Basic telephony over cable
on 16 July 2001, 12:45 pm)
Introduction: In an earlier article, we had touched upon
the possibilities of offering a whole range of value added
services (VAS) over the ubiquitous cable networks. These services
aimed to exploit the wide bandwidth carrying capacity of cable
and encompass the entire gamut of data, voice and video services.
We now examine the why's and how's of offering basic telephony
services over cable in slightly greater detail.
Telephony Story: In a world which is driven by communication
today, India has approximately 30 million telephone connections
in addition to 3.8 million cellular subscribers. This gives
us a telephone penetration of around 3 per 100 people, one
of the lowest in the world and certainly not the level of
infrastructure expected for one of the better "developing
economies". This figure further pales in comparison to
China's 230 million landlines and 116 million mobile phone
users. The question then naturally arises as to what are the
remedies for increasing India's telephone penetration; especially
attract investment in the "Last Mile" segment where the margins
are much thinner than the lucrative National Long Distance
or International telephony.
of the solutions being suggested (to increase penetration
levels to 7 telephones per 100 people by 2007 and 15 per 100
by 2015) is Wireless in Local Loop (WiLL), which bypasses
the need for establishing last mile copper-wire connectivity.
However, WiLL systems will incur high capital expenditures
in the range of 25 to 30 thousand rupees per connection using
the present CDMA technology (inclusive of the cost of CPE
and infrastructure). The other option is considering telephony
over cable networks, which seems viable considering the
high penetration of CATV in India.
Cable Telephony works: The basic cable telephony architecture
is based on either circuit switched i.e. constant bit-rate
telephony or packet switched i.e. IP telephony over
a hybrid fiber coaxial (HFC) network. The circuit switched
architecture appears to be more favourable to the cable operators
entering the telephony business because of quicker revenues
generated, especially with IP telephony technology still being
in a nascent stage.
cable operator installs a Class 5 switch at the Network Operating
Center (NOC), which is the control point for the telephone
network, routing calls to and from their destination. This
switch is then connected via fiber to a Host Digital Terminal
(HDT) installed at the NOC. The HDT converts the circuit switched
telephone calls to Radio Frequency signals for transmission
to end-users over the HFC network. Voice ports are installed
at the customer premise to convert these RF signals into dial
tone enabling subscribers to use any standard telephone, fax
machine or telephone modem on the network. Unlike conventional
CATV networks, the cable operator has to ensure uninterrupted
power supply through battery back ups as telephony is an essential
service. Also, telephone billing is a complex process and
the Network Interface Units must capture all relevant usage
data with help of software to provide accurate billing to
The International Experience: Presently, there are about
400,000 cable telephony subscribers in the U.S. itself, with
Strategis Group projecting a subscriber figure of over 10
million worldwide by 2005 with circuit switched subscribers
accounting for more than 70 per cent of these. According to
a Arthur D. Little forecast, Cable telephony service providers
could attract about 35 per cent of total U.S. households in
a couple of years time. The drivers of this success will be
a blend of cost savings and a one-stop shopping for bundled
services (cable TV, VoD, PPV, Videoconferencing etc.) Worldwide
cable telephony revenue is expected to grow to $7 billion
by 2004, with projected monthly telephony revenue per subscriber
expected to be in the range of $45 - $50 with a margin of
35%-40% within 2-5 years of deployment.
into the future: Although it would be economically feasible
to introduce only circuit switched based cable telephony now,
the future clearly lies in an IP based network once DOCSIS
1.1 and 1.2 standards are fully implemented. The principal
advantage of an IP solution lies in the fact that voice and
high-speed data travel on the same network. IP telephony also
allows the MSOs to avoid the capital, operational and spectrum
inefficiencies that result from maintaining a separate voice
network and they can create an integrated multi-service communications
system that takes less time to deploy and costs less to operate.
In addition, this also promises a host of unique value-added
services such as integrated voice and e-mail, web based service
modifications and "click to talk" websites. What remains is
the Quality of Service challenge inherent in all VoIP implementations.
Amongst the most significant QoS hurdles are transmission
latency, echo, jitter and lost packets.
Creating the win-win situation in India: Let us consider
the implications from the perspective of the three major parties
involved: the Government, Cable operators and the users of
the cable telephony service.
the cable distribution business is so structured that the
Last Mile (into the consumer's premises) belongs to small
time cable operators/franchisees. There is rampant under-declaration
of the true number of connections as a result of which the
MSO bleeds. Also, the state of the cable infrastructure is
extremely poor and absolutely unsuitable for offering any
kind of VAS. In such a scenario, it becomes unfeasible economically
and practically for the MSOs to introduce services such as
cable telephony and thus unlock the true value of their investments
in the cable networks. What is clearly the need of the hour
is for the Government to introduce legislation governing this
Government can actually earn revenues by demarcating the country
into different zones on the pattern of telecom circles and
then auctioning it to MSOs. This is particularly relevant
in the context of the demarcation between traditionally divergent
services and carriers slowly blurring due to convergence.
What this will also ensure is that there will be sufficient
incentives for the larger MSOs to invest capital to upgrade
their networks and provide VAS to the consumers. There is
also scope for not only a one-time license fee, but also a
revenue-sharing agreement, akin to what the cellular operators
of course the consumers will have the best of bargains with
the true range of convergent services (Internet, Cable channels,
Telephony etc.) available to them through a broadband medium
(cable) into a single access medium (TV/Computer) with attendant
soft benefits like customer care, service and billing by a
single service provider.
*The article is co-authored by Anjan Sur,
a strategic business analyst for the Zee Convergence Group,
Bangalore (firstname.lastname@example.org) and Monideep Chattopadhay,
a student of the ICFAI Business School, Bangalore.
*All arguments and views expressed herein are the authors'
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