Pipeline Profile: Michael Collette

SCTE member since 2001 Title: CEO, Narad Networks Broadband Background: Collette’s appointment as CEO of Narad was announced just last week. He brings to the job the knowledge he gained in his previous position, CEO of Ucentric Systems, and experience in marketing, sales and business development for companies including OpenTV and ICTV. Can you elaborate on your transition from Ucentric to Narad Networks? You’re wondering how the software guy jumps into plant? I’ve been working with new media and communications technologies for 15 years. Much of that time was spent with plant products. In the late ’90s, I looked at telco architectures and switched video, as well as server/networked video, and advised equipment manufacturers such as Scientific-Atlanta and Philips on new products and acquisition frameworks based on emerging plant architectures. It’s been really interesting to circle back to pipes and architectures. As well, at Ucentric, we really wanted big, fat pipes into the home to feed the media server and the home network. So, in that sense, one thing led to the next. Did you take any time off after Motorola bought Ucentric? Yeah, actually, I did. I took about four months off and tried to do as little work as possible. Before too long, I was drawn back into the venture space. I discussed CEO opportunities with different companies, and in the end, I decided to join Narad. We have a great mix of talent, developed technology, intellectual property, and, very important to venture dynamics, a monster market. What’s driving the lower cost/greater performance behind Narad’s FTTx switch? First, we’re updating technology, and as we do so, we can move to more powerful and less expensive components. Second, we built a manufacturing plan that allows us to project cost over volume. Much of the improved economics derives from an understanding of how volume purchasing and volume manufacturing will drive cost. Previously, all our pricing was based upon handmade volumes. Third, we developed a plan for a series of cost-reduction programs that we’ve feathered into our manufacturing plan. Fourth, and perhaps most important, the new switch allows us to support a diversity of architectures, and each architecture has a different mix of fixed and variable components. As this mix moves, the end cost per customer moves. Last, we show how density in a deployment impacts average cost per customer. As density in a node increases, the amortized cost of the fixed cost elements declines—especially in the new FTTC and FTTP architectures. What are the network prerequisites to an operator’s deploying a solution like this? There really aren’t any. The Ethernet over coax aspect of our product was designed to run on any cable system. Our carrier runs above 860 MHz and below 1.2 GHz, so it will run on any plant today. The fiber-based solutions are basically off-plant. We leverage the existing coax plant extensively and can run fiber as justified, needed or preferred. Is the clock really ticking now for MSOs to get into the enterprise market? Can you succeed here without voice? I guess it depends on who’s wearing the watch. If an MSO is public, then the pressure to grow free cash flow is really intensifying, and the enterprise market is clearly a great opportunity to grow by degrees large enough to feed the Wall Street beast. Competitively, as the telco advance starts to mount, it becomes increasingly important to attack the cash flows they’re using to build fiber plant to attack cable. The longer an MSO waits, the longer they give the telco a free ride. With respect to voice, from an operator standpoint, about 80 percent of the total commercial market spending is voice. So really, a voice product is very important. On the other hand, the market is just plain enormous, and there’s clearly a fair amount of early growth available to an operator from data alone. So, short term, voice may not be necessary. Long term, for revenue growth, investment return and strategic impact, voice is essential. How software-intensive is an offering such as Narad’s? There’s an extremely advanced and mature software system at the core of Narad’s platform. We have terrific traffic engineering, provisioning, management, and alarm system that is essential to providing commercial-grade service to business customers. This system is comprised of a management server that runs at the headend and firmware clients that run in all of our plant equipment. The resulting switching fabric allows us to really take full advantage of all the neat things that engineers and traffic managers might want to do with a cascade of switches—things like intelligent re-routing of traffic in the event of a line cut or sub-switch to sub-switch traffic flows to avoid aggregation of inter-node traffic. Do bandwidth (spectral) constraints really exist today? Or is this a ‘tomorrow’ question? It’s clear that discussions about spectral constraints really exist today! Actually, we find that this varies widely across MSOs. It’s very clear that the pressures from things like HDVOD and Verizon FiOS are very real. That said, not surprisingly, MSOs that are largely built and running on 860 MHz plant are not as bothered about spectrum issues as those running at 750 MHz or below. The main question is a business question: What uses of spectrum produce the greatest profit? In this regard, we’re confident that plant planners will make sure that the very big market and very fat profit margins in commercial services are accounted for appropriately as part of the spectrum plan.