The Race to Gigabit is About Business

Peter : On Rad's Radar?
Peter
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

The Race to Gigabit is About Business

The cable companies racing to Gigabit networks isn't about delivering ultra-fast broadband to consumers. The Gigabit announcements get them good PR in DC, where the largest MSOs are waiting for approval for acquisitions (Comcast for TWC; Charter for Bright House). Comcast, as the largest MSO, has a poor reputation for customer service and for Net Neutrality. The Comcast-Verizon squeeze on Netflix was probably the number 1 reason the FCC received millions of public comments and laid down the law. How do you let that go and reward them with a larger market share?

The Gigabit movement was initially publicized by Google Fiber, scaring the heck out of the Duopoly. Now they are embracing it as a way to demonstrate that they can deliver big bandwidth. Not for consumers -- for businesses. Selling cable modems at $300 to small business is not going to give them the growth that they desire (or that Wall Street desires or that their debt holders desire).

Comcast has stated that they want more of the business services market, despite having a $3 Billion division. Cable chased wireless backhaul to grow business revenue (meanwhile the cellcos paid for those fiber builds.) Cable also offers special access to CLECs, which they do not chase, because, quite frankly, they hate wholesale. They want the customer all to themselves.

Cable is pushing Metro Ethernet to take even more businesses from the LECs. Some LECs still have TDM gear (with the associated TDM pricing), yet the customers all want the simplicity of Ethernet. That requires gear swaps and backhaul reconfiguration. It is coming but Ethernet is NOT everywhere - as recent site surveys I have can tell me.

What do you think was behind offering television to businesses? Business TV was a nice way to (A) get invited into any business with a lobby; (B) offer triple play to businesses which is stickier and higher ARPU than just cable modem; and (C) grow market share.

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ILECs are getting beat at every turn right now. If the cable mergers go through, the competition will be too big for many CLECs. The cablecos are fueled by consumer revenues that give them a huge cash flow runway that many other service providers wish for.

In two ways though, cable ties its shoes together. Foremost, Buffering at home is the best way to defeat cable in the business arena for anything except "just cheap, dumb pipe". Secondly, customer service. As long as consumers have gripes against cable at home, that negativity will impact business revenues. Hard to believe that the cable execs haven't figured that out yet.

The third way is that their systems are just not prepared for business growth. How many businesses are going to wait weeks for a site survey? Paper systems with unknown business assets in companies that do billions in revenue gives the appearance of a not-ready-for-prime-time org.

I can see how the Ma and Pa Bell (VZ & ATT) didn't much care about the cable explosion, since they had their eyes on Enterprise, Global expansion and cellular. But the other large ILECs - CenturyLink, Frontier, fairpoint and Windstream - didn't ramp up for the fight. While TDS has US Cellular, it followed WIND and C-Link in the data center and cloud services playbook, which I don't think is panning out any better than it did for Cbeyond. The two ILECs that bought Pa Bell assets just keep running after POTS and DSL. Frontier is probably better at this than Fairpoint, but the transitions make them lose customers that are too expensive and too hard to win back.

It is funny that VZ used to talk about turning pay phones into Internet access points (and kiosks) but it is the cablecos who turned up the enormous number of wi-fi hotspots. This was another big win for cable over telco. Bell-heads just don't know how to stop thinking like a phone.

With the TDM-to-IP transition, LECs should have started transitioning some of the Bell-heads out and hired Net-heads or Digital Natives.

Lucent is being bought and absorbed by Nokia, according to the press today. There goes Bell Labs. Meanwhile, Cable Labs is working in lock step with the cablecos to keep them competitive.

But one minute you have the edge - Blackberry, Covad, ILECs - and the next you don't. That doesn't mean that the pendulum can't swing the other way.



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