ip telephony meets cable tv sandy teger and david waks system dynamics inc. fall’97 von september...

IP Telephony Meets Cable TV

Sandy Teger and David WaksSystem Dynamics Inc.

Fall’97 VON

September 25, 1997

Copyright © 1997

System Dynamics Inc.

Copyright © 1997 System Dynamics Inc. Sandy Teger and David Waks Slide 2

Overview

•Cable industry is rolling out high-speed Internet access and services

•Starting to introduce communications applications

•Many potential markets and applications for IP telephony over cable

•Corporate work-at-home is attractive initial opportunity

•Addition of video is natural migration


Cable Industry Today

•Cable passes more than 97% of US TV households

•Penetration stable at about 65%

•Systems have been islands, slowly interconnecting– “Clustering”– “Interconnects”

•Relatively fragmented industry, but consolidating– Top 10 multiple system operators (MSOs) have 75% of

subscribers


Cable Operators See Bright Future...

•Operators have valuable assets– Deployed physical plant– Bandwidth to the home - “broadband real estate”– Customer relationships

•New services are promising– Digital television– High speed data services – Telephone services, especially IP telephony

•Microsoft boosted industry– $1 billion investment in Comcast


... But Challenges to be Overcome

•Plant Upgrades– Hybrid Fiber-Coax (HFC) architecture, two-way

•Proactive Network Management– Plant status monitoring and response systems– Data network management– Traffic measurement, capacity planning

•Culture changes– Plant reliability– Customer care


High Speed Data Over Cable is Real

•Major changes in past year

•Modems maturing

•Plant preparation moving quickly

•Rollouts under way in North America– Commitments to aggressive deployment by major MSOs– Cable operators are acting as ISPs

•Trials and rollouts in many other countries


“Cable Modems Pass 2M Mark” (Multichannel News 3/17/97)*

MSO Locations Subscribers

Time Warner Akron/Canton, OH; Elmira, NY; Portland, ME; SanDiego; Troy, NY

10,000

MediaOne Boston; J acksonville, FL; Detroit; Chicago; Atlanta 4,500+

Rogers Toronto; Vancouver; 4 other cities 5,500

TCI Sunnyvale/Fremont, CA; Hartford, CT; ArlingtonHeights, IL; Seattle; East Lansing, MI

2,500+

Comcast Baltimore; Philadelphia; Sarasota, FL; 3 others 2,000+

Shaw Toronto; Calgary; Edmonton 1,500+

Cox, J ones,Adelphia,CablevisionSystems

Varied 3,000+

TOTAL (excluding smaller MSOs and independents) 29,000+

* Homes passed by data-service ready networks (1.5M in U.S., 0.5 in Canada)

** excludes institutions

HSDS Subscribers in North America**

Source: Cable World 7/21/97


Service Operator

- Location

Modem Monthly Rate

Road Runner Time Warner

- Akron/Canton, OH

- San Diego

- Portland, ME

Motorola

Motorola

Toshiba

$39.95

$44.95/49.95 (sub/non)

$39.95 (residential)$79.95 (business)

@Home TCI

- Fremont, CA

- Hartford, CT

LANcity

Motorola

$34.95

$39.95

MediaOneExpress

MediaOne

- J acksonville, FL

GI Surfboard

Dial-up

LANcity

$34.95/44.95 (sub/non)

$17.95

$39.95/49.95 (sub/non)

WAVE, nowWAVE@Home

Rogers

Newmarket, Ont.

LANcity $C 55

OptimumCable

Cablevision Systems

Long Island, NY (usingRoadRunner content)

LANcity

Purchase plan formodem: $295

$44.95 package plan

$34.95 purchase plan

High Speed Data Services Over Cable - Some Examples


HSDS Is Much More Than Faster Dial-up

•Cable modem technologies have common underlying characteristics

•Truly high speed connection between cable “headend” and the PC– Downstream (to home): 1 to 27 Mbps– Upstream (to headend): up to 10 Mbps– Bandwidth shared between users– High speed connection to PC

•Continuous connection

•Based on Internet Protocol (IP) and Winsock

•Some technologies include QoS

•Provides a “fat pipe” for IP applications


HSDS Value Proposition

•“Blazingly Fast” — connection and services

•“Always On” — becomes a utility

•Doesn’t tie up phone line

•Turnkey solution– Modem, NIC, software, in-home installation

•End-to-end system support - one phone call

•Content– Links to best sites– Becoming specialized for high-speed delivery

•High quality of service when “on-net” (@Home)


HSDS Markets

•Two distinct markets– Residential (households with PCs)– Business (businesses with PCs)

•New market for most cable operators

– Different needs in each market and segment

•PC households have distinct segments– Self-employed working at home (full time, part time)– Corporate employee working at home

•Telecommuter: full-time at home•Corporate after hours: part-time at home

– Non work at home


HSDS Applications

•Multiple applications– Two distinct types: content-based and communications-

based– Differing characteristics– All evolve over time

•Broadband changes the equation

•Near term– High-speed access to Internet– Web content hosting– Telecommuting/remote LAN access– IP telephony

•Longer term– Videoconferencing and video telephony– …and many more

Interactive gamesDownload Play

WorldWide Web Electronic mailInternet

Continuum of Electronic Applications

Content Communications

Telecommuting

Broadcast radio and TV

Video telephony and teleconferencing

Information on products and services

Transactions and supportElectronic Commerce

TelephonySubscription video services

Commercial on-line services (AOL, CompuServe, Prodigy)

Proprietary content Email, chat, forums

Copyright © 1997 System Dynamics Inc.

Remote LAN access


IP Telephony Attractive to Some MSOs

•Diminished enthusiasm for primary telephony– Varies by MSO — some still enthusiastic– Requires major infrastructure and culture changes– Regulatory uncertainties– Key issues: powering, standards, pricing

•CableLabs actively promoting IP telephony– Natural application for HSDS– Proactive testing and vendor interactions– Encouraging interconnection of major MSO backbones

(Time Warner, Media One, @Home)

•Several MSOs intrigued by revenue potential of IP telephony


Multiple Motivations for IP Telephony

•“Do it cheaper”– Strong motivator, but expect to decrease over time

•“Meet people”– Basic human needs and emotions

•“Do it better”– “Value added” applications– Early opportunities in business segments


Cable Applications for IP Telephony

•Many applications -- residential and business– Second line telephone service– Corporate work-at-home– Corporate intranets– Customer sales and support / Call centers

•Broadband enables logical extension from point-to-point voice to – Data collaboration– Video– Multipoint


Corporate Work-at-home Opportunity

•Segments– Telecommuter– After hours

•User needs: Transparency “Virtually There”– Remote access to information and systems– All PBX functions– Robust access to co-workers– Easy to install, easy to use

•Company needs– Demonstrable cost/benefit– Consistent (avoid multiple solutions, multiple vendors)– Secure– Controllable– Minimum “hassle value”


The Vision - Location Transparency

•Worker at Home 1 has the ability to– Access data and applications at corporate offices– Operate as an extension off the corporate PBX– Collaborate with other workers, whether in offices or homes

Home 1

Home 2Home 3Local Corporate

Office

Remote CorporateOffice


Broadband Access and IP Telephony are Key Enablers for the Vision

Needs Enablers Status

Remote PBXaccess

Multiple solutions - IP telephonygateways

Early implementations

Remote LANaccess

Broadbandconnectivity

Being done

Security Firewalls, VPN, IPtunneling

Solutions becomingavailable

Data Collaboration PCs

T.120 Standard

Low-costimplementations

Standard business tool

Accepted

MS NetMeeting, others


Video Is a Natural Migration

•Some IP telephony vendors already supporting– VocalTec, Microsoft

•Broadband access removes a major limitation on video quality

•Natural enhancement for some applications– Collaborative work from home– Call centers

•Inhibitors remain– Home is likely to be ready for video before the office– High complexity in equipping home PC for IP video– QoS not widely deployed in early cable modem rollouts

•Broadband access will accelerate use of video when appropriate to “do it better”


IP Telephony and Cable - Natural Partners

18 Beaver Ridge Road, Morris Plains, NJ 07950-1901

(973) 644-4739 Fax (973) 538-6003

dave @ system-dynamics.com

sandy @ system-dynamics.com

http://www.system-dynamics.com

For More Information:

System Dynamics Inc.

ip telephony meets cable tv sandy teger and david waks system dynamics inc. fall’97 von september...

Documents

home slide

david waks slide

david waks system dynamics

comcast slide

cable tv sandy teger

natural migration slide

remote lan access slide

cable modems