If delivering video entertainment is a license to print money, then using those same networks to serve commercial customers is a license to print larger denominations.

Cable long ago figured that if it could charge exorbitant fees to residential customers for high-speed data (HSD), it could make even more money by offering a slightly different variation on the same theme to small-medium businesses. Throughout this decade, as the telcos slowly challenged cable’s core video business, cablecos have quietly floated into the small-medium business (SMB) slipstream.

The phone companies have pretty much ignored cable’s move because throughout their history carriers have had a license to print really, really big denominations by providing voice and data services to large companies. If an SMB slipped off here or there, it was like change falling through a hole in a pocket.

Now, though, many in the cable industry are ready to chase after high- roller enterprise customers. Vertical Systems Group, a consulting firm, values the U.S. Business Data Services market at $32 billion in 2006.

To attract those customers, cablecos are adapting a traditional telco technology, metro Ethernet, for their network designs and are pushing industry standards bodies like the Metro Ethernet Forum (MEF) into a direction they like

“I don’t think you can underestimate that this really is a different business,” says Rosemary Cochran who, as principal and co-founder of Vertical Systems Group watches and rates telecommunications’ efforts in the commercial space.

Enterprise customers who have cable television at home are naturally wary when companies like Cox Communications and Time Warner Cable come knocking on their doors. Both of those MSOs have taken steps to separate their business units from their cable TV bloodlines, but the names remain the same. Cablevision Systems has renamed its business effort Optimum Lightpath. While none of the cablecos' business units would admit it, there’s a good reason to distance themselves from the residential players.

Rep’s an issue

“The reputation of your local cable company is an issue; there’s no question about it,” Cochran says.

Cable’s push into commercial delivery was an offshoot of its residential business: the wires went through the neighborhoods, why not charge businesses more to attach and give them the same cable modem and eventually phone service for a higher price?

“The cable companies that are offering (commercial services) as a side business really aren’t serious about understanding what they’re selling against,” Cochran said. “If you’re competing against Verizon or AT&T … you have to understand the dynamics of migration from frame relay and private line legacy services and LANs. Now we’re getting into VPLS and other technologies and other types of service offerings … a much larger, broader base of service offerings.”

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