May 18, 2007

Arris Ready to Help MSOs Tackle SMB Market

By Mike Robuck

Arris held another of its technology breakfasts a few weeks ago at The Cable Show '07. Aside from updating the early morning crowd on some of its product developments, Michael Emmendorfer, Arris' senior director, solution architecture and strategy and a recent Charter employee, outlined the technology drivers for business services in the cable industry.

Emmendorfer said that 60 percent of the revenue opportunities for U.S. small and medium-sized business market segments are from businesses with fewer than 20 employees. Currently, cable companies are providing an average of 100 kilobits per business subscriber, but are spending more to support their high-speed data networks that serve businesses.

Emmendorfer said T-1 lines are still growing in number and that they account for half of the U.S. business transport revenues, which comes out to $13.7 billion. One way cable can break the T-1 stranglehold is by positioning DOCSIS, especially DOCSIS 3.0, to replace legacy TDM transport. Through channel bonding, DOCSIS 3.0 will offer more up and downstream bandwidth.

"T-1s are growing, but I would suggest T-1s are growing because sub-bandwidth is growing," Emmendorfer said. "When I was at Charter, customers wanted more downstream capacity, but they had to buy the expensive upstream as well from the RBOCs."

Another market opportunity for MSOs in the business service sector is the shift to Ethernet-based services. Emmendorfer cited Ethernet's low cost, flexibility and ubiquity as its strengths in replacing frame relay, ATM and SONET technologies.

Arris became the 100th member of the Metro Ethernet Forum late last year. Prior to a recent influx of cable operators and vendors, the MEF largely consisted of telcos and other service operators.

"At Charter, we were doing Ethernet, but there was no way to show (customers) we had parity (with telcos)," Emmendorfer said. "MEF has defined the service and given operators and vendors a framework to test against."

While cable operators such as Cablevision's Optimum Lightpath have made great strides with Ethernet services, the telcos still account for 40 percent of the market share, while cable is lumped in with smaller RBOCs for a 26 percent share in the "other" category.

Leveraging investments

With its triple play, cable has an inherent advantage over other service providers, but another way cable operators can displace RBOCs is by offering Layer 2 and Layer 3 VPN services over DOCSIS and IP, Emmendorfer said.

Cable operators can target network capacity through node splits or send more capacity to a specific node and add fixed wireless services to extend businesses services into a portable asset while avoiding expensive network upgrades.

Combining DOCSIS 3.0 with the existing infrastructure is more than enough to support the majority of the SMB needs, without additional fiber builds.

"The capital is already in place," Emmendorfer said in his closing comments in regards to the cable industry increasing its share in the SMB market. "The No. 1 rule is for MSOs to leverage their existing infrastructure."

- Mike Robuck