Serve Businesses, Haul Away Cash

By now you’ve probably caught a whiff of the savory smells wafting from what used to be called “commercial services,” and what industry people now call “business services.” It’s all about linking today’s cable plant, and maybe a few wireless extenders in tricky areas, to small and medium businesses, to handle their broadband and telecommunication needs.

Those involved proclaim business services as the Next Big Thing to grow cable-industry revenue, after the residential voice push adds the “triple” to those triple-play bundles.

Cox, the undisputed master of cable-delivered business services, likes to say that one capital dollar invested into the business segment returns 70 cents in 12 months -— and 42 cents of that is cash left over after expenses.

Many others wonder why business services aren’t a bigger push right now.

For whatever reasons, business services always seem to land below the top-three stated priorities of U.S. cable operators. (Again, except Cox, which holds business services equal to residential broadband services.)

The people working on business services move as a pioneering group, not unlike the people who began and work in the local ad-sales sector. Both groups haul in admirable gobs of cash. But because neither touches residential services, both always seem to thrive on the periphery. Nonetheless, they’re either hugely successful (ad sales), or poised to be hugely successful (business services).

If you’ve ever attempted a deep dive on the business services sector, one thing sticks out fast: It’s a whole different language. T-1, multipoint Ethernet, metro Ethernet, mesh networks, MPLS.

Parts of the business-services lingo borrows heavily from telephone-network language — a 100-plus-year-old vocabulary. Other parts delve into data-networking terms: Business services generally live “higher up” in the network, and those higher-up layers speak a different flavor of tech. Plus, business customers talk their lingo, which matters, because it’s what they pen into their service-level agreements.

This week’s translation aims to break some of it down. But be forewarned: You could spend a decade of your life just skimming the terminology.

So far, the sweet spot in cable-delivered business services is the sale of broadband data links to businesses with fewer than 100 employees. Adding voice to that mix is next. Cox and others dabbling in the sector point to government buildings and hospitals as especially attractive.

In many cases, operators are serving those broadband links over dedicated Data Over Cable Service Interface Specification (DOCSIS) cable modems — but business-service aficionados say that’s small potatoes.

The real action, they say, is in “cellular backhaul” and “T-1 replacement.” (See “Cable Could Haul Wireless Calls,” May 15,

Let’s start where the Big Money appears to be pooling, awaiting capture: Cellular backhaul. Setup: There are 185,000-ish cell towers in the United States. They serve the 207 million of us who use cell phones.

When we talk on our mobile phones, the signal carrying our conversation travels first to the nearest tower, then to the phone network, then to the destination. If it’s you calling me and I’m on my mobile, the handoff involves the tower closest to me.

It’s that leg between the tower and the telephone backbone that’s spilling over with potential revenue, observers say.

Here’s how that works. Say there are five carriers on a tower — Verizon Communications Inc., Sprint Nextel Corp. and others. Each spends around $250 per month (prices range widely) for that midway link, provided today by telcos in the form of a “T-1 line.”

One cash-capture scenario goes like this: The local cable operator drops a line to the cell tower. The other end hooks to those metropolitan networks that link most cable hubs in most cities, and to the national backbone.

The “let’s make a deal” offer, to the wireless carriers hanging on the tower, is a plump discount from today’s $250 a month. Let’s say it’s 20% off what they currently pay, in exchange for 20% of their towers.

On a national basis, 20% of 185,000 towers is 37,000 towers. If each tower holds five carriers, and each carrier pays $200 a month, that’s $37 million per month -- for hauling phone calls from a tower to a network.

Before getting giddy over the numbers, know this: Cellular-side aficionados warn that it isn’t as easy as it sounds. Mobile carriers — self-described prima donnas — are vigilant about their service-level agreements. Advanced testing is a necessity. It’s a whole new discipline, with a new level of customer care.

Still, there’s an overbearing sense of urgency among mobile carriers to stay ahead of traffic. Text messages are escalating into the range of 9 billion per month; all of us talk more and more on our mobile phones.

Says one cell-side technologist: “Talk to the guy who needs to build 500 sites, or 7,000 radios. He doesn’t want anything fancy, he just wants something now. He’ll tell you — get me something that works, and get it to me in two weeks.”

That alone seems a sturdy catalyst to kick business services into a higher gear.

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