There are those who might be wondering when it happened but a panel of MSO executives at the National Show in Atlanta say cable telephony has passed the deployment phase and is now part of an operating integrated services bundle. In a panel tellingly titled, "Talk about a Choice: The Remarkable Rise of Cable Telephony," representatives from Comcast, Time Warner Cable, Cox Communications and Cablevision Systems-pretty much the entirety of today’s cable industry, eh?-made it clear that cable is in the phone business. "This is a bigger story than just voice by the cable company," said Joseph Varello, vice president of digital voice product management at Cablevision Systems. Impact on incumbents Actually, while the story might be about competition and it might be about bundles and it might even be about wedging a mobile piece into to the services pie, it really is about voice being offered by a cable company, how that’s being accomplished and its impact on the incumbent providers who, the panelists agreed, have been slow to react to the cable threat but who are now waking up that something is going on. The carriers’ response to cable has been "Band Aids or throwing things against the wall and seeing what sticks," said Mark Sakalosky, vice president of field marketing and sales at Time Warner Cable, using Verizon‘s stutter-step introduction of a Voice Wing VoIP product as an example. "I don’t think we’ve seen that stick," he said. Another reason the telcos have been slow to respond, said David Pugliese, vice president of product marketing and management at Cox, is that they’re so big and unwieldy that they "didn’t have visibility into their networks to see that they were losing customers." When they did notice the losses starting to pile up, they responded, sometimes with advertising campaigns aimed at the cable companies, such as one that SBC-now AT&T-launched, that was so egregious Cox got a cease and desist order to have it pulled off the air. "They were pretty sloppy" with the claims made in the ads, Pugliese said. Not just price Unlike some over-the-top broadband telephony services, true cable operator-delivered voice is "not just a price issue (but) more of a price-value issue," said Varello. "It’s a whole lot of work and execution." There is, said Tom White, vice president of marketing at Comcast, no single way that the carriers are attacking the cable operators, noting that "the strategies differ by the RBOCs (so) we have to treat them differently, really on a market-by-market basis." Whatever the case, everyone seemed to agree that the battle has yet to be fully joined by all the parties. "The worst is yet to come," Pugliese predicted. "Once there’s a true alternative to the incumbent … they get more frantic than we’ve seen." One thing working in cable’s favor is that the phone companies are stuck as far as how low they can go in a price war. "Price is a tough area for them to go … and their regulation ties them up in that area," said Pugliese. Divvying up the money Cable, meanwhile, must be careful to integrate its voice product with other parts of the bundle without setting specific accounting goals or targets for any individual piece of the overall products package, said Sakalosky. "We can’t be concerned about where we’re allocating the revenue internally for accounting purposes," he said. Instead, he said, operators must focus on how much revenue they’re "pulling out of the house" with "cross-product integration" without determining that one segment or the other is the moneymaker and deserves all the attention. That policy will especially hold true as the cable industry adds the wireless piece to its bundle. "We’re not looking to just add a wireless platform bolted on," emphasized Sakalosky, pointing to Time Warner’s 15-month-old trial with Sprint in Kansas City. "We’re going to leverage that experience as we move into the opportunity going forward." Then there’s the JV The industry is also going to leverage its highly touted joint venture (JV) with Sprint Nextel. "It really is about cross-product integration," said Varello. "You don’t just drive voice into your business … and device; you’re rolling out integrated strategies. It’s all about the operational support systems. We’re at the very beginning of what this means for our business." The panel also touched on other issues relevant to cable’s voice rollout including … Commercial voice services: "We are all serving a base of work-at-homes (and) small business customers with our residential service," said White, noting that Comcast is "looking to get the foundation built this year with our rollouts." Peering among themselves: Cox has been able to put a "good chunk" of long distance calls on its nationwide IP backbone, saving the cost of going off net to the PSTN, Pugliese said, and MSOs can create "huge efficiencies," added Varello. As they said, it is really remarkable the way cable is becoming a voice provider. – Jim Barthold

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