Last week, the two announced that they had hooked up a fiber optic communications link between Cox’s business customers in Las Vegas and Charter’s business customers in Reno and Carson City (story here). While Cox and Charter formed a similar partnership between Cox’s Orange County division and Charter’s Los Angeles division, the Nevada partnership was a first for that state.
Steve Walsh, director of sales for Cox Business, said that Cox’s business customers in Las Vegas – which include realtors, attorneys and accountants – almost invariably have offices or locations in Reno or Carson City.
“Late last summer and in the beginning of fall, we had a couple of customers approach us about agreements that served both offices,” Walsh said. “Through some industry organizations such as CTAM and some industry relationships, we were able to get in touch with the right people at Charter who run Reno. We had our team and their team put their minds together and say, ‘Look, we both do Ethernet, we both do transport, we both have fiber optic networks and we both have similar customers, so why can’t we get together and do Ethernet handoffs, figure out a way to monitor traffic and provide SLAs?’”
The end result is that Charter and Cox business customers can shuttle their data back and forth between the two areas via an Ethernet service that also allows them to connect via SONET or IP transport services.
“Our preferred method of transport is Ethernet, and these customers that we’ve lit initially are Ethernet customers, but the gear and the way we designed our network has given us the flexibility to deliver Ethernet, SONET or IP transport, because some customers might want to use Ethernet, but they have equipment that is SONET-based,” Walsh said. “We have the flexibility to provide either Ethernet or the traditional TDM services, so it’s really a nice menu of services for our customers because we can provide almost any flavor that they need. We’re not pigeon-holed into one set of services.”
It’s a service that a telco provider, such as Embarq in Nevada, cannot currently match with its traditional infrastructure, which is based on transporting data via T1s, DS3s and OC-3s. Walsh said that when ILEC customers want to upgrade from a T1 to a DS3 to an OC-3, they will have to make hardware upgrades to their networks.
“The MSO networks are just the opposite,” Walsh explained. “MSOs tend to prefer Ethernet in terms of transport. Ethernet is extremely flexible relative to bandwidth, meaning you can start with a commitment of five or ten [Mbps], and you can ramp bandwidth up to a Gigabit Ethernet without having to do any equipment exchanges or forklift upgrades. It’s extremely flexible, and we can usually turn up the bandwidth within 24 hours. That’s the biggest difference of what you would get from a cable company as opposed to an ILEC.”
While Cox designed its transport from the beginning with Ethernet in mind, telcos face the prospect of cannibalizing their own customer bases as they upgrade their backbones.
Who owns the customer?
The customers of the Cox and Charter service receive one bill that covers all of the circuits in both cities from the cable operator that provides the most circuits; the dominant cable operator is the vendor of record.
“It’s not the best phrase, but they call it having only one throat to choke now, so when something goes wrong they have just one vendor to hold accountable,” Walsh said. “Having one bill is a tremendous advantage for the customers because they don’t have to manage multiple vendors. They can leverage cost and they can have one contract that covers all of their sites, so that was a big driver from the customer side. It makes their lives a lot easier.”
The Metro Ethernet Forum is currently working on defining a new specification that relates to network-to-network interfaces (NNI), which will address the global availability across multiple service providers, but in the meantime MSOs can work on linking up with cable operators in adjoining footprints in order to better serve their customers.
Walsh said that cable operators need to get beyond worrying about which cable operator owns the customer when forming a partnership such as the one Cox and Charter have in Nevada.
“There’s a ton of business out there for MSOs to go after, but our challenge is going to be getting the right people at the MSOs to sit down and take a customer-centric approach in order to put the technology together to serve the customers’ needs,” Walsh said. “If we take that approach, we’ll be successful. When we start worrying about who owns the customer and how do we do billing, I think we lose focus of what the real goal is, and that’s to serve customers’ needs.”
Walsh said that the most important end result for the customers is that the service is easy to use because it gives them a single point of entry on provisioning, monitoring, troubleshooting and billing.
“We’ve made the customer’s ability to do business easier, and there’s always value in that,” he said. “Customers are willing to pay more for ease of use. I think a lot of times in our industry we lose focus on that, and we tend to think it’s all about the price.
“I will tell you that these customers are willing to pay a premium to have a single point of contact and to have one vendor manage their network for them. That’s a very different approach than what you’ve traditionally had in a commodity-based industry such as telecom.”