Comcast Rises to VoIP Challenge

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Internet-protocol telephony, also known as voice-over-IP, has bounced around the edges of legitimacy in the cable industry for several years.

Originally designed as a low-cost telephone alternative to match the regional Bell operating companies in a three-front war for voice, video and data supremacy, it's been churning through the requisite research, development and standards-setting phases.

Now, at a time when it's fairly close to being ready to go, the telecommunications meltdown and the extreme pressure MSOs face to reduce capital expenditures have created a challenging time in which to secure the needed capital investment.

So it's worth paying attention when Comcast Corp. — in the process of absorbing AT&T Broadband and tripling the size of its cable division — announces it will dive into primary-line, Internet-Protocol-based telephone service early next year.

"It's time to start the process," Comcast cable unit president Steve Burke told financial analysts several weeks ago. "We want to make sure IP is a more robust alternative when the time comes."

"No VoIP system has been deployed in scale," added senior vice president of new media development Steve Craddock. There had been talk that a German company would be the first, he said, but that outfit has pulled back.

"It's going to have to be us," he said.

Cable operators have high hopes for IP telephony, because it's a natural and cost-effective extension of their cable-modem business, which also is based on that technology.

To launch phone service, operators only have to buy in-home multimedia adapters, telephony software and "soft switches," so phone calls can be connected to the traditional public circuit-switched network.

The current circuit-switched network used by present-day telephony providers — including cable-telephony pioneers AT&T Broadband (1.2 million customers), Cox Communications Inc. (578,000) and Insight Communications Co. (18,000) — uses standard "hard" signal switching to transfer phone calls. Comcast also has about 40,000 circuited-switch customers, obtained from earlier deals with AT&T and Jones Intercable.

INTERESTING TIMING

Comcast's IP-telephony foray comes at an intriguing moment for cable.

On the one hand, IP telephony will require capital expenditures at a time when Wall Street urges spending cutbacks. Analysts have been critical of cable MSOs who've overextended themselves — an inherent suggestion that cable concentrate on new video (video-on-demand) and data services. (Comcast says the initial deployment, meant to assure VoIP can be deployed on a widescale basis, will not cost more than $10 million.)

And all of the bugs in IP-telephony deployment haven't been worked out.

But some analysts believe VoIP is an opportunity cable should act upon, as telcos look to bundle phone, wireless, DSL and long-distance telephony into one package.

"Regardless of how long it takes, there is no getting away from the fact that at some point telephony will provide huge opportunities for cable companies and provide them with a competitive edge," said Probe Research vice president, U.S. carrier research Lynda Starr.

Kinetic Strategies analyst Michael Harris predicted MSOs would have 5.8 million IP telephony customers in four years, with IP rollouts starting in earnest in 2004. IP telephony software and infrastructure equipment sales will reach $900 million by 2006, he predicted.

Even MSOs that have deployed circuit-switched telephony are looking at VoIP, with Cox the most notable example. The Atlanta-based MSO is conducting a test in Oklahoma City, blending IP telephony technology into its existing circuit-switched plant.

Cox, which has offered phone service over the cable plant since 1997, would in effect provide IP telephony service to outlying areas beyond a major city, while relying on the circuit-switched features in the major metropolitan area.

But in recent interviews, Cox officials have made it clear that they aren't rushing into anything that wouldn't be "in lockstep" with the existing circuited-switch architecture.

"I don't think it's ready to be a primary-line service at this point," Cox chief technical officer Chris Bowick said. "I don't think that very many in the industry believe it's ready for primetime yet."

BUILT-IN INCENTIVE

Time Warner Cable plans to launch IP telephony service in several markets by year-end.

Basically, it's been left to the post-merger AT&T Comcast Corp. — with an incentive to show federal regulators that the merger will enhance local telephony competition — to make the biggest splash in VoIP.

The rollout is planned for second-quarter 2003, in a sizable Western section of Comcast's Philadelphia system, estimated at more than 80,000 homes.

It's believed Philadelphia will be the first, full-scale launch of primary-line IP telephony service in the U.S. Comcast hasn't announcing pricing, bundling or marketing strategies yet.

The IP service will be launched alongside Comcast's existing Data Over Cable Service Specification 1.0 cable-modem termination system (CMTS) in Philadelphia, which handles the system's current data network.

Over time, Comcast plans to migrate data traffic from the 1.0 CMTS to the DOCSIS 1.1 CMTS. The MSO will begin deploying 1.1 modems for Philadelphia-area data and voice customers next year.

The DOCSIS 1.1 standard — developed by Cable Television Laboratories Inc., and now used to certify vendors — paves the way for IP telephony by allowing MSOs to tier bandwidth and provide dynamic quality-of-service.

UNION EXPERIENCE

Comcast trialed IP telephony several years ago in Union, N.J. "We learned everything we didn't want to do," Craddock said.

Subsequently, Comcast tested different equipment and platforms at headquarters and in its Willow Grove, Pa., test bed.

At the same time, it incorporated what it learned into the CableLabs standardization process, Craddock said.

The result is a PacketCable specification that's grounded in the real world and is now ready for a bigger stage, Craddock said.

PacketCable brings a critical-carrier-class mentality to telephony. When running into a problem with a modem or CMTS, data engineers are inclined to just reboot the system.

But when you're offering IP telephony as the customer's primary home phone line, "you don't reboot the CMTS every five minutes," Craddock said. "The CMTS has to be designed to stay up. To the network guys and layer-3 routing types, that [rebooting] is not a big deal.

"We're dealing with a mission-critical service. It must be carrier grade," he said.

Craddock is looking for "hitless failover": If one component goes down inside the DOCSIS 1.1 CMTS, another component picks up the slack.

In many DOCSIS 1.1 CMTSs, all the connections are on the front end, Craddock noted. If an alarm goes off, everything on a CMTS card goes down, which could include several modems.

"You have to disconnect every RF connection, pop out the card, put in a new one," he said. "Everybody is out for a few minutes. You can't have that in telephony."

Three of the eight next-generation DOCSIS 1.1 CMTSs that Craddock has tested have the "hitless failover" capability, including gear from Arris Group Inc., he said. Other vendors are working towards that end.

Hitless failover means that the CMTS card connections are located in the back, while the electronics components are up front, Craddock said. That eliminates the need for recabling.

A spare card in the unit's chassis handles the traffic of a "down" card while a technician puts a new one in place.

"The system recognizes that and puts connections over to the spare card, and you don't lose a phone call," he said.

In addition to the Syndeo soft switch, which "can do all class-5 switch functions and more," Comcast is testing a soft switch from CedarPoint Communications. Both are capable of handling video telephony, Craddock said.

Even if Comcast planned to only provide second-line service, Craddock said, he'd go the extra mile on DOCSIS 1.1 because the dynamic QoS allows the MSO to offer streaming video, videoconferencing and service-level agreements to businesses.

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