If the cable industry as a whole had a business plan, the 2004 version would include a large section on voice over Internet protocol (VoIP) telephony, but it would also include several paths to potential new services. For reasons explained later, no one model serves all of us; however, a case history often points out ways that our own systems can be leveraged as springboards to emerging opportunity. This month’s column looks at one company’s path from cable TV to broadband IP that covers telephony, data and two market segments. Our industry’s roots are one reason we can’t have a cookie-cutter business plan. We grew from separate, entrepreneurial companies and added new services in the order that made sense to our particular market. Despite consolidation, the particulars of implementation are, therefore, very specific not only to companies, but also to geographical regions or districts. Looking at this from the perspective of access, transport and core networks, cable engineers often begin by building the access network and "renting" transport and core to complete an end-to-end, two-way solution that extends beyond their system. We tend to implement VoIP this way—from the subscriber back into the network. That’s one way to enter the market for IP services, but new technologies and markets are providing reasons to consider owning and developing other parts of an IP network. There’s revenue opportunity and future potential in core networks that may well surpass residential voice, video and data revenues combined. Cablevision’s path to IP Cablevision Systems is a case history of metamorphosis from residential cable company to broadband, multimarket communications provider. In the early 1980s, the company was Long Island’s cable TV service provider. In 1988, the company began deploying fiber optics as part of the cable system infrastructure. In 1990, it filed with the New York Public Service Commission to provide local telephone service, establishing it as a competitive local exchange carrier (CLEC). In 1993, driven at least in part by the regulatory climate at the time, Cablevision created Lightpath, a company to operate its fiber networks and offer business telecommunications services to metropolitan New York. Through Lightpath, Cablevision today owns not only residential access, but also a regional transport network. Lightpath’s focus is on the business market. In 1994, it deployed its first Lucent 5ESS circuit switch as a step toward building its own switched transport network to serve business data and voice transport needs. Remember, in 1994, packet data was more embryo than infant. Public switched telephone network (PSTN) access via circuit switches was critical to providing an end-to-end data pipe. Ownership of a switch was part of a solution to controlling facility availability and costs. In 1994, owning a digital switch provided a state-of-the-art interface to the PSTN "core" network, but also carried the benefit of being able to offer local dial tone and business Centrex telephone services. Today, Lightpath owns eight 5ESS switches and points out that this alone qualifies it to be called a local exchange carrier (LEC), rather than a CLEC. Parallel to acquiring switches, Lightpath continued to expand its fiber net. In 1998, it provided direct fiber connection to 500 commercial buildings. Today, the company owns more than 2,700 route miles of fiber-optic cable in the New York metropolitan area and connects fiber to more than 1,500 commercial buildings. While Lightpath was growing a business telephony and transport market, Cablevision began offering residential subscribers high-speed data in addition to video services. In 1997, it launched Optimum Online and now claims 23 percent market penetration. Cablevision began offering Optimum Voice VoIP service to its Optimum Online cable modem subs in western Long Island in 2003 and has now extended the service to its remaining systems in Long Island, New Jersey, Connecticut, Westchester, N.Y., and New York City, making residential VoIP available to more than four million homes. Unlike the local service that Lightpath offers to business via the 5ESS circuit switch, Optimum Voice is powered by a Siemens softswitch. Market diversity payoff With this background, we can now discuss how service convergence is a natural fit for Cablevision and speculate on what types of business convergence are possible. Until recently, Lightpath’s fiber net was based on synchronous optical network (SONET). This April, it completed transforming the network connecting its fiber hubs to dense wavelength division multiplexing (DWDM) to enable it to offer next-gen, IP-based services. This upgrade provided Lightpath with increased network capacity to support a multiprotocol label switching (MPLS) overlay network. MPLS will enable Lightpath to simplify its network architecture by creating a converged IP multiservice core network that eliminates the need for separate infrastructures to support different traffic and quality of service (QoS) requirements. Brian Fabriano, Lightpath senior vice president of network services, explored some possibilities with me in a phone interview. "With MPLS, Lightpath can offer TDM and VoIP on the same infrastructure. In the long run, SONET, TDM, frame relay and IP will all converge to the MPLS network. Over a single fiber, Lightpath will be able to offer multiple voice and data VPN services with different quality of service levels to each customer." Now, let’s talk about coming full circle. Lightpath already has stated that it plans to migrate its business voice service customers to the Optimum Voice VoIP service that Cablevision offers to its residential customers. If Cablevision is flexible enough to cross-pollinate residential VoIP to the business market served by Lightpath, then all the transport services provided by Lightpath to business must be viewed as resources for future residential applications. Lightpaths’ core network could support not only business services, but also residential end-to-end VoIP, work at home and remote office virtual private networks (VPNs), and even IP video. Of course, there are caveats to this case history. Not every company has the concentration of business customers that favored Cablevision’s strategy, nor the financial staying power to simultaneously operate multiple businesses. Even Cablevision has found it necessary to reevaluate business strategy and spin off businesses that didn’t match as well as planned or meet projections for growth. From a technology perspective, just having a fiber network doesn’t mean upgrades are easy. Fabriano admits that the first step to Lightpath’s network upgrade was a one-year fiber characterization of all the strands, similar to the prequalification of hybrid fiber-coax (HFC) networks required before offering two-way services. The moral of this story is that operating a network that supports both residential and business markets can pay dividends. Granted, each leg of the business has to stand on its own. However, avoiding one market segment in favor of another leaves a company vulnerable to competition from incumbent providers, who already have business units that address both. Justin J. Junkus is president of KnowledgeLink Inc. To discuss this topic further, you may email him at email@example.com.