Vendors Answer Ops Business Apps Call

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The cable industry may finally be ready to exploit the
largely ignored market potential of business-data services thanks to technical advances
that support the hottest applications in that sector.

As always, the limelight at the recent National Show in
Chicago was on consumer services.

But below the surface, there was abundant evidence that
cable companies are preparing to pursue a new revenue stream outside of the traditional
market base that could easily rival, if not surpass, the residential data-services
business.

Most prominent, Comcast Corp. and AT&T Corp. announced
new initiatives on the business front. But the scale of industry activity was most evident
in the products that vendors have developed in response to MSO demands for
industrial-strength data solutions.

"We're seeing a lot of interest now among cable
operators in this area," said Jake Seid, product manager for cable products and
solutions at Cisco Systems Inc. "My impression is that there's some real push
coming from the grassroots level. Businesses that have heard about cable modems are coming
to operators and asking for service."

Operators are especially loath to turn away potential
business customers if those customers have an alternative option from service providers
offering digital-subscriber-line services, noted Barry Hardek, director for operator
marketing at the cable-access unit of 3Com Corp.

"There's a real concern among some operators that
if you don't battle DSL on the business flank, you're going to lose strength on
the residential side, as well, since so many people who want business-data services are
potential customers for high-speed access at home," Hardek added.

3Com has come up with a way to meet quality-of-service
needs for delivering business services over the first-generation DOCSIS (Data Over Cable
Service Interface Specification) platform, without waiting for DOCSIS 1.1-compliant
devices, Hardek noted.

"We're able to support VPNs [virtual private
networks] by adding a QOS capability to our DOCSIS CMTS [cable-modem-termination system],
using a cable-access router and [Microsoft Corp. Windows] NT controller software
that's added at the IP level," he explained.

The technique allows the operator to throttle downstream
speeds of the general access community in order to ensure guaranteed rate levels to
specific customers and to assign upstream bandwidth slots for QOS requirements, Hardek
said.

"We also have policy-management capabilities, where
you can offer telecommuter tiers on a 9-to-5 basis, when casual residential use is at a
low rate," he added.

In the first instance of a public commitment to the use of
a DOCSIS 1.1 solution in the commercial market, Comcast said it was undertaking a new
initiative with Cisco through its Comcast Commercial Online Communications Inc. unit to
deliver Internet access and VPN services to small businesses, schools and telecommuters
throughout the MSO's territories, starting with a market trial in northern New
Jersey.

Eventually, the services will include packet voice, as
well, Seid said.

Teaming up with Cisco adds strong sales support, as well as
technical strength, to Comcast's commercial-services effort, said Matt Fanning, vice
president of sales and marketing at Comcast Commercial Online.

Unlike the residential market, where a single modem
typically serves one or two personal computers, the business market requires expertise and
products capable of linking many premises devices to service configurations that are
highly specific to individual companies' needs. That's one reason why cable has
been slow to move in this direction.

"This is about more than products -- it's about a
partnership," Fanning said. "By teaming up with Cisco's sales channel to
integrate their product-line capability into our commercial-service offerings, we'll
be able to reach more potential customers with more revenue-generating services."

Closing the gap in business-sector marketing expertise has
long been a primary goal of cable-data-service provider High Speed Access Corp. That
approach is paying off, HSA CEO Ron Pitcock said. "Commercial services in our markets
are taking off quite well, even though we're in a lot of the smaller markets,"
he added.

Indeed, he said, HSA's experience demonstrates that
operators can land business customers even if those operators can't serve all
locations of a particular business. "We have many business customers whose facilities
extend beyond the reach of the local cable plant, and that hasn't been a
problem," Pitcock added.

In fact, he noted, larger companies are accustomed to
dealing with different service providers in different markets, especially now that
competition has provided companies with multiple access and service options that can only
be exploited to maximum advantage on a market-by-market basis.

"The real issue for cable operators is having the
personnel who can adequately address the unique needs of each business, whether it's
a local company or an international corporation," Pitcock said.

The number of business customers in markets served by HSA
is low in comparison with its residential-subscriber numbers. But the revenue take is much
higher -- typically ranging between about $100 per month to close to $4,000.

"We're delivering services to universities, major
manufacturers, the SoHo [small office/home office] market, office buildings -- it's
pretty broad-based," Pitcock noted.

By using the QOS and dynamic bandwidth-allocation
capabilities built into Com21 Inc.'s modem system, HSA can configure service more
flexibly than many of its competitors, especially when those competitors are only offering
T-1 (1.5-megabit-per-second) connections, Pitcock added.

"When you give people the option of anything from 500
kilobits per second to several megabits, you discover that practically no one really wants
the T-1 rate," he said.

Com21, like Cisco, introduced modems at the National Show
designed to support packetized-voice services, as well as standard data services,
reflecting rising business-sector demand for high-speed-data solutions that also offer
multiline-voice connectivity.

In Com21's case, the new enterprise-telephony system
is part of a complete work-at-home solution being developed in conjunction with AT&T
Labs' Wide Area Internet Sales Link, which the companies said would allow cable
operators to provide high-speed VPNs for virtual call centers.

Unlike Com21's ATM-based (asynchronous transfer mode)
system, Cisco's new "uBR924" cable-access router with voice-over-IP
(Internet protocol) capability is based on the recently formulated DOCSIS 1.1 protocols,
representing the first 1.1 premises device to be offered commercially.

While certification of 1.1 modems isn't expected to
begin until the fourth quarter, and it will likely take several months to complete, MSO
demand for 1.1-based solutions in the business sector has made it worth Cisco's while
to bring the product to market now, Seid said.

"There's a real race shaping up with DSL on the
commercial side," he said. "We're working with several cable operators to
help them get into this market as aggressively as possible."

Cisco is close to closing deals on a number of trials in
addition to the Comcast agreement, Seid added. "We're working with operators
outside of the United States, as well," he said.

Strong support for cable entry into the business market was
also evident in a new deal between Motorola Inc. and Lucent Technologies. The two vendors
said they were working together on an end-to-end integrated IP-voice and high-speed-data
solution available to operators on a turnkey basis.

Motorola and Lucent said products would be available in the
first quarter of next year, with trials at unnamed MSOs starting in July.

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