With the help of some long-distance telephony carriers,
cable operators are poised to quickly enter the telecommunications arena and compete with
established incumbents. With so much focus on residential telephony, many companies lose
sight of the fact that a host of "other" telephony services can be profitably
provided by cable operators to their customers. Offerings such as shared-tenant services,
coin phones, business-to-business services and the like are all ripe for the pickings.
Another is long-distance service, and one company making a
strong pitch to cable operators is Austin, Texas-based IXC Communications Inc.
With four key executives who possess cable-TV backgrounds,
the company has a keen understanding of how to package technology with a suite of services
that become attractive to today's cable companies.
Adelphia Communications Corp. and its competitive
local-exchange carrier subsidiary, Hyperion Telecommunications, are already interested,
and they recently signed a three-year deal with IXC for long-distance services.
Under the terms of the nonexclusive arrangement, IXC is
offering Adelphia a turnkey, self-branded service that contains a full range of calling
services, including: "1 plus" domestic and international service; 800/888
toll-free calling; calling cards; and debit or prepaid cards.
Adelphia will offer long-distance services to its cable
customers, while Hyperion will market the services to its customers, which are primarily
businesses.
Under this scenario, Adelphia doesn't have to construct
telecommunications facilities, because IXC takes care of customer connection and
switching.
"We call this a switchless arrangement," said Del
Henry, senior vice president of emerging markets at IXC.
In addition to offering calling services, IXC is also
targeting cable operators with its set of billing, order-entry, customer-care and
collections services. The idea is to allow cable companies to enter the telecommunications
arena immediately, avoiding all typical barriers.
"We're a bridge so that they can launch these services
quickly," Henry said.
Adelphia is currently able to offer long-distance telephony
services under its brand name to about 1.5 million cable subscribers. The company is also
offering inbound 800 access. Adelphia tested the service for roughly 18 months before
signing the three-year, $12 million deal with IXC.
Due to its executives' backgrounds, IXC might be uniquely
positioned to understand and focus on cable companies as potential customers. Henry spent
31 years in the cable industry, starting as a door-to-door salesman, knocking on doors
alongside Jeff Marcus and others. He was later president of American Cable in Phoenix and,
at one time, part-owner of Gill Cable.
IXC president and CEO Ralph Swett, executive vice president
of finance and chief financial officer Jim Guthrie and director of strategic operations
John Breithaupt all have backgrounds with Times Mirror Cable, as well. Swett is a former
president and CEO of Times' cable division; Guthrie was CFO; and Breithaupt was vice
president of customer operations in the Phoenix system.
Apparently, their message is striking a chord with MSOs.
Henry said deals have already been struck with three of the top seven MSOs.
And now that industry heavyweight Tele-Communications Inc.
is about to be acquired by telecommunications giant AT&T Corp., other MSOs have
inundated IXC with inquiries, according to Henry.
"The interest level that we've had from cable
operators over the past four months is 50 times that of the last 18 months," he
gushed. "AT&T's move will be great for IXC ... we hope that they do very, very
well."
Cable companies that are considering entering the
long-distance telecommunications market have to make one fundamental decision early on,
Henry said. They can offer a "switchless" solution, where their capital
investment is nearly zero; they can choose to deliver residential services over the hybrid
fiber-coaxial network; or they can focus on business customers through a CLEC subsidiary.
Clearly, any approach can be lucrative, Henry said. He
pointed out that Comcast Corp., Cox Communications Inc., Cablevision Systems Corp. and
MediaOne have all rolled out HFC-telephony successfully, while Time Warner chose to focus
on the CLEC market through its Time Warner Telecom entity.
Henry was bullish about the future of telephony services
coming from cable companies.
"I expect most of the top 20 cable companies to be in
telephony in the next 18 to 24 months," he predicted.
Time Warner Telecom partnered with IXC in a two-year deal
to offer services for its business customers. This past summer, Time Warner connected
Albany, Binghamton, Rochester and New York, N.Y.; Austin, San Antonio and Houston, Texas;
Charlotte, Greensboro and Raleigh, N.C; Cincinnati and Columbus, Ohio; Indianapolis;
Memphis, Tenn.; Milwaukee; Orlando and Tampa, Fla.; and San Diego.
IXC is about to launch an IP-based (Internet protocol)
network, recognizing the fact that the market is moving in that direction, according to
Mike Vent, senior vice president of engineering and operations. Vent is charged with
expanding IXC's network, which already reaches coast-to-coast.
Under Vent's supervision, IXC is expected to have 13,000
route miles of fiber active by early 1999. The company is constructing a state-of-the-art
SONET-based (synchronous optical network) network. And this past fall, IXC implemented
what is believed to be the first long-haul 80-gigabit OC-192 network. The company employs
dense-wave-division-multiplexing technology to offer its customers incredible bandwidth.
Roger Brown is the editor ofCommunications Engineering & Design,
a sister publication to Multichannel News.
