router/modems, used in conjunction with the DOCSIS-headend gear, provide ample support for
second-line voice services, and maybe even primary-line voice services, including
videoconferencing, Bosco said.

"I think that you'll see SOHO and telecommuter
applications, where things like videoconferencing come into play, very quickly," he
said.

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