The story of the cable industry’s entrée into the incumbent local exchange carrier (ILEC)-dominated business telephony market reads like a screenplay, with each act building on the ones that came prior.
The prelude was residential telephony. Then came small-office home-office (SOHO). For several years now, some MSOs have been addressing the small-to-medium-sized business (SMB) segment. Along the way, technology also evolved from circuit-switched telephony to PacketCable-based voice over IP (VoIP). Now one finds telephony feature servers, Session Initiation Protocol (SIP)-enabled customer premises equipment (CPE) and other innovations. At the same time, MSO portfolios also include legacy services traditionally required by larger businesses, such as Primary Rate ISDN (PRI) lines.
While not the focus of this article, high-speed data connectivity and applications (such as Microsoft Communications Services, part of the Comcast package) are linked to the telephony services that operators can sell to businesses.
Addressing the overall needs of SMBs remains a current priority, with some emphasis on the "S" end of that spectrum. "Everyone is trying to maximize penetration in the very small business (segment) and aiming to get the market share there, equal or greater to the residential space," Chris Carabello, director of marketing, MetaSwitch, said.
But as the lower cost structures and greater flexibility of IP-based platforms continue to win over businesses, a pervasive opportunism could characterize the next act in this unfolding drama. (For more on SMB VoIP opportunity, see sidebar.)
"It’s just a matter of time before everyone’s very aggressive in all aspects of the business market," Carabello said.
PRIs, feature server
Charter Business, for example, serves the SOHO market, but has expanded into PRI service, as well. "We offer that for the small or medium-sized enterprise that has their own switching gear on site that we would connect to," Pete Hicks, director of product management, said.
Cable operators have typically provided PRIs by bringing in fiber or leasing lines from an ILEC. The case of a large business wanting four to five PRIs would justify building out fiber. But most businesses only require a single PRI, said Charles Scarborough, senior director of product development, Cox Business Services.
"(With) a lot of smaller opportunities, we had to walk away from the business or figure out how to deploy fiber to that location," he said.
That is no longer so. Cox recently began providing PRI trunks over DOCSIS, a long sought-after capability. The company has launched this service in several markets and is already delivering hundreds of such trunks.
While there is no formal spec for PRI over DOCSIS, Scarborough credits quality of service (QoS) provisions in PacketCable 2.0 for helping to enable this solution, which smartly leverages existing assets.
"Our coaxial network is almost ubiquitous, so that enables a very rapid turn up of trunk services in days, not months, and it is extremely cost effective compared to a traditional C (competitive) LEC," Scarborough said.
Operators can deploy PRI trunking solely as an ILEC replacement service. However, Cox has been adopting a feature-server architecture that surpasses the incumbent technology’s capabilities.
Based on the BroadSoft BroadWorks platform, this architecture is breaking new ground by facilitating "out of the box" provisioning of advanced features, such as Web-based call control and others.
"That is not something we have been able to do with our legacy circuit-switched/packet-switched environment," Scarborough said.
By early March, Cox had rolled out the platform in 75 percent of its footprint, using its network to provide these types of applications to its PRI trunk customers, in addition to services such as simultaneous ring and disaster recovery. This can extend the life of a PBX.
"We are now gaining a competitive advantage over legacy PRIs," Scarborough said. "With new advanced technology and the feature-server capabilities, we can breathe life into what used to be a staid product."
Business customers would not have to purchase a new phone system to gain advanced functionality. This is of particular interest because many upgraded their PBXs for Y2K, and the lifecycle of these systems is about ten years. Using a hosted solution, a company essentially rents a feature set on a monthly basis.
"The pay-as-you-grow model appeals particularly in today’s economy," Chris Gugger, senior director, CedarPoint Communications, said.
According to a recent Frost & Sullivan report, IP migration and unified communications are driving enterprise telephony platform markets.
Businesses need IP for two reasons. "Cost savings" comes first, said Frost & Sullivan Industry Analyst Vanessa Alvarez in a statement. But IP also helps satisfy "the need for tools to create a collaborative environment, which in turn drives innovation and productivity."
Many businesses are inserting a SIP-based IP card into their existing PBX, which allows it to handle VoIP. Alternatively, they are upgrading to a SIP PBX, which allows for even more features, Gugger said.
SIP trunking, therefore, is "emerging" as an opportunity for cable operators. "I don’t want to say it is an explosion. It is a slow crescendo," Scarborough said, noting that Cox is in trial now with SIP trunking and plans to go "more deeply" with it this year.
Charter also finds SIP trunking "very attractive" and is in the "detailed design" phase. "We believe a high percentage of IP-PBXs (are) installed that have that capability and therefore demand those types of services," Hicks said.
By nature a packet network, DOCSIS lends itself well for SIP, which is IP from end-to-end and thus requires no protocol conversion.
The Cox experience with PRI is instructive. "Whereas the ability to support PRI over DOCSIS has been problematic, all the problems go away…with SIP," Scarborough said.
SIP trunking, in turn, can accommodate different sized businesses — Hicks said Charter could just "stack trunks" — because the interface is the same whether there are three trunks or 1000 trunks.
To customers, enhanced functionality is a real payoff.
"A customer may have a very small key set with four lines coming in, but 12 phones behind the key set," Scarborough said. "If you have an IP key set or IP PBX, you could have four SIP trunks and get 12 DIDs (direct inward dials)." (For more on SIP, see sidebars, page 17 and 18.)
Enabling mobility is particularly attractive to many businesses.
Within a SIP framework, each employee is assigned a single one number, or ‘address of record’ (AoR). Then the business extends IM capabilities, content sharing and video to the employee’s mobile device.
"(SIP also) allows the IT manager to extend all corporate policies to the mobile device. Call limits or different types of policies are all managed through a single point," Leslie Ferry, vice president of marketing for BroadSoft, said.
Operators can power this type of mobility even if they do not have a wireless offering. (Cox is preparing to launch a residential wireless product in March, but is not ready to reveal anything related to a business offering.)
Disaster recovery also is an attractive feature, Scarborough said. If a line is cut, an automatic failover trigger will route communications to another location, or the customer can control it on their own via a Web interface. These types of capabilities might not be inherent to a specific PBX. "But (the) services can be extended and delivered through the SIP trunk," Ferris said.
More and more, business-class telephony is being defined by an expanding wish list of features.
SMBs are looking for the same features that their larger competitors enjoy, such as hunt groups, unified messaging, front office attendant and mobility, according to a paper that Sigma Systems’ VP Product Management Rick Mallon wrote for Cable-Tec Expo last October. It is such capabilities, in addition to a bullet-proof back office, that distinguishes business from residential voice. (For more on provisioning, see sidebar.)
"Many cable MSOs and telecoms have attempted to grab a share of this market away from the incumbents by rolling out basic feature packages," Mallon wrote. "But the SMB customer is technology savvy."
While in today’s economy, businesses may turn away from the incumbent on cost alone. But a winning voice strategy will also include the feature-sets and tools that businesses themselves need to improve and win at their own games.
-Monta Monaco Hernon is a contributor to Communications Technology.
SMB VoIP Opportunites
The SMB VoIP market for service providers is $2 billion and growing 19 percent per year, according to an InfoTech Research report cited by Sigma Systems VP Rick Mallon, in his Cable-Tex Expo paper last fall.
Mallon also used statistics from a Frost & Sullivan study showing that the North American hosted IP telephony market will grow to $5 billion by 2012. Also by that year, revenue from already installed hosted services will hit $7.2 million and there will be 14.5 million trunk lines.
With an overall 150 million business voice lines in North America, as stated by Goliath Business Knowledge, this indicates that there is a lot more room for growth.
SIP – related specs
Application profiles that build off of PacketCable 2.0 base specifications include Business SIP Services (BSS), which addresses a hosted service, and SIP Enterprise Connect (SIP-EC), which deals with SIP trunking.
The specifications related to BSS are PacketCable Business SIP Services Feature Specification and PacketCable Business SIP Services Provisioning Specification.
As for SIP-EC, the specs are still under development. They include SIPconnect 1.1 from the SIP Forum and enhancements to PacketCable 2.0. PacketCable SIP Enterprise Connect Specification, will encompass the above as well as any additional requirements.
(Source: "Packet Cable Architecture for Business Voice Services," a Cable-Tec Expo paper by Glenn Russell, David Hancock, and Sandeep Sharma, CableLabs.)
How to Sell a SIP Trunk
A cable operator can go a couple of routes, stemming from where the company draws the line of demarcation between itself and the business customer.
One option is to put it where the SIP trunk comes in. In other words, the customer owns the PBX and the operator is only responsible for the connectivity. "(But) some MSOs will go to VARs and offer what they consider a certified solution," Eli Baruch, senior director product management, ARRIS, said.
Existing interconnects that sell PBX and trunking services from the PSTN side have a rolodex of businesses and are looking to jump on the new technology bandwagon. "Alliances are particularly a way small cable operators can start penetrating the business market," Cliff Rees, CEO, XCast Labs, said.
Another option for operators with 10,000 to 80,000 customers would be a reseller model, purchasing an integrated package of technology and infrastructure from a company like XCast. "Most of them, at this point, are purely interested in residential, but a few are starting getting interested in penetrating the business market," Rees said.
On the other end of the spectrum are MSOs who are working to run the show themselves from start to finish, providing a complete end-to-end interface. "They will put the IP PBX behind and control and maintain that," Baruch said.
Providing and managing the PBX on premise is one type of managed service; IP Centrex is another. "Some of us are looking at driving deeper into the customer’s network," Charles Scarborough, senior director of product development, Cox Business Services said.
"Cox Business is not there, but those are things we are looking at closely."
Provisioning: Resi vs. Biz
There are differences between servicing a business customer vs. residential customer.
In a paper presented at Cable-Tec Expo last October, Chris Gugger, senior director, CedarPoint Communications, offered hints and suggestions on how to revamp what he terms the Order to Cash process, including training a sales staff on the differences in order taking between residential and business
"Elements… need to be well thought out and planned ahead before you launch the first business customer," Gugger wrote.
While residential order taking for a VoIP offering is relatively simple, a business order with multiple lines and advanced features is not. So while a semi-manual process involving a spreadsheet and the keying in of information is acceptable for the former, it will cause "mass" errors if used in the latter, according to another Expo paper authored by Sigma Systems’ VP Rick Mallon.
He suggested an order and provisioning system that is 98 percent automated, and the creation of standardized packages that combine the more than 60 features available in VoIP offerings in ways that make sense for particular vertical markets.