LIBERTY GETS A LOUDER VOICE

Jose Alegria can be forgiven for making the easy choice. A little more than two years ago, Alegria, general manager of Liberty Cablevision in Puerto Rico, was set to roll out a circuit-switched cable telephony service in his network that runs across much of the island except for San Juan.

At the time, even though many in the cable industry were talking about converting to voice-over-IP platforms, the vast majority of actual deployments used traditional Class 5 switching.

“Two years ago, VoIP was still a new technology,” Alegria said. “We didn't have the resources to investigate everything about it.”

Before the project could even get off the ground, Alegria was approached by Net2Phone, which pitched the idea of essentially outsourcing much of the heavy lifting for a VoIP network.

Liberty Cablevision is owned by Liberty Media International, a holding company for Liberty Media's assets in, among other locations, Puerto Rico. Though Liberty Media has no ownership interest in LMI after a recent spin-off, both are headed by cable industry pioneer John Malone. Liberty Media in turn has ownership stakes in numerous cable networks, including QVC, Encore and Discovery Channel. It also happens to be the biggest single shareholder in Net2Phone.

“That said, we still had to sell our system to [Alegria],” said Mike Pastor, president of Net2Phone's cable telephony unit. “Since he had already built a business case to deploy CBR telephony, we had to convince him that voice over IP could support a primary line replacement service. Second, we had to convince him that an outsource solution made economic sense.”

Alegria decided to team up with Net2Phone, largely because of financial considerations. Under the terms of the six-year contract the two companies signed, Net2Phone will provide the back office platform, switching and transport, ongoing operations and Tier 2 technical support to Liberty Cablevision. The cable operator owns the customer relationship and provides Tier 1 support.

Motorola is providing the customer premises equipment, as well as its cable modem termination system for the data element of the triple-play offering, while Cedar Point is providing its switch to offer Class 5 functions within the local network and connectivity to public switched network.

Additionally, Sprint and IDC (another major shareholder in Net2Phone) have been tapped to provide off-net long-distance as well as backhaul service to Net2Phone New Jersey facilities.

“We have less resources on hand than a lot of other cable companies so it make it makes a lot of sense to team up with a company like Net2Phone,” Alegria said. “We also probably don't have the customer base to justify [our own VoIP buildout]. We also get keep to most of the revenue, and we have the option at the end of the contract to extend with Net2Phone or buy back the solution.”

The system is able to be expanded relatively easily. Liberty Cablevision initially started off with a small trial but has expanded to pass about 300,000 homes.

“We began this whole process less than two years ago with a 200-customer trial,” Alegria said.

CedarPoint vice chairman Mark Dzuban said the company can support up to 100,000 lines in a single chassis, which take up about one cubic yard. “Net2Phone came to us for total-office end-to-end back office solution and the switch,” said Dzuban, who ironically at one point many years ago was CTO of Cross Country Cable, which built some of the first cable systems in Puerto Rico. “We fit very nicely into the existing space.”

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