Rural cable crowd finds its voice

As major cable companies have made inroads into telephony, rural operators have been slow to follow. That's about to change.

The National Cable Television Cooperative is now making it much easier for small rural cable companies to get into the telephony business, making life in general much harder for their rural telco competitors.

The NCTC has long been a source of video content to small cable outfits, harnessing the collective purchasing power of its 1100 members to negotiate with TV programming providers and offering the resulting content as a package to its members. When a growing number of telcos wanted into that clubhouse in 2005 to offer their own video services, the NCTC stopped taking new members, avoiding the prospect of serving both cable companies and their competitors. As a result, the telcos' own group, the National Rural Telecommunications Cooperative, began offering a package of IPTV content to its members this year.

Now the NCTC is going a step further, making it easier for rural cable companies to get into the telephony business. The company is applying its members' bulk purchasing power to the cable telephony customer premises gear of Arris, a leading vendor in the space. In particular, NCTC is offering its members Arris' voice-over-IP modems, the Touchstone line of Embedded Multimedia Terminal Adapters (E-MTAs).

Arris leads the market for telephony applications among cable companies, as well as the market for cable modem termination systems (CMTSs, the cable equivalent of DSLAMs but not as easy to say). Its MTAs took 40% of the global market in 2005. Cable companies can deploy the DOCSIS-based E-MTAs instead of cable modems for customers that order high-speed Internet service and then upsell voice to those subscribers. With the Trojan horse of the E-MTA already inside the home, turning up telephony service is a snap. And the company frequently updates its gear; its ultra-high bandwidth E-MTA is capable of handling up to 100 Mb/s.

“Some [multiple systems operators] have taken a serious look at Arris' 100 Mb/s wideband customer premise solutions as a response to Verizon's [Gigabit passive optical networking] plans,” Morgan Keegan analyst Simon Leopold wrote in a recent note.

Arris expects the NCTC deal to accelerate E-MTA sales to smaller cable operators. E-MTAs typically cost about $80 (a big leap from the $30 or $40 it costs for a typical cable modem). Ordinarily, that price tag might slow the uptake of E-MTAs among smaller operators. But it's unknown how big a discount comes with the NCTC deal.

“The top tier guys — Wide Open West, Mediacom — they're all going very hard on the voice side,” said Ron Miller, Arris' senior director of marketing and customer operations. “Smaller operators are just starting to look at voice, starting to taste it.”

Starting in January, Arris' gear will include new features sure to up the ante in cable/telco competition. New voice quality metrics will keep a log of the last 10 calls, allowing operators to examine recent calls when a customer complains about voice quality problems. And new loop diagnostics tools will allow operators to remotely test for problems in the in-home wiring. All of which will require rural telcos to step up their game.