Cable gets ready to take a big bite out of the wholesale market

Sean Buckley, FierceTelecom

Cable companies may still not have the same ubiquity or clout that incumbent telcos have enjoyed for years in the wholesale market, but it's clear that they are having an impact.

In our latest feature, Cable hones its wholesale skills in special access and wireless backhaul, we take a look at how cable operators are taking on the wholesale services industry, providing services to a host of wireless operators, CLECs, IXCs and ILECs that need to fulfill out-of-territory service requirements for multi-site business customers.

One of the key trends that could potentially make the cable industry itself a more powerful player is the ongoing consolidation of the industry. The latest consolidation wave is being headed up by Comcast (NASDAQ: CMCSA) and Charter Communications (NASDAQ: CHTR).

Comcast is waiting for regulatory approval to complete its acquisition of Time Warner Cable (NYSE: TWC), while Charter announced its intention to purchase Bright House Networks. While there are clear implications for the residential and traditional video services side, these two deals will immediately increase the business services and wholesale power of both of these cable MSOs with a larger footprint of Ethernet, fiber and HFC capabilities.

At this point, cable still has plenty of growth potential. According to Atlantic-ACM, cable's take of the overall wholesale market is relatively small in comparison to the traditional ILECs. Today, they only have 7.7 percent of the total wholesale transport industry, with a large portion still being wireless backhaul services.

However, as CLEC operators look for new alternatives, particularly as telcos like AT&T (NYSE: T), CenturyLink (NYSE: CTL) and Verizon (NYSE: VZ) look to replace TDM-based services like T-1s with IP circuits at higher rates, cable could be a welcome savior.

Overall, the state of the U.S. special access market is also in flux. The FCC recently announced that it is extending the deadline for interested parties to file comments until July on its special access proceeding.

Charlie Reed, partner of Atlantic-ACM, says that cable has the potential to make a bigger name for itself in the special access market, selling not only fiber, but slower 5 and 10 Mbps speed wholesale services to other CLECs over their existing hybrid fiber coax network using a mix of today's DOCSIS 3.0 and later 3.1 technology.

"In that market, more than half of special access market is T-1 access to businesses and data centers and I think cable is moving in that direction and beefing up their mid-speed and lower speed access products," Reed said.

A number of cable operators, including Cox, Time Warner Cable and Mediacom, have been developing Ethernet over DOCSIS and related HFC-based services products, while others like Comcast are moving in a similar direction.

At the same time, cable continues to be a viable supplier to wireless operators, enabling a number of the major operators to backhaul traffic from large macro cell sites and increasingly small cell sites.

If you want to know more about cable's role in wholesale, take a look at our new feature, Cable hones its wholesale skills in special access and wireless backhaul.--Sean