October 18, 2006

Optimum Lightpath a Beacon For Business Services

By Mike Robuck

For proof about the validity of the business services model, look no farther than Cablevision’s Optimum Lightpath subsidiary.

Optimum Lightpath Executive Vice President and General Manager Dave Pistacchio was able to preach to the choir as the keynote speaker during lunch at Tuesday’s SCTE Business Services Symposium in Chicago. While something of a thoroughbred in cable circles, Optimum Lightpath owes its success to a combination of cutting-edge Metro Ethernet services and the old-fashioned business credo of giving the customers what they want, the latter of which Pistacchio said the local ILECs in Lightpath’s footprint weren’t doing.

“The small to medium businesses in most markets are ignored by the ILECs,” Pistacchio said. “They’re dying for someone to sell them these services.”

Lightpath estimated that businesses in its footprint, which includes parts of the tri-state areas of New York, New Jersey and Connecticut, were spending $5.5 billion a year on services, with the mid-size to large businesses accounting for $2.2 billion of that total amount. Lightpath works in conjunction with its Cablevision brethren if a small business needs a modem, but it stands behind all of the business accounts, and both Lightpath and Cablevision share the business leads in the footprint.

Cablevision identified 550,000 business customers within 2,500 feet of its cable plant. Currently, Lightpath is lighting up 20 to 30 new buildings in its service area a month and recently lit up its 2,000th building.

One of the reasons for Lightpath’s success story, said Pistacchio, is that businesses “get Ethernet because they know what it is.” For Lightpath, it’s easier to install, and the equipment is cheaper. Lightpath felt so strongly about Ethernet that it dropped its TDM and SONET-based services last year in favor of Metro Ethernet services. Earlier this year, Lightpath won an award from the Metro Ethernet Forum for its commitment to all Metro Ethernet services.

“Ethernet is clearly the place to go, and our customers know it,” Pistacchio said. “Our entry level speed is 10 Mbps, and we recently sold 10 10 GigE rings to one company.”

The network is a fully ringed topology with “nailed up bandwidth” that is symmetrical instead of bursting and not oversubscribed like some of Lightpath’s competition. Lightpath uses Atrica for its transport, Cisco in its core and Cisco and RAD for the smaller cable modems.

“We own the network, and it’s the most advanced fiber in our footprint,” Pistacchio said. “We control the customer’s experience. We can light buildings at a lower cost, so it’s hard for the ILECs to come in behind us and get in a building.”

What customers want

Pistacchio said customers want to be able to measure performance, lower cost security, improved technical support and “simplicity, simplicity, simplicity.” For simplicity, Pistacchio said to post bundled prices with flat rates on Web sites and build customer portals.

In order to take market share, build the best network possible, he said. Operators also need to “price disruptably” below the ILECs, and in doing so Pistacchio said there were still good margins to be had. Operators need to learn how to sell to different sized businesses. More than 40 percent of mid-to-large businesses only buy through consulting firms, so cable operators need to actively build relationships with those firms.

“Provide unparalleled services and be flexible,” he said. “They want to know that real human beings are supporting them.”

- Mike Robuck