Road Runner — Time Warner Cable's high-speed Internet-service arm — is reaching beyond the residential cable-modem market and setting its sights on providing data services to small- and medium-sized businesses.
As cable-modem technology improves — and alternative data providers go out of business — MSOs see an opportunity to use their Internet-protocol platform to offer data, and eventually telephone service, too.
"There's a giant opportunity," said Road Runner vice president of commercial services Jason Welz. "We need to get our arms around it and maximize the opportunity, and leverage the assets using our existing cable-modem structure.
"Over the not-too-distant future, this could be hundreds of millions of dollars in revenue for MSOs."
Road Runner has installed data services in more than 50,000 commercial locations nationwide. Those subscribers average $125 a month in revenue, Welz said.
In addition to providing various tiers of Internet access, Road Runner Business Class offers Web hosting, commercial-grade electronic mail, domain-name solutions, virtual private networks and personalized static IP addresses.
Years ago, when Time Warner launched cable-modem service, the various divisions created their own ad hoc solutions for SMBs, Welz said.
"A lot of nonstandard products were developing," he said.
Over the past year, Welz has formed a corporate product-development and strategy group to craft a consistent corporate marketing message and create a national sales organization.
"Cable is not incredibly difficult to get to the business," Welz said. Time Warner systems are now mapping their territories, overlaying maps of the cable plant with those that show where SMBs are located.
Welz's group helps Time Warner's local divisions approach large companies that may have branch offices in many cities.
"Every division is either testing the waters or has full-fledged rollouts," Welz said.
Markets like Portland, Maine — where cable-modem penetration is beyond 30 percent — led the charge.
"We use them for trending," said Welz. "They have an extensive commercial business in Portland."
Welz's group will typically install a Data Over Cable Service Interface Specification 1.0 modem with an integrated IP router. Time Warner uses Cisco Systems Inc.'s Universal Bandwidth Router line, along with ZyXEL Communications Co. products.
Essentially, Time Warner will set up a high-speed local area network inside a business to provide always-on, same-speed connectivity whether there are five or 50 users.
High-end customers may need more than 1.5 megabits of capacity and can pay $700 to $900 a month for service, Welz said.
Today, Road Runner is focusing its Business Class service on SMBs with a typical setup that may include telecommuters. But Welz is creating a national sales organization that will go after large clients with office workers spread throughout the country.
"We're going to large companies and presenting a uniform, single footprint view of TWC," Welz said.
The MSO would provide a company with a single point of contact for sales, ordering, provisioning and billing, Welz said. DSL coverage can be spotty, depending on the market.
"We can tell a large company that if they want service in Tampa, Fla., we can provide you service," he said. "Especially after Sept. 11, companies are looking for these types of backup plans."
WANT BIG FOOTPRINTS
Welz also hopes to work with other MSOs to complete an SMB footprint if a customer wants high-speed connections in markets where Time Warner doesn't operate.
There's also a new crop of value-added resellers looking to aggregate service providers for businesses with dozens of offices or workers across the U.S. that require broadband interconnections. Such a reseller may contact Time Warner, Cox Communications Inc. and Comcast Corp. to set up high-speed networks that cross three cable systems.
Welz's group is also targeting businesses with sizable telecommuting populations. That's a natural offshoot, since many of those telecommuters may already be residential Road Runner subscribers.
Going forward, Welz is looking to add Web hosting, commercial grade e-mail and domain name services. "Many businesses want to have their vanity domain names," he said.
"We can also offer static IP addresses for server hosting or resolution, and we're in the process of some beta trials for our VPN product," Welz said.
That VPN product will likely have two options: managed, in which Road Runner establishes and monitors service; and unmanaged, in which "we provide the equipment and they would self-administer." For instance, businesses that already have their own VPN application may only need Road Runner for access, he said.
"We're also starting to evaluate firewall options," Welz said. "The verdict is still out where we'll head with that product. We may add to VPN a managed-firewall service."
The Cisco UBRs used by Road Runner have built-in firewall and VPN software applications, so it wouldn't have to spend much to offer new services, Welz said.
"We're trying to do things at the application layer where the device in customers location can do new services," he said.
"[Voice over Internet protocol] is something the residential side is looking at," he added. "When the time is right, we'll take a look at that."
VoIP could focus on FAX lines or on extending PBX functionality from the office to a telecommuter.
"You could take an office line and forward it to a digital phone at home," Welz said.
Welz said he'll test some DOCSIS 1.1 modems this year.
"We're talking to a lot of vendors to understand what 1.1 might give us," he said. "DOCSIS 1.1 will have some more functional [quality-of-service] capabilities. It won't be different operationally, but QOS capabilities may allow us to provide more enhancements to the product."
The prospect of new services — coupled with today's penetration rate of 30 percent in some markets — has Welz bullish on the SMB market.
"Most RBOCs, CLECs and ILECs have ignored that space," he said. "But the number of small businesses is giant."