At Expo, it was apparent that cable has discovered commercial services as a market. Although T-1 interconnection is probably the lowest hanging fruit, that product is essentially another transport service, rather than an application. While cable knows that selling a pipe generates revenue, it has also learned from residential services that offering customers a product with value-added attributes is a better long-term way to capture and hold their business. Voice services offer just such an opportunity in the business market segment. They can be provided as customer premises-based products, such as an Internet protocol (IP) private branch exchange (PBX), or network hosted offerings, often called Centrex. The status quo Before I probe into how each of these potential offerings might become part of cable, I’d like to point out why cable is now willing to look harder at business as a customer. After writing two columns in 2002 suggesting it made sense to offer both PBX and hosted products, I talked to a few operations managers about why their companies weren’t pursuing small business parks and malls near residential drops. The usual answer was that although competition for residential data and to some extent voice was beginning, if cable seriously attacked the business market, the telcos would fight to the death to defend their goldmine. So the "compromise" was to wage war for residential data, take as much residential voice business as possible and believe that telcos could never offer video. The pie would then stand divided: cable gets video, telco gets business services. (Except for a few aggressive pioneers such as Cox that established business services early in the game.) But the game has changed. Now that both telcos and cable are looking at IP as the technology of choice, telco IP video is a lot closer to reality. That, of course, crumbles the implied pie slices, and everything becomes fair game in the war to survive. Business voice services are a powerful weapon in the product arsenal. Premises-based approach Both implementations of business voice depend upon a service provider network for completion of calls. In a customer premises-based system, the logic that defines the voice services resides in customer-owned hardware, instead of in the service provider’s network. The type of implementation that is appropriate for a business correlates with the number of phone lines required and the desire of the customer to own its communications system. With IP-based implementations of either flavor, the opportunity exists for integration of new video, data and even mobility services as add-ons later. If a small business owner with one or two telephone lines wants to own and manage a communications system, there are excellent customer premises-based hybrid key systems to meet that need. Such systems consist of a number of high-end telephone sets that typically connect to up to 10 telephone lines. Each set contains internal logic that implements basic business features such as conferencing, transfer, call groups and paging. The important word in this description is "lines." By definition, each line associated with a hybrid key system is the same as an individual residential or business line. There are no T-1 trunks connected to a key system, and there is no internal switching. The good news here is that multi-line embedded multimedia terminal adapters (EMTAs) work with many hybrid key systems, so cable can be in this part of the business just by adding a drop to the customer. We are providing telephony transport, but we also have the opportunity to bundle telephony with data and even video. IP PBX approach The next step up in customer premises-based solutions is a centralized key system. The difference here is that the station sets are simpler, and the logic for business features lives in a separate, shared processor. The connections to the external world are still lines, not trunks. With IP technology, the distinction between a centralized key system and a PBX is blurred. A typical IP PBX serves 20 to 1,000 lines. Like a key system, an IP PBX does not connect to a service provider’s network via trunks. Instead, it uses one or more broadband connections to a service provider’s IP network. Software defines the business features that are part of the IP PBX. The software resides on a hardware platform that may be an off-the-shelf business server or a proprietary solution specific to the PBX vendor. The customer owns or leases the hardware and licenses the software for an IP PBX, similar to a computer system. A cable operator could offer an IP PBX as part of a business services package. The cable operator realizes revenue through the sale of software licenses, in partnership with the PBX vendor. As an IP network operator, the cable company could also gain revenue from interconnection services and by offering network-based services such as voice mail. Mark Galvin, the founder and CEO of Whaleback Systems, concedes that selling an IP PBX as a business service will require a different marketing approach. "The cable company will have to use `door knockers’ who visit the customer’s premises and can show ways that savings can be realized. They might begin by showing how a business could realize T-1 facilities savings by consolidating voice and data over IP and then talk about long distance cost reductions due to an IP network." Unlike incumbent IP PBX vendors Cisco and Avaya, Whaleback is hardware-agnostic, which allows a business customer to choose its own hardware platform, including the station sets, separately from the software that defines the voice services applications. This opens the door to further cost savings by possible sharing of the hardware platform with other business applications. A hosted approach What about the network-based hosted business services approach? This type of voice services offering provides business features in a service provider’s network-resident applications processor. Call setup and signaling are handled by a call management server (CMS), the same as for residential services. Similar to the IP PBX model, revenue realization is through a licensing arrangement, but in this case, the business customer licenses a number of user end points. Dave Spear, EVP Cedar Point Communications, sees hosted services as relatively simple applications, such as four-digit dialing between business customer offices. A typical hosted architecture would include a multiline EMTA that interfaces with a network-based communications system such as Cedar Point’s Safari C3. Spear maintains this is a niche market that is best targeted to the two- to 10-line range. He observed that medium to large businesses typically prefer to own their communications systems and can secure financing through the PBX vendor. Interestingly, IP-based hosted business services have been offered outside the cable industry for a number of years. Stan Little, VP Consumer Marketing at Sylantro Systems, indicated his company has about 250 installations in service and is evolving the product to an application that resides on a feature server, which is part of an IP multimedia subsystem (IMS) network architecture. In preliminary discussions with several MSOs, Sylantro is also investigating how to migrate to PacketCable Multimedia (PCMM). The bottom line is that while it’s impossible to predict which type of offering will dominate our industry, you can expect to find a full range of voice services solutions appearing shortly. Justin J. Junkus is president of KnowledgeLink and telephony editor for Communications Technology. Reach him at [email protected].