Until recently, the business model was fairly straightforward. Residential customers paid for broadband and used it largely for entertainment and some browsing and schoolwork. This model has now been turned on its head because of the COVID-19 crisis. Home broadband is suddenly used for online education, work from home, telehealth, and myriad other applications. During the first few months of the pandemic, people rushed to either sign up for broadband or to upgrade their connectivity, a boon for broadband service providers.

Although some of these trends are temporary, early indication and research point to the long-term sustainability of at least part of these trends. Already, new business models and solutions are emerging that incorporate elements of the virtual world into the physical world. In healthcare, for example, telehealth has been adopted on a substantial scale during the pandemic. According to a McKinsey study, 46% of US consumers are now using telehealth, versus 11% in 2019. The healthcare industry is already exploring how to make virtual care a viable long-term component of care delivery. 

Related: We Need More Broadband, Stat!

As consumers use their home broadband for services such as virtual healthcare or remote work, are they responsible for paying for the broadband that supports the delivery of such services? Let’s take the example of a person insured by Medicaid; this is likely a lower income individual for whom home broadband is expensive, possibly out of reach. Should the healthcare payor that is insuring her on behalf of Medicaid provide a subsidy for broadband? What about the home worker, whose company authorized a work from home arrangement partly in an effort to reduce operating costs? Perhaps this worker’s job requires extensive broadband utilization for AR/VR capabilities and value-added services such as security and so on. 

A pattern is starting to emerge where home broadband (and perhaps devices and other equipment) is subsidized by a third-party, such as an employer, a medical provider, an educational institution or other. However, how these subsidies are delivered is far from clear. For example, a behavioral health provider in North Carolina who serves a lower income population provided free cellphones to some patients in an effort to continue their care during the COVID crisis. They had to provide these patients with free unlimited wireless broadband. Although the pandemic makes such initiatives necessary, such models are not sustainable over the long term. 

It is likely that more nimble business models will emerge; for example, broadband could be purchased by third parties and bundled with some applications. These are early days, but there will be disruption ahead. Operators and vendors that will win are those that are already laying the foundation for meeting the needs of a fast-changing marketplace.

"These initiatives and others will position cable operators to play an important role in 5G backhaul and potentially Virtual RAN midhaul. Over the longer term, they may open a path to 5G fronthaul as well." -Liliane Offredo-Zreik and Chris Nicoll, principal analysts, ACG Research

Mobile network operators need a cost-effective solution for their 5G network densification that will enable them to deliver the full benefit of speed and latency improvements inherent to 5G. The much-promoted speed and latency benefits of 5G primarily come with the use of mmWave spectrum in the ranges above 20GHz. ACG predicts that to deliver on the full potential of this valuable mmWave spectrum, 5G networks will need to be up to 10x denser than 4G networks. In this spectral range, transmission range is limited to typically less than 500m, thus using small cells or mini-macro cells is an essential ingredient in the successful densification of 5G. Adding the vast number of new cell sites to achieve the necessary densification is a challenge to telecom operators and an opportunity to cable operators.

Wireless cells have traditionally been backhauled over fiber. However, given the significantly larger numbers of cells needed in 5G and the need to locate them very closely to subscribers, using fiber to backhaul these cells is very expensive and operationally more complex. Pulling fiber and power very deep into the access network requires permits and construction, delaying the deployment for several months to a year.

This is where cable operators come in. According to NCTA, the cable plant passes 93% of US homes, and cable operators have largely upgraded their infrastructures to DOCSIS 3.1, which enables capacity of up to 10 Gb/s downstream and 1 Gb/s upstream. Furthermore, with the continuing node splits and the migration to a distributed access architecture, modern cable systems will have the capacity and bandwidth needed for 5G backhaul. The cable plant also has sufficient power in the last mile; this enables DOCSIS to meet the need of backhaul in terms of bandwidth and power.

Does the cable infrastructure meet the bandwidth and latency requirements for 5G backhaul? What about fronthaul and midhaul for Virtual RAN? The answer is a qualified yes. The latency requirements for 5G backhaul are far less stringent than those of midhaul and fronthaul, where latency requirements can be 25us–75us (microseconds).

For midhaul and fronthaul the answer is more complicated because each RAN virtualization option has different latency and bandwidth requirements (table), and wireless operators have not settled on one split option. Moreover, although LTE utilizes individual wireless spectrum channels of up to 20 MHz each, 5G expands channel widths to 100 MHz and greater, which increases the amount of bandwidth needed to serve a cell site by up to 5x.

Typically, fronthaul and midhaul are best served by fiber or optical ethernet connections. However, cable operators are working on a number of initiatives to address both latency and bandwidth constraints in an effort to become a viable alternative for midhaul and fronthaul:

Low Latency xHaul (LLX) was introduced by CableLabs in June 2019 to address the latency requirements of xHaul; it has a pipelining scheme to hide the DOCSIS latency behind the 5G latency.

Synchronization Techniques for DOCSIS Technology Specification, introduced in April 2020, addresses the asymmetrical shortcoming of DOCSIS because the mobile network is symmetric in nature and requires the sharing of a common clock.

DOCSIS 4.0 enables operators to significantly increase upstream bandwidth, either using Extended Spectrum or Full Duplex DOCSIS. The additional spectrum, going to 1.8 GHz and even 3.0 GHz, will substantially increase the bandwidth availability in the last mile.

These initiatives and others will position cable operators to play an important role in 5G backhaul and potentially Virtual RAN midhaul. Over the longer term, they may open a path to 5G fronthaul as well. Efforts to utilize mmWave spectrum provide a much-needed capacity layer to 5G networks but require a cell density to achieve consistent coverage. Small cells are ideal for 5G densification; however, the backhaul and power requirements to get them connected has posed a barrier for years.

Cable operators are in an advantageous position to serve a positive and profitable supporting role in 5G network deployment and densification, particularly in backhaul, and have a potentially successful pathway toward enabling midhaul and even fronthaul in the future. 

It is hard to believe, but the entire world is grinding to a halt as more and more communities are forced into lockdown or shutdown to prevent the spread of the Coronavirus. In this bleak and difficult situation, the Internet has emerged as the nervous system of the world, keeping education, business, healthcare and people connected as never before. It is not that people have suddenly discovered the online world, far from it; however, in the space of a few weeks, the world has converted to eLearning, telemedicine, virtual meetings, virtual conferences, and so on. Even religious and arts institutions are streaming to their constituents and the public at large, not to mention the increase in streaming and gaming now that most people are confined to their homes. In February, Cisco saw 22 times the amount of network traffic per second it normally gets for WebEx, according to CNBC. It is likely to be even higher in March.

None of these use cases are new, but they have all of a sudden been adopted on a massive scale. Early reports from Europe suggest a 40% increase in network traffic. Can networks handle this amount of traffic?

To be sure, many of these trends are short term, driven by necessity; for example, schools are repeatedly making clear that eLearning is a short-term measure and is not a substitute to in-person education. Furthermore, the success of these online initiatives requires much more than fast and reliable broadband; at a minimum, they need to be complemented by new processes, appropriate resources, clear expectations, training, and a different IT infrastructure, among other things. However, it is likely that things will not necessarily revert to business as usual when the crisis has passed.

What is clear is that in the near term, the world needs a lot more broadband and needs it to be fast, reliable and affordable. To their credit, ISPs have stepped up to the task. They are removing consumption caps, increasing speed, providing free bandwidth to the under-privileged, and committing their resources to keep broadband networks reliable and functioning in this moment of great need.

Do cable operators have the capacity to meet the exploding demand in the access network in terms of speed, reliability and latency? It is true that the industry has largely wrapped up the deployment of DOCSIS 3.1, which delivers speeds up to 10 Gbps downstream, and operators have been continuously reducing the size of their service groups by splitting nodes. However, the unprecedented demand on their networks may require a new playbook, because this surge may stay with us for a while, and some of the increased usage will prevail for the longer term.

Will this surge in demand be the catalyst for the industry to seriously consider migrating to the distributed access architecture (DAA) on a large scale? Will this need to suddenly increase capacity become a driver to consider virtualized solutions that enable easier scaling in the headends? Will it drive operators to allocate more capacity to upstream?

The cable access network remains limited in the upstream: most operators still allocate only 42 MHz to upstream with a minority allocating 84 MHz. Upstream capacity will become crucial as more people rely on virtual meetings, eLearning, etc. The industry has a good upstream option with the 204 MHz split that is currently supported (as an option) in the DOCSIS 3.1 specifications and that is made available by most major industry vendors. The 204 MHz split can enable 1 to 1.5 Gbps upstream. Of course, there is no free lunch; more spectrum allocated to the upstream means less in the downstream, and there is a need for a guard band or “spectral penalty” of about 54 MHz. The migration to 204 MHz requires changes to existing nodes and amplifiers on the HFC plant.

Multiple operators are already trialing or deploying DAA, particularly the Remote PHY version, and some have already adopted virtualized solutions. It is entirely possible that this trend will gain momentum driven by market need.

It is too early to tell what the long-term implications of this crisis will be. What is certain is that it will not be business as usual when we are finally out of crisis mode, and for broadband providers, it might spur a new cycle of infrastructure investment.

The telecommunications industry has been riding the hype wave of virtualization over the past few years, and the cable industry has not been immune to this trend. To be sure, virtualization brings significant benefits in terms of improved operations, better resiliency, feature velocity, better customer experience and possibly lower cost, and indeed the cable industry is right to focus on adopting this enabling technology in their operating environment. We expect virtualization to gain meaningful traction in 2020 in the cable industry.

This said, virtualization is an enabling technology with far reaching implications for the operating environment of a cable operator beyond simply deploying a new system, and there is not one optimal approach to pursue; each operator should carefully consider the path to virtualization that is best suited to its current network, operating environment and parameters, service needs, and market dynamics.

Although the focus of virtualization conversations has typically focused on the CCAP—granted an essential component of a virtualization strategy—it is important to note that significant benefits can be derived from virtualizing the management and control planes, which can be achieved even while retaining the legacy I-CCAP. We expect cable operator strategies regarding virtualization to follow four paths in the next five years:

1. Retain the legacy I-CCAP as long as it continues to meet the operator’s needs. Despite technology innovation, legacy technologies tend to stay around a lot longer than one would expect, as long as they adequately meet the operator’s needs.

2. Virtualize the CMTS core while retaining the edge QAMs and move the PHY layer to a remote PHY shelf, which can be located in the headend or the hub. The advantage of this architecture is that it enables the MSO to derive some virtualization benefits while retaining RF from the headend and preserving the edge QAMs.

3. Remote PHY: The CMTS core is virtualized, and the PHY layer is moved to a Remote PHY device (RPD), which is housed in the access node. The traffic out of the headend is IP, carried over digital fiber. This approach allows the operator to leverage existing resources in the headend for MAC processing, keeping nodes simpler (no compute resource) with lower power requirements.

4. Remote MACPHY: The MAC and PHY layers are moved to the node, and a Remote MACPHY device (RMD) is housed in the node and performs the CMTS core capability in the node. This approach is simpler and has lower latency, but possibly a higher power requirement in the node and the need for compute resources in the node.

Although each of the above strategies has pros and cons and significant considerations based on the needs of each operator, it is important to note that all four solutions can be managed by a virtualized control plane, and more modern management tools such as RESTCONF and YANG can supplement traditional tools such as SNMP and CLI to deliver significantly improved management and monitoring. Furthermore, the architecture that the operator adopts today is not necessarily the one it will have over time. For example, Option 2 could be an interim solution for an operator that is looking to ultimately have a Remote PHY architecture but is not yet ready to move away from the edge QAMs and RF. Furthermore, some innovative vendors are developing solutions where the MAC functionality can be either part of the CMTS core or in the node.

It is imperative that an operator carefully considers its needs and makes a well-thought-out evolution plan, rather than be swept by the virtualization wave, and to work closely with a leading industry vendor that can offer the right solutions to meet its needs.

Liliane Offredo-Zreik (@offredo) is principal analyst atACG Research.