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Cable Technology Feature Article

May 23, 2008

The Ties That Bind? Cablcos, CLECs and VARs

By Gary Kim, Contributing Editor


Denver-based Iptimize, a provider of hosted PBX (News - Alert), hosted consumer VoIP and other network assessment and managed services, has changed its business model.
 
Formerly targeting the retail business customer, Iptimize now has decided to become a wholesale provider of those services to rural cable operators. New CEO Ron PItcock has done that sort of thing before, in providing managed cable modem services to rural cable operators. That undoubtedly means more work for value-added reseller and distributor partners in areas where Iptimize will be supporting cable operators.
 
Though remote management will be possible, local, hands-on troubleshooting ultimately will be necessary.
 
All of which makes one wonder how long it will be until some chunks of today’s independent competitive local exchange carrier business become service units owned by cable companies.
 
While cable operators obviously will try to "walk before they run," initial commercial service efforts focused on the small office market ultimately will extend to more-complicated market segments over time.
 
Regional businesses will make sense for some operators with good system clusters. In other cases, operators will the right mix of metro markets will be able to sell to multi-location organizations as well.
 
That's going to require more technological expertise, though. While small businesses might focus their telecommunications needs on connectivity and bandwidth, larger businesses typically also want managed solutions.
 
CLECs can help with some of those managed services, including virtual private networking and diverse routing.
 
The tougher problem will be on-the-ground support for all the local network tasks. Some entrepreneurs in the past have had the notion that a larger regional or national organization to provide business local network services could be built by rolling up and amalgamating small local information technology shops.
 
That generally doesn’t work all that well for reasons having to do with why entrepreneurs create their own businesses in the first place. Turning entrepreneurs into employees is almost always a formula for losing the people that were the acquired assets in the first place.
 
In truth, data networking assets of the human sort will be more important than CLEC wide area networking skills. The latter can be “acquired.” The former probably can’t.
 
So while cable acquisitions of CLEC assets logically could be forthcoming in a couple of years, rollups of small independent technology shops will not make sense. In principle, a cable company could acquire an enterprise specialist, in the way that H-P recently acquired EDS (News - Alert), for example. But that only helps if the customer target is an enterprise, not a smaller business.
 
One way or the other, the data-centric channel partner is assuming more importance in the IP services value chain.
 
Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.
 

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