Insider: Cable operators grab 20% of U.S. Ethernet services market

JANUARY 7, 2010 -- Ethernet rises as a large part of cable network operators' run to capture a larger share of the business services market, says Light Reading Insider.

JANUARY 7, 2010 -- Cable network operators continue to make a strong run at capturing a larger share of the business services market, and Ethernet is emerging as a large portion of their competitive arsenal, according to the latest report from Light Reading Insider, a research service of TechWeb's Light Reading.

"Cable Operators & Ethernet: Serious Business" examines how cable companies are approaching the Ethernet services business, comparing their go-to-market and technology strategies. It profiles and analyzes eight significant cable companies and/or their data subsidiaries in terms of how they are addressing the Ethernet market, particularly their service offerings, expansion plans, strategies, technology suppliers and choices, target markets, and resulting customers and businesses.

Companies covered in the report include Bright House Networks, Charter Communications, Comcast, Cox Communications, Optimum Lightpath (a subsidiary of Cablevision Systems Corp.), RCN Corp., SureWest Communications, and Time Warner Cable.

"U.S. cable carriers continue moving aggressively into the Ethernet services market," notes Steve Koppman, research analyst with Light Reading Insider and author of the report. "All MSOs [multiple-systems operators] of substantial size have involved themselves in the business services market, with Ethernet a growing part of that portfolio -- and some 20% of the U.S. Ethernet services market is now going to cable operators."

It is certain that the MSO share of the Ethernet market will continue growing at the expense of incumbents and other competitors, Koppman says. "MSOs continue to have specific competitive strengths particularly in their focus on Ethernet as their prime data service (beyond IP), their lack of concern for preserving competing legacy data (private line, frame relay) businesses, their next-generation architectures, combinations of ubiquitous HFC [hybrid fiber coax] networks with substantial fiber ones, and generally lower overheads than incumbents," he explains.

Key findings of the report include the following:

  • U.S. MSOs now account for about 20% of the U.S. Ethernet services market, the majority held by three market leaders
  • MSOs have a relatively consistent pattern of selling point-to-point, metro-oriented retail Ethernet while de-emphasizing other data
  • While having strengths in traditional verticals, MSOs are making their deepest inroads in the SMB [small- to medium-sized business] sector
  • Despite an emphasis on SMBs, a majority of revenue already comes from relatively high-end 100-Mbyte+ services

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