What follows is an edited transcript of a discussion on commercial services held at the SCTE Cable Tec Expo, in San Antonio, on June 1. MSO participants included John Dickinson, senior director of network operations, Bright House Networks, Tampa Bay; Tim Doran, director of product development, Rogers Cable; Keith Grunberg, sales engineer, Charter Business Services. For a summary of input from Steve Synder, senior partner, communications and high tech practice, Accenture, see sidebar. CT: You’re an engineer, John, so let me ask you a marketing question. What’s the story in Tampa? Have you been shooting at everything that moves, or have you followed a more targeted strategy? Dickinson: When we started out, we shot at everything that moved. We learned real quick that we can’t be everything to everyone. So we backed off and we came up with a product guide, and we segmented the market. We have small customers that basically take a cable modem. And to charge on top, for a value-add, what we did was ask, "What else do you want in terms of branded services and managed care?" We also looked into doing direct connect with fiber as a technology, and we really advanced it selling it to hospitals. A lot of that technology was available. We had the backbones in place. We convinced senior management there was business and that we can make a go of this. In 1998-99, we really started to hone in and refine our product guide. I think what is key is this: to keep a simple plan and to define those services up front and to set expectations with customers—and make sure expectations are met. What you are offering them is also driven by your competition. You always have to look at that. Make sure your score sheet is comparative with theirs. CT: Are the larger companies more difficult to tackle? Dickinson: They are difficult to tackle, but they are a breath of fresh air once you win them because they are self-sufficient. What we find is that one of the largest challenges with the smaller guys, is that they are more dependent on the service providers to assist them with their LAN (local area network) and IT needs on the network. So the larger guys are a tougher sales cycle, maybe a six-month win, but once you win them, they are pretty much hands-off. CT: Keith, what can you tell us about the approach that Charter takes? Grunberg: Our thinking is more, "We can win the big RFPs (requests for proposal), but let’s go out for all of that low-hanging fruit because it is there and ripe for the picking." Going out and meeting with the telecommunications consortium groups is a very key component for us, especially in the Northwest. We get in and find out what the communities and municipalities and school districts need. Those are great low-hanging fruit areas because these folks have strapped budgets. We can walk in and give them a proposal that is basically the cost-plus model and then work with them on their budgeting, which may take up to 12 months. CT: Tim, what customers you are serving, which segments might those be, and what are they are looking for? Doran: Rogers Cable has only been addressing the commercial space since 2002. We started at the small business level. It is probably a difficult segment to reach and serve economically and effectively, but we built our revenue business there. In 2003, we brought in some former telco people to help us build the plant and a team to address the enterprise. That plan really first addressed what we are calling distributed enterprises, typically retail, but also branch offices. It is not a flashy business, but it combines our strength, which is broadband, and it gives us an opportunity to build a managed service around that. CT: What sort of businesses are these? Doran: A typical enterprise in Canada would be a giant chain of coffee shops that is just getting into supply-chain integration and has never been able to afford an always-on connection to all of their stores. So we will come in and fulfill many thousands—in a lot of cases—of broadband connections nationwide using our plant, other MSOs’ plants and DSL (digital subscriber line)—God help us—when it comes to that. And we will run a managed IP VPN (Internet protocol virtual private network) for them. We are very cost competitive vs. our competition, and we find our competition is not paying a lot of attention to this space. In the bigger business arena, we have won a number of large metro Ethernet deals in the MUSH (municipality, university, school and hospital) sector. It’s not easy to get these folks, but often we have an open door for an RFP. We have worked very hard on a small number of RFPs, and we try to control our folks to make sure we focus our efforts. And we have won a number of them. CT: How do service level agreements (SLAs) figure into what you can do and offer? John? Dickinson: Tim (Doran) had pointed to the coffee shops as a part of a chain of thousands of coffee shops, but their budgets are very small. So how do we offer them a good SLA that they can afford? One of the key tools there is using our GPRS (general packet radio service) network, which is cellular data, which is running at speeds two to three times of dial. And we set up our IP VPN to failover to that GPRS network in the event of an outage. That takes a great deal of pressure off us in this space. It allows the business to continue to operate if there is a broadband outage. And it means we don’t have to staff up the teams all across the country to support these businesses. On the other side, on the big pipe side of the business, our OSS (operations support system) is coming together, but is not fully ready for prime time. So we actually work with a partner who has a pretty sophisticated NOC (network operations center), and they actually happen to be our field services partner. We can work with them to negotiate an SLA. CT: Tim, what can you tell us about Rogers’ growing wireless assets and their relevance to this space? Doran: Cable has been a part of a privately held division of the holding company, whereas wireless has been shared with the public. That has changed. Ted (Rogers) has brought the wireless company into the (private) fold and it is now fully owned by the holding company, and we’re beginning to come together at the executive level. So overnight we have customers nationwide using our wireless service that we can address to all sorts of services. SMB (small to medium business) is the first and easy target where we can simply take our existing portfolio, with or without access, and nationally leverage those wireless channels. That, I think, is where the bundling opportunity comes in, and the residential starts looking at that as well. On the enterprise side, I look it as new infrastructure I can make good use of. Rogers Wireless actually holds more licensed spectrum, I think, than any other North American carrier, including a whole bunch of useful Wi-Max spectrum. So all of a sudden, I can either do any big point-to-multipoint network in all of the interesting markets, or I can get into individual point-to-point big bandwidth plays and make it a big part of my business nationwide. CT: Going forward, John, are you trying to pursue a unified technology platform, or are you mapping your portfolio with existing technologies? Dickinson: In Tampa, we have consolidated the product packages with specific technologies and specific connectivity. They really fit in three categories: you have the small coax customer, the small-to-medium sized customer, and the coax- and fiber-direct customer. So we have three different products, and we do the raw pipe, and then we have a managed-care piece that sits on all three of those. So really, we have six different products, if you look at it from that perspective. CT: Charter corporate is talking about multi-protocol label switching (MPLS) quite a lot. Has that filtered down to the system level yet, Keith? Grunberg: Charter has deployed MPLS services to support commercial customers since 2002, and we are providing private network connectivity over DOCSIS and optical Ethernet, and today we have deployed MPLS services either RFC 2547 bis and/or EoMPLS (Ethernet over MPLS) in three of our four divisions. Here in the northern portion of our Western Division, we’ve done some quotes on MPLS back-haul services. We’re working aggressively to interconnect all of our systems with a long-haul provider in our region. And that opens the door for doing multiple kinds of things with MPLS. It also opens the door for you to be your competition’s local loop provider. CT: We heard from Tim about the wireless play. What about other wireless applications, such as line extenders? Is that playing into any of your architectures or system designs or customer requirements? Grunberg: It’s another tool to reach that business customer. And we’ve been pretty successful in using wireless DOCSIS extension, so far. There’s some bugs that come up, but it’s definitely an added tool that we’re going to continue to use. Dickinson: We have found from our experience that it’s very effective. In some places, it has become or been seen as a temporary solution. We will be looking at the whole model of wireless to go after business that we otherwise might have thought had been left behind. CT: What about voice and how that fits in? John, what are you doing on that front? Dickinson: We don’t have a commercial voice partner right now, but we are actively seeking a partner. Put Time Warner in there, as we endeavor in trying to come to a follow up solution, including a type of small PBX (private branch exchange). That is probably the No. 1 question from customers: "Will you enter voice and data?" So it is key for our offering, and we’re hoping that by early in 2006 we will have that product. CT: To sum up, what can you tell me about what’s working and what’s not? Doran: What’s working for us is that we’re a new competitor in the marketplace. So many people got burned by other carriers that being stable and having a good reputation for a network is a really welcome thing. The challenges for us are around mostly adapting our back-office and our systems and our brand and our people in the commercial services space. Grunberg: Winning over a customer means understanding their needs. Then when you go back, you take in their needs and roll up and implement a plan. Perhaps you go for the low-hanging fruit first and then work your way up the food chain. Obviously, getting involved with consortium groups and getting your name with a network is a key component—and showing competitors how you can play in their ballpark. As for other questions: You’ve got backroom management—can you support it after turn up? How are you going to maintain it? Do you have plant extensions that are going to go and disrupt your service? You have to look at your core component and ask how you are going to upgrade it at that time. Dickinson: As for what Keith said, as far as supporting what you will offer—that is key going forward because you can get caught up expanding your market, and you might expand too quickly. But you have to have the support services first, so it’s hard to keep selling the new until you have the support. Going back to what Keith also said about understanding what the customer wants and properly filling the expectations—those really help guide you through this. Look at the traditional cable model, and you’ll understand the difference between a $50 customer and a $5,000 customer, how to react in the integration process, how to do that customer care piece. Looking at what we have as operators, we have 90 percent of what it takes. It is very good from a business perspective. We are pushing very hard in Tampa, and we’re moving forward and adding customers as quick as we can and not over-running our support. Jonathan Tombes is editor of Communications Technology. Reach him at jtombes@accessintel.com. Sidebar Opportunity, Planning and Telephony Here is an edited transcript of the input from Accenture’s Steve Snyder. The accompanying PowerPoint is available for downloading at the Communications Technology’s Web site (www.ct-magazine.com). CT: How do you frame this commercial services issue? Snyder: I think this whole discussion around commercial services isn’t "How I do put the T-1 on the plate for the small or medium business or enterprise costumer in the next 30 days?" It’s really about trying to move the battleship that sits in the network on the ground and how to take advantage of what effectively is an untapped revenue stream. CT: What’s your view of the market? Snyder: A big chunk of the businesses in North America today are small to medium. They vary widely on their technical sophistication, but they do have a lot of money to spend, and they really need flexibility in many cases. What they are trying to do is run their business, not run a telecom infrastructure. The interesting piece is that when you talk about untapped opportunities, MSOs are sitting at less than 2 percent market share. To me this says, "This is fair game, and it’s time to pull out the ammunition and take some shots at this market space." CT: Where is the revenue potential? Snyder: The new money is clearly in voice, and the potential for extensions into wireless or mobility-based services is extreme. All of these services play into what the small to medium businesses really need. So, if we start thinking of the transition points of where these businesses are, a lot of them are in the process of switching from dialup services to ad hoc services they’ve purchased to broadband. CT: This is more than just hauling around data, right? Snyder: Access is access, and if somebody’s pipe looks like yours in capacity, then you need to have some pieces that provide icing on the cake. And that starts getting into the relative margins that come out of new services. Access has a very heavy cost, but if you can keep laying on pieces on top of that, then you can start going after things that create greater stickiness. We’ve found that there is a lot of money starting to be spent for things like PC backup, for the security functions, for a number of things that just make life easier for many of these small businesses. That’s really where the margin gain is best. CT: Why not go after bigger businesses? Snyder: The corporate guys are harder to get at. They have small and concentrated purchasing organizations and tend to be much more structured in their purchasing process. They have very specific telecom needs. While you can go after some of that with things like fiber back-haul for the mobile carrier or for other types of more advanced, pipe-oriented services, the sweet spot from an MSO’s standpoint clearly is the residential-plus: moving from the onesie-twosies to 50 employees. CT: Verticals are important, too, aren’t they? Snyder: One interesting example that we found in terms of how to reach out to certain sectors is a small program that’s used by 90 percent of the rental equipment companies in the United States. The idea is to tag whoever in the marketplace has a direct channel to a whole series of people and a certain marketplace. So that’s about channels, it’s about getting a select but effective group of value-added resellers, being able to help.

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