Carriers must take control of their broadband, IPTV services, Cisco says

As “over-the-top” broadband services such Vonage and Skype proliferate, Cisco last week said broadband carriers must prioritize and ensure quality of service for their applications tied to access services, such as voice, collaboration and other offerings. And Cisco will seek to help with this effort.

Mike Volpi, senior vice president for Cisco’s service provider business, laid out trends in the carrier markets at the company’s World Wide Analyst Conference last week, and the role Cisco will play in helping service providers move to IPTV, while extracting more revenue and control of broadband carrier customers. He also played down any assumptions that Cisco is looking to get into the DSL access market, in spite of close ties its newly-acquired Scientific Atlanta business already has with DSL-based providers.

Also: Cisco seeks to control your apps

“IP is double edge sword,” Volpi said. “It allows service providers to give services tied to broadband, but it also allows anyone to deliver their own services over [the same] broadband [link].”

Broadband providers that begin to offer voice and communication services on top of their own access links will need to gain a better insight into end-user connections. The idea is not to interfere with services consumers might receive over the Web, but to ensure any carrier services connected to the access service have a guaranteed level of quality, no matter what else is running over that link.

“Consumers can go off to the Internet and do their thing,” Volpi said. But he added that service providers “need to control those [over-the-top] applications and make sure they don’t interfere with our [service provider’s] own offering.”

A service control infrastructure consists of four components, Volpi said: “The provider has to have good grasp on the ID of the user, the device they are used, the user’s location and the user’s state or presence.” Carriers that deploy technology that can manage, control and measure these factors will be successful. Having an end-to-end carrier infrastructure — from Cisco in the network core and edge, to the home with Linksys and now its Scientific American set top boxes — provides this architecture.

Guaranteeing carrier-branded applications tied to broadband is one right carriers should exercise or else lose out on the revenue opportunity that providers of voice over IP and other outside services are enjoying. In IPTV and video, carriers will also have the ability to take advantage of an end-to-end Cisco network — from the head end down to the cable box. This could involve gathering valuable data on television viewing habits of customers, as well as offering customized advertising based on user profiles, similar to Amazon.com.

 “The fact of the matter is that broadband today is not a guaranteed right to everyone; it’s not a utility you get for free, just because you are a human being. It’s a service you pay for,” Volpi said. “Service providers are certainly more than entitled to monitor the relationship, as long as they meet the needs above and beyond what they promise, they can do what they want with their networks.”

To this end, what Scientific Atlanta brings Cisco is the ability to sell IPTV systems that carriers can use to more closely manage the network and gain insight into customer trends.

“[A carrier] can see how full a [DVR] hard drive is” on a set top box, Volpi said. This could allow an alert to be sent to the user to warn of space restraints. A carrier could also see “how often a customer switches channels, what are the most frequently watched channels. All of this is information, that when returned back to service provider, gives critical business information back to the provider.” 

Volpi addressed analyst concerns about “lumpiness” or unpredictable fits and stops in Cisco’s carrier router revenue streams.

“The lumpiness in the service provider market won’t go away; The transactions that are coming through are in such big chunks,” he said, as carriers make large upgrades to networks in anticipation of growth. “We’ll see lumpiness in the service provider business, just by the way orders fall.”

While orders and revenue streams may not be as predictable as investors would like, he added, Cisco’s routing business has grown over the past seven quarters. “If you look at the absolute, revenue is generally growing at a significant rate.”

One area in which analysts should not expect to see growth is in the DSL access market — because Cisco has not interest in entering the market, Volpi emphasized to analysts. At least for now.

Some observers have speculated that Cisco might have to enter the DSLAM market as IPTV proliferates, due to the fact that Verizon and SBC — the two carriers driving early adoption of the technology — are DSL, not cable broadband, access providers. Scientific Atlanta established relationships with both carriers prior to the buyout as being the customer premises piece of an IPTV offering that could ride over a high-speed version DSL.

“It is not a logical conclusion that we have to be in that business,” Volpi said of the DSL access market. He acknowledged that Alcatel is the leader in DSL, and that it has had some traction in the area of emerging triple-play services with DSL-based broadband Internet, IP voice and IPTV services. But he added “Alcatel’s success has less to do with that they have DSLAMs and more that they have a relationship with Microsoft,” which is the provider of software to control and deliver IPTV services.

But in common Cisco fashion, the vendor will not close the door on any market possibility.

“We don’t believe we need to own access technology” to deliver IPTV, Volpi said. “We need to own the end-to-end experience. That doesn’t exclude us from doing something in access, but in near term, it’s not one of our top priorities.”