Cable Continues to Thrive in Carrier Ethernet Segment

Cable Continues to Thrive in the Carrier Ethernet Space The cable industry’s success in the carrier Ethernet segment is continuing. In its Leaderboard report for the end of 2014, which was released in mid-February, Vertical Systems Group found that three of the top eight providers are cable MSOs.

The MSOs are Time Warner Cable (fifth), Comcast (sixth) and Cox (seventh). To qualify for the Leaderboard, a carrier must ship 4% of Carrier Ethernet (CE) ports, said Rick Malone, VSG’s co-founder and principal. Malone would not comment on the precise market share percentages of the four companies. He did say that the overall CE market is growing dramatically: It enjoyed a 23% gain last year, which followed a 26% increase in 2013.

Cable operators’ CE offerings and strategy to the market are not monolithic. Indeed, Malone said each approaches the market in unique ways dependent upon their business goals, their legacy infrastructure and the nature of their footprint.

Here is a look at the three players:

Time Warner Cable: The leading MSO on the Leaderboard, Malone said, has tailored its offerings to its unique footprint - and customers, such as financial services companies - that demand top notch services. “Time Warner Cable has a lot of private line services,” Malone said. “The reason is that their footprint is very well penetrated in the New York City and Los Angeles areas. Those are two geographies that are that ripe for this kind of private line connectivity.”

Satya Parimi, Time Warner Cable’s group vice president for business services, said that initially TWC was invited in as a backup provider to the incumbent ILECs and focused on businesses with 20 to 500 employees, who may have been spread over a half-dozen or so locales. The main product was point-to-point Ethernet - connecting locations - or providing dedicated Internet access. The pitch was that TWC can provide it less expensively and more quickly.

Parimi said those basics still are in place, but that they are evolving. The company is organically growing its appeal. It is moving from secondary to primary status with many customers, and the size of the companies served is tracking upward. Larger users, such as school districts and state governments, are becoming more common. “We brought competition and used new and better technology,” he said. “That has massively changed the landscape.”

Cox: Brian Rose, the director of product development for Cox Business, focused on speed to market as a key to Cox’s success. “When we win a deal, we have local teams ready to roll and go forward aggressively to make it happen,” he said. “Some incumbents have to deal with more bureaucracy and even established time lines [dictating how quickly work will get done]. Our advantage is our eagerness in chasing that business.”

Rose points to the company’s launch of IP VPN capabilities as another enabler. Cox, he said, has long offered Ethernet-based virtual private networks (VPNs). Last year, it made IP VPN services available. Both run atop its Multiprotocol Label Switching (MPLS) network. Thus, a customer can choose either style of VPN or, potentially, mix both.

The key is a comprehensive offering, Rose said. “The biggest thing is we want the sales team to walk in door want and say: 'We have a great network, great customer service and here are all the buildings we reach. If you have a network bias toward an IP VPN or an Ethernet VPN, we can do it.'”

Comcast: Malone said that Comcast, which is a relatively late entrant into the carrier Ethernet market, employed a strategy of gaining as much traction as quickly as possible through a focus on dedicated Internet access. The company also provides large scale connectivity to high profile sports arenas, which generates revenue and is a great marketing tool.

Michael Tighe, the executive director of data services for Comcast Business, agreed with this assessment. He also said that one of the company’s strengths is the ability to stand up services far more quickly than the telephone companies. Comcast, he said, in some cases can deliver services within 60 days, which is as little as one-third the time needed by telephone companies. Telcos often have older technologies, more layers of bureaucracy and have diverted a higher percentage of their budgets to wireless.

Tighe described a picture of a market that is changing. Comcast did - and still does - focus on core verticals such as government, education and healthcare. The size of the network supporting those type of companies is growing larger and more sophisticated. The services offered have evolved from the fairly rudimentary Ethernet dedicated Internet access (EDI) to Ethernet local area networks (ELANs), which enables multiple locales to appear to be on the same LAN.

The industry clearly is well represented in this year’s report. The next may look significantly different. If Comcast’s acquisition of TWC closes, a new two-tier carrier Ethernet powerhouse will be created. That, certainly, would make the next Leaderboard look a lot different. It also would deemphasize the regional nature of the cable industry. This is important because the larger the target group is, the more ubiquity they demand. A combined TWC/Comcast would better be able to serve these large enterprises - and work with other operators to help them do so as well.

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