Comcast Courts Mid-Size Market With Metro Ethernet, PRI Services

William Stemper, president, Comcast Business Services

William Stemper, president, Comcast Business Services

June 7, 2011 – Comcast, responding to strong growth in its commercial services business, has stepped up pursuit of the medium business market with launch of fiber-based Metro Ethernet services in more than 20 major metro markets along with aggressive marketing of T1 Primary Rate Interface services over its high-speed DOCSIS plant.

After years of building the business at the smaller end of the SMB market, Comcast is now able to leverage a fiber footprint in 20 of the nation’s top 25 markets to compete with big telcos and other providers for businesses in the 20-500 employee range, officials said. Addressing analysts in a conference call earlier this year, Neil Smit, president of Comcast Communications, said, “We feel comfortable in the mid-sized business, and that has been an area where we continue to take share [from incumbent telcos], and we believe we can continue to take share.”

Business service revenues grew to $1.3 billion in 2010, representing a 53 percent increase over 2009, the company said. The pace continued in the first quarter of 2011, with revenues topping $394 million, up 50 percent from Q1 2010 and 8 percent over the previous quarter.

The time is ripe for moving Metro Ethernet into the mid-size business market, noted Sandra Palumbo, research fellow at the Yankee Group. These companies are capitalizing on the operating efficiencies stemming from virtualization of the IT environment with cloud-based applications like SaaS (software-as-a-service) that require dedicated high-capacity links, Ralumbo said.

“This market segment has high-bandwidth requirements across multiple sites and values the lower cost of ownership, simplicity and scalable capacity of Metro Ethernet,” she said. “Significant last-mile networks and investments in advanced Carrier Ethernet network infrastructure are vital.”

Comcast’s investment in fiber infrastructure, by avoiding reliance on incumbent carriers’ networks, has given it the flexibility to extend fiber where needed to support high-bandwidth services at a moment when businesses looking for multi-megabit carrier-class service frequently have no alternative but to pay for bonded T1 (1.5 mbps) and fractional T3 (45 mbps) links. The ability to leverage the metro fiber backbones built for residential service allows an MSO like Comcast to offer fiber-based services cost competitively against these older solutions with much greater flexibility to deliver high-capacity services to multiple tenant buildings and office parks.

“Metro Ethernet is quickly overtaking T1 and other legacy services as the preferred technology for business communications,” noted Bill Stemper, president of Comcast Business Services. “Just as broadband supplanted dial-up in consumers’ homes, our new Metro Ethernet services are designed to help businesses compete and win using our fast and scalable digital platform.”

Comcast can remotely scale bandwidth over these links in increments of 1 mbps, 10 mbps, 100 mbps or 1 gigabit per second in support of three classes of service certified as compliant with Metro Ethernet Forum 9, 14 and 18 specifications, marking the first time any carrier has gained certification for the three MEF classes, officials said. This means the Ethernet services are all backed by strict service level agreements and around-the-clock monitoring from the MSO’s network operations centers.

Comcast is now offering four types of Ethernet services at these various class levels, including:

  • Ethernet Private Line Service – point-to-point connectivity between two customer sites for bandwidth-intensive applications.
  • Ethernet Virtual Private Line Service – a point-to-multipoint connection that allows customers to tailor bandwidth, performance characteristics and cost to meet the needs of their applications.
  • Ethernet Network Service – multipoint-to-multipoint connectivity for organizations with high-bandwidth requirements and multiple locations across Comcast’s network.
  • Ethernet Dedicated Internet Access Service – continuous, high-bandwidth connectivity between customers’ LANs and the public Internet.

Of course, there’s still plenty of demand for T1 service, which is another focus in Comcast’s drive to target mid-size businesses. “We’ve now got PRI available in about 90 percent of our footprint,” Smit said.

Here the company is leveraging its DOCSIS 3.0 networks, offering a combination PRI-class trunk replacement service with 100 mbps Internet access at $599 per month over HFC plant. PRI is designed to feed up to 23 individual voice channels to a premises PBX, enough to serve up to 100 employees. Comcast customers can buy those PRI VoIP channels incrementally on a pay-as-you-scale basis, in contrast to most offerings which require full-capacity purchase.

The company has begun offering hosted PBX services in Boston and western New England in conjunction with last year’s purchase of New Global Telecom. Sources say it is planning to roll out the service on a much larger scale in the months ahead.

Reporting for telecom outlet Viodi.com, independent consultant Alan Weissberger recently quoted industry sources as saying 85 percent of the MSO’s business service revenues have come from customers with fewer than 20 employees. With that business driving margins above what the company has seen on the residential side, according to Smit, there’s obviously every reason to double down in the mid-size market. “We’re making the investment now for the longer-term growth,” Smit said.