Net2Phone Links Packets and SIP in Puerto Rico

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Most U.S. cable operators are looking at offering voice-over-Internet protocol service using PacketCable standards and specifications. But some phone providers, including Net2Phone Inc., are offering both PacketCable and SIP, or session-initiated protocol, phone services.

SIP has some appeal for cost-conscious operators, Net2Phone executives said. And it's also growing in acceptance around the world.

Net2Phone, which is targeting both domestic and international broadband players, feels it's important to have both technologies in its product portfolio.

"Session-initiated protocol is the de facto standard for VoIP that's not PacketCable," said Net2Phone Global Services president Bryan Wiener.

Net2Phone counts 1,000 telephony subscribers among the 30,000 high-speed data subscribers in Liberty Media Corp.'s Puerto Rico cable system, which passes 300,000 homes. Net2Phone also has struck a deal with Cebridge Communications to offer PacketCable phone service in the U.S.

Weiner said cable operators outside the U.S. are looking at both PacketCable and SIP-based approaches. PacketCable can guarantee quality of service all the way through the plant, but it's more expensive than SIP, Wiener said.

With SIP, an operator would buy the multimedia terminal adapter, but share a soft switch — and thus the soft switch's costs — with other companies.

"There is a savings to be connected to a central platform," Weiner said.

Overall, Net2Phone estimates that total cap ex for SIP stands at $150 per subscriber, versus $300 for PacketCable, which also requires a truck roll. SIP works on any two-way plant and is economical for systems as small as 10,000 homes passed.

"We have many SIP customers," he said. A telephony company in Panama has installed a two-port MTA SIP system, he added.

Weiner said many smaller cable operators could be good targets for SIP, including MSOs with lots of systems across diverse territories, like Bresnan Communications Inc. "One hundred thousand to 700,000 homes is still a good sized footprint," he said.

Lower SIP costs also mean that operators can be even more competitive with pricing — in the $25-to-$35-per month range, Net2Phone said.

Smaller operators should be interested in voice, he said. "Voice is not just an additional revenue stream, it's a significant churn reduction tool. Cable is competing against DBS and that's another reason to offer voice.

"People are scrambling to rollout voice in 2004," he added, and the capital issue plays into Net2Phone's sales pitch.

"Vonage [Holdings Corp.] is approaching cable to resell their service," he said. "We're saying: 'We'll integrate our service into your platform, your brand and your bill.' "

Net2Phone and instantly provide switches through its sister company, Winstar. "We have [points of presence] around the country. They have tandem switches. We have the soft switches and a good footprint across the country."