TWC and Comcast Business Services Looking Ahead

Dec. 17, 2014
The cable industry's commercial services initiatives, though perhaps a bit crowded by home automation and other emerging opportunities for ...
The cable industry's commercial services initiatives, though perhaps a bit crowded by home automation and other emerging opportunities for MSOs, appear to have had a good year as they refine their marketing approaches and continue to move up the chain to court larger organizations.

Two of the main players in cable's commercial services sector are Time Warner Cable(NYSE: TWC) and Comcast (NASDAQ: CMCSA). The two may run under one banner in the near future, but their largely non-overlapping footprints should lead to a business-as-usual approach on the ground - and potentially great synergies at the higher levels.

Earlier this month, Comcast Business announced the Ethernet @Home service. The idea is simple: While many subscribers work and live within the MSO's footprint, folks who work in both places generally can only can get subscriber service at their home. This means that there is inherent inequality between the two places: At home, download/upload speeds are significantly constrained, security features are weaker, and IT management capabilities inferior.

Ethernet @Home alleviates the issue by using capabilities of DOCSIS 3.0 to extend upload and download speed, speed things up, and increase quality of service and quality of experience (QoS and QoE) to the home. In essence, the home PC simply becomes another node on the enterprise LAN. Ethernet @Home offers symmetrical speeds as high as 10 Mbps, said Michael Tighe, Comcast Business’ Executive Director of Data Services. Some other Comcast Business services go as high as 10 Gbps.

Tighe said the natural first vertical for Ethernet @Home is healthcare. Doctors can have heavy data demands - such as the trafficking of radiological images - and labor under stringent HIPAA security and privacy requirements. Much of those capabilities can be offered by a virtual private network (VPN) but, said Tighe, some doctors are not adept at logging on to the systems. Ethernet @Home enables them to use their terminals exactly as they would in the office.

Tighe said the idea originated with questions from its healthcare customers who were interested in doing such things as sending radiology images to doctors who were at home. “That got us thinking that there is no reason why we can’t do it,” Tighe said. “The architecture of DOCSIS allows us to expand to home.” Tighe added that many verticals besides healthcare are using the service. The use can be as mundane as ensuring that CEOs can conduct high-definition video conferences from home, he said. He said the additional bandwidth and extra security are about equal in attractiveness to customers.

The service, which won the Metro Ethernet Forum’s Best Service of the Year for North America, has been in the market for about a month and is available wherever Comcast Business is available. It was soft-launched, Tighe said.

Time Warner Cable Business Class announced no innovation along the lines of Ethernet @Home, but the probable future stablemate of Comcast’s service is making subtle adjustments to the market as well, executives said.

In 2013, said Senior Vice President and Chief Marketing Officer Stephanie Anderson, the company made the decision - which was executed upon this year - to create unique teams to serve three market sectors: Organizations with one to 24 employees, those with 25 to 499 employees, and those that employ 500 and more people. “Our language and everything we did was focused on that segment,” she said.

The move suggests a maturing of the market. The small end of the market is still TWCBC’s biggest, but other two sectors - mid-market and enterprise - are growing the fastest, Anderson said. She added tailoring to each segment extends to both the marketing and technology areas. The company not only distinguishes the market by size, but also by vertical as well. Jeff Greenberg, TWCBS’ Group Vice President for Mid-Market and Vertical Marketing, used video as an example. The company offers customized video programming to its hospitality and healthcare customers.

The two companies, assuming the acquisition goes through, will become an Ethernet business services powerhouse. Anderson said there will be little impact on the ground, at least at first, because the two organizations don’t overlap. The combination, however, will help build offers aimed at organizations with workforces in many regions. “We get added reach,” she said. “Prior to this, we have worked together, but it was bit more difficult. Now it will be more seamless.”

The overall trend seems to be the general acceptance of cable as a full competitor in the sector, especially for organizations below the large enterprise class. “I think that ... there will be some competitive advantages that the traditional telcos have over the cable companies within the business segment, over time that gradually diminish,” said Robert Rosenberg, the president of Insight Research.