With the East Coast finally shaken free of its second "once-in-a-lifetime" power outage in as many months, now is an opportune time for cable operators to re-examine some of the key issues that surround the industry's accelerating entry into the delivery of voice services.
Primary line or non-primary line? Network power, battery backup or non-powered? In the wake of the Northeast blackout in August and the lashing administered by hurricane Isabel last month, one thing is clear: In order to capitalize fully on the substantial revenue-reneration and subscriber- retention potential of cable telephony, operators need to make sure that their networks are suitably hardened to deliver services during the subscriber's most critical hours of need.
If we've learned anything over the past couple of months, it is that there is no "once-in-a-lifetime" event. Who could have predicted that a man-made disaster would leave much of the Northeast, including New York City, in the dark because of aging power grids? Or that Mother Nature would have similar disdain for our technological infrastructure when she sent Isabel to cut a wide swath through the Atlantic Coast region.
When the power went down in both instances, down too went an argument that has been percolating for some time — that a highly reliable, primary-line service is less relevant because of the increasing ubiquity of cellular phones. Whether through lack of power, storm-toppled antennae or "blocking" caused by the surge in traffic, cellular phones proved less than capable of meeting the urgent needs of customers. The real communications hero in both cases was the old reliable: the plain, old telephone service that has been with us for more than 100 years.
The reliability factor
As cable operators across the country move headlong into voice delivery, each one should take into consideration the environmental challenges that the network will face. Cable's ability to maximize the profit potential of the telephone business will be dependent certainly on the price and feature advantages that packet-based services can offer to subscribers. Even more important, however, will be cable's ability to maintain services under adverse conditions.
Over the last century, Americans have come to expect one thing from their telephone: that when the handset is lifted, a dial tone will be present. In recent years, there has been talk of subscriber expectations changing: that a battery backup will suffice during a network outage; that a subscriber will have a cell phone back-up; or that a customer will understand the nature of the network when a non-primary line phone fails to deliver a dial tone under dire circumstances. With events of the past few months-proving otherwise, cable can ill afford not to meet the needs of its subscribers in life-and-death circumstances?
Cable operators understandably are reluctant to invest substantially in building a hardened infrastructure when there is no real subscriber base to support it and the percentages of extended network outages are so slim. Network powering is conservatively estimated to cost about $10-$25 per home passed, whether that residence takes phone service or not — a sizable investment at a time when the financial markets are urging cable toward free cash flow.
That doesn't mean that the industry should abandon primary line voice service. On-premise battery back-ups now have lives of five years or more and can maintain service for periods ranging from eight hours to a full day when activated. They cost far less than powering the entire network and can be installed only in homes where there is phone service.
Moreover, questions about maintenance of on-premise equipment now have answers. It's likely over a five-year period that the cable company will send a technician to the home for some reason. While there, it is easy for the technician to check or replace the batteries. It's also become easier for cable operators to monitor battery status remotely and mail replacement batteries to subscribers, who would do the routine change-outs themselves.
While batteries would cover the greatest — and gravest — situations where power might be lost and give subscribers the confidence that the phones will work, their limits would be tested by a truly catastrophic, Isabel-like event whose impact is felt for days or weeks.
To prevent subscribers from souring if performance failed to meet expectations, cable operators who initially install battery backups would benefit in the long term from a hardened, network-powered infrastructure. The expense of building this infrastructure would be covered by the thriving phone business; the result would be a network that would be truly competitive with the incumbent telephone companies, and more attractive to even more subscribers.
But making sure on-premises equipment continues to work is only one step. Wireline telecommunications services remained operational during the recent East Coast crises because the incumbents had prepared their entire plant for the ultimate catastrophe. This meant having back-up generators that produced power, enough fuel to supply those generators for several days, and a plan to get more fuel to them when it's needed.
For cable operators to attract and retain the primary line business of subscribers, they will have to be similarly prepared, not just for day-to-day business, but for the challenging conditions that Mother Nature — or mankind — can present.
The circuit deployments by Cox and Comcast already have proven cable telephony's revenue potential. And with the emergence of carrier class switches that integrate all of the PacketCable components into one element with the PSTN, cable has an architecture that can deliver the lower-cost, feature-rich Internet protocol voice services that the legacy providers cannot match. But for cable to maximize that advantage, it must have a product that subscribers can count on to be always on and always ready.
The Blackout of 2003 and Hurricane Isabel proved again one of the real paradoxes of the communications industry: that the network is most in demand by subscribers at the very time that the network is most vulnerable. Different geographic areas will present different environmental challenges, but all systems need to take whatever steps are necessary for their telephony services to meet the "dial tone" expectations of subscribers.
Primary line or non-primary line? Network power, battery backup or non-powered? As those of us engaged in the discussion know, there is no simple, universal answer. But clearly, cable operators need to consider the survivability of the network on a market-by-market basis, and to choose the powering solutions that will assure availability, protect their customers and enable the industry to realize the promise of voice services.