Cable goes to the office

When DSL providers falter, MSOs are filling the gap

As commercial DSL providers exit the high-speed commercial data market, the void is being filled by an unexpected set of players. Cable's commercial broadband arms, with deep pockets and reliable supply lines, are stepping up deliveries for a bevy of speed-addicted small to medium-sized business users.

“They're definitely taking advantage of [DSL] falling apart,” said Michael Goodman, senior analyst for The Yankee Group.

Cox Business Services, the most aggressive of the cable bunch, is running unapologetically provocative advertisements aimed at disgruntled or disconnected DSL subscribers with headlines such as “Is Your DSL Provider Taking You to the InterNot?” and promising “High-Speed Data Service Without Those Pesky Bankruptcies.”

In some ways, DSL providers had it coming.

“[DSL providers] made it very clear to the end user that cable is not DSL,” said Rich Mazurek, senior data product manager for Cox Business Services. “Now we're turning the tables. We're standing up and saying, ‘You're right cable is not DSL.’”

Cox's aggression echoes across the cable sector.

Comcast has created a business unit, Comcast Business Communications (CBC), to pursue opportunities that started to percolate with NorthPoint Communications' demise earlier this year and boiled over with Rhythms NetConnections' recent Chapter 11 filing.

“We've had to make sure that we get the message across to all of our operational group that this isn't a one-time blip, it's a volume that you should expect to have,” said Jason Livingood, director of Internet services for CBC.

Comcast is targeting business customers that DSL providers hooked with low prices, then abandoned.

Most of these DSL providers were selling service at prices that couldn't cover their costs. Cable operators, though, are holding firm on their pricing, Livingood said.

“We feel a certain amount of vindication.”

Adelphia Communications, described by a spokeswoman as “a quiet company,” is a bit louder when it comes to its Adelphia Business Solutions (ABIZ) unit.

“There is a bright future for certain CLEC-type properties,” said Adelphia Chief Financial Officer Tim Rigas during the company's second quarter earnings conference.

In preparation for an expected expansion, Adelphia last week signed a multi-year agreement with Level 3 Communications for 2.5 Gb/s wavelengths along nine intercity routes that will be used by the parent company and ABIZ to carry IP traffic and cable modem traffic, said Francois Doremieux, Level 3's product management director.

The response of DSL providers to aggression from the cable side has been lackluster, with most trotting out old complaints about cable's reliability.

“I don't think the cable technology is sufficient for business-grade service,” said Rob Shanahan, president and CEO of Conversent Communications, which is picking up discarded DSL customers and converting them to either its DSL services or shared T-1 lines.

Livingood claims that's old news. “We're not working with another underlying service provider like a Bell company, and we're not working with another party that would manage the DSLAMs and is a DSL wholesaler,” he said. “When a customer goes with us, they have us as the single source provider.”

But single source of what? Networks that duplicate existing telco plant or offshoots of cable's residential hybrid fiber/coax (HFC) networks?

“The missing link is how you access the HFC plant in the business environment,” said Michael Harris, president of Kinetic Strategies.

Cox is using its HFC plant and video links into small businesses to segue into the data market.

“If we're there, and you're in an upgraded node, we can hook up within a matter of days maybe two weeks at the most,” he said. Residential business, in fact, is integral to building cable's high-speed habit.

“They taste the Cox product at home and go to their offices begging to be signed up for that product in their office,” Mazurek said.