The news on Sept. 25 that Beneficial Bank had retained
Comcast (NASDAQ:CMCSA) Business Class for voice and data services for its network in the Philadelphia metropolitan area is a nice win for the cable operator. Such a deal is no longer a revelation, however. Cable operators, after all, sign deals like this on a fairly regular basis.
But it is informative to take a closer look to determine precisely why Comcast won the deal over the kind of capable competitors found in the Philadelphia market - which, of course, is one of the most sophisticated in the country.
The genesis of the contract, according to information from both Comcast and Beneficial, was grounded in the familiarity between the two. Comcast provides traditional video services to the bank. Both are headquartered in the city, so executives are bound to bump up against each other fairly often.
That home field advantage, however, would not get Comcast very far if the MSO's business services didn't measure up. They obviously did: Comcast was invited in to serve four of Beneficial's 66 offices. That trial -- one of the branches was in New Jersey and three in Pennsylvania -- obviously went well. The bank didn't release a formal request for proposals or request for information, but did consider Verizon and several other providers.
“We worked with another vendor, Access IT, to do penetration testing, which resulted in positive outcomes across the board," Maines indicated in an email subsequent to an interview. "This led to our decision to move forward with Comcast Business Class as our new provider.”
[Native Advertisement] The bottom line, according to Beneficial and Comcast, is that the operator won the deal because its carrier Ethernet technology and the ancillary services designed to secure it evolved just as the demand exploded and the composition of that demand transitioned from being highly weighted to voice to more of a mix of voice and data applications.
And didn't hurt that the services Comcast offered came in at about half the cost of the incumbent's. "As it continued to evolve, it got to a place at which there are real significant cost savings while having larger capacity for each of the branches," said Rob Maines, the director of operations for Beneficial. "It's a win-win for us."
Maines described a sea change from the old to the new that has filtered down to give IT planners at businesses of all sizes - from small shops to enterprises - far more choices than a decade ago when T-1s were the state of the art from both the capacity and security perspectives.
The big advantage that carrier Ethernet has over T-1s is that the latter generally are not divisible: If an organization needs a bit more bandwidth, it needs to buy an entire new T-1. Carrier Ethernet, however, allows a far finer match between users' needs and the amount of capacity that they must buy.
The general theme goes beyond bandwidth itself: A customer requesting more Ethernet bandwidth can be serviced via a remote adjustment to the Ethernet port configuration. On the other hand, a new T-1 is likely to require a service provider visit, said Karen Schmidt, the executive director of management and strategy for Comcast Business Services. The ability to allocate more bandwidth to a remote location is no small issue, she said, in an era in which data usage is expanding so quickly.
The ability to scale efficiently is nice, but would essentially be meaningless if the company - especially one with the sensitivities of a bank - couldn't be sure that the data flowing over those Ethernet pipes is safe.
The advent of the Advanced Encryption Standard (AES) and other approaches to keeping data safe make it possible to use shared infrastructure with a high degree of confidence - and to start listening more intently to pitches from companies that don't rely on T-1s. It's simply an outgrowth of the great advances made during the past decade. "The landscape has changed," Maines said.
The follow-on question is which industry is best positioned to take advantage of that transition. There are three major players: The incumbent telephone companies, the cable operators and non facilities-based competitors.
The cable industry's argument - and the one that won the day in the Beneficial contract - is that the cable industry offers the best of both worlds: A facilities-based operation that is not concerned with squeezing every last dime out of a legacy T-1 infrastructure that it feels obligated to protect. The timing is good for cable operators in another way as well: The migration from T-1s to Ethernet is happening at the same time the cable industry is looking to enlarge its business targets from the smaller to larger mid-size and enterprise level customer base.
Beneficial is not done growing. The company plans to add two branches early next year and another two or three in early 2014. The thinking is that Comcast's services will be able to grow as the footprint does.
While a nice win for Comcast, the Beneficial Bank contract is not a game changer. But it is a good example of how the industry's technology and the broader changes in the telecommunications business have come together to make cable a more important player in business services. "What Comcast had was better architecture and better built-out architecture," Maines said. "The amount of resources they've invested to develop broadband services was very attractive."
Carl Weinschenk is the Senior Editor of Broadband Technology Report. Contact him at firstname.lastname@example.org.
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