VoIP Reduces Need For Power

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If you listen closely to talk in cable telephony circles these days, voice service could be losing power — literally.

Though once thought of as a basic entry requirement for primary line telephony, powering might become merely an option for at least some operators, particularly those cooking up plans for Internet Protocol-based voice service.

Eliminating the power feed from the network — which maintains service during electrical outages — not only cuts the cost of rollouts, but also may not be as critical an issue for consumers in the age of the mobile phone.

Evidence of this can be seen in cable's first pair of commercial IP-telephony rollouts. In May, Time Warner Cable debuted IP telephony service in Portland, Maine, offering a nonpowered connection that so far has attracted more than 2,000 customers.

Plans are to roll out IP telephony in Rochester, N.Y., and two of Time Warner's four North Carolina systems by the end of this year, according to spokesman Keith Cocozza.

While Time Warner will largely stick to the nonpowered format, it is looking into a powering option "as some customers may want the ability to back up the digital phone unit, just as some people back up their personal computers with an additional power source," he said.

But based on the uptime in Portland, there may not be much of a need. So far, the Portland telephony service has posted a 99.7% uptime rating, thanks to a stable local power grid, Cocuzza said.

Similarly, Cablevision Systems Corp. last month said it would roll out nonpowered IP telephony to its New York franchise area starting in the third quarter. The decision to eliminate the powering element was based on an ongoing trial in Long Island.

Powering "is not an issue that customers have spoken loudly about," Optimum Voice vice president of product management Tanya Van Court told Multichannel News in June. "And so what we are doing is offering customers a solution that includes E-911 and that, we think, is just a great product offering — and some customers are using it as primary line.

"Some customers are using it as a second line, and some customers are using it to replace a second line."

Even MSOs that have staunchly backed powering for switched telephony are taking a new look when it comes to IP.

Comcast Corp. is now evaluating powering options in its Coatesville, Pa., VoIP trial, according to spokeswoman Sarah Eder. And Cox Communications Inc. is testing a nonpowered PacketCable IP telephony technical trial in Roanoke, Va., involving 50 or 60 employees.

If funding for the project is approved, it will be expanded later this year for a wider market trial involving actual customers, according to Albert Young, Cox's principal engineer.

"Basically our position is we started from the proposition that we would have to power. We're seeing indicators that other MSOs are seeing — that it may not be quite as critical as it once was," he said.

40% less Capex

The cost savings certainly don't hurt the argument for nonpowered service. A recent Merrill Lynch report estimated that going with a nonpowered IP telephony service can reduce expenditures by 40%.

The relatively high penetration of cell phones among customers — and the addition of E-911 capability to many mobile phone services — also makes powered lifeline telephony less crucial, Young added.

"When cell phones are all E-911 capable, it becomes even less of an issue," he said. "There is definitely a trend there."

And if telephony follows the trend set with cable modems — one in which customers buy their access gear — powering from the network may not even be possible, Young said.

It's a safety issue: While it is fine to deliver an electrical current to a unit mounted on the side of a house, delivering it into a multimedia terminal adapter or digital set-top via coaxial connection is another matter.

"If we do have customers going and buying their own customer-premise equipment and hooking it up, we know we can't drive network power into the home," Young said. "It would be a safety issue. You can't have power on the inside outlet.

"AC power on a cable outlet in your living room would not be a good thing."

But while Cox will test the nonpowered service, don't look for the MSO to abandon powering for its existing switched telephony business.

Switched service likely will remain powered, given the difficulty and the customer issues inherent in taking away an existing service capability.

"We view that as changing the product really, and that would really cause confusion with our customers," Young said. "We wouldn't do that lightly for sure — we'd have to think about that for a long time."

IP telephony gear vendors, including Cedar Point Communications Inc., are also watching attitudes shift. While early telephony players like Cox and Comcast may continue to back powered subscriber phone lines, there will be "others taking a more diverse view, testing the marketplace as to how much more can I shave capital and improve the bottom line, and it's helping," said Mark Dzuban, Cedar Point's executive vice president of cable telephony deployment.

For example, these days operators are looking at attaching batteries to customers' MTAs, rather than powering via the network. That also cuts rollout costs — particularly if the customer buys the adapter.

Few urban outages

"When you network-power an MTA, you are building and spending those dollars well ahead of actually generating any revenue, and you actually build it without knowing where your penetrations are going to be," Dzuban noted. "So there is some economic logic that says you might want to deploy a battery backup MTA to support a lifeline-like or primary-line service, and then follow up at a point and time when the smoke has settled and the costs have been clearly defined to network power it down the road. But at least it gives you the option."

In urban markets with stable power grids, batteries may not even be necessary, given the infrequency of outages.

"I think over time, actually, if you look at where Cablevision is offering the service, there may be very little powering issues," Dzuban said. "The market has a lot to do with it — the continuity of the power grid in the particular market."

And cable operators do understand the impact of cellular phone service as an alternative when the lights go off. Time Warner's market research also indicated that 60% of its Portland telephony customers already have cell phone service.

"If there is a catastrophic event in San Francisco, and you need dial tone, can you get it?" Dzuban asked. "Fortunately, the cell-phone penetration levels are so high that I think it mitigates the severity of the problem."

So for the near future, look for cablers to keep experimenting with the power issue in their early VoIP rollouts.

"This is going to be like water seeking a natural level — these guys are smart," Dzuban noted. "They are going to watch churn and fine-tune the product in the marketplace to be as competitive as any product in that space."

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