Halloween came early for the cable technology world in January, when four Danish internet security researchers identified “Cable Haunt,” a security flaw affecting more than 200 million cable modems equipped with Broadcom chips in Europe alone.

The Cable Haunt vulnerability is focused on the spectrum analyzer, a standard component of Broadcom silicon that protects modems from signal surges and other disturbances piped in by the coax.

The spectrum analyzer is often used by internet service providers for debugging and improving connection quality. Access to it is typically limited to connections originating within the managed network.

Researchers at Danish firm Lyrebirds said the Broadcom chipset’s spectrum analyzer is vulnerable because it uses default credentials and lacks protection against denial of service-based “rebinding attacks.” They also said the chipset contains a firmware programming error.

Hackers could exploit the vulnerability and get users to accept malicious web pages, researchees said. Once that’s done, hackers could change default domain name system (DNS) servers; conduct remote man-in-the-middle attacks; swap code and change firmware, config files and MAC addresses; and do other evil things.

The vulnerability is widespread, they added. “The reason for this, is that the vulnerability originated in reference software, which have seemingly been copied by different cable modems manufacturers, when creating their cable modem firmware,” the researchers said on cablehaunt.com, a website they set up to publicize the issue. “This means that we have not been able to track the exact spread of the vulnerability, and that it might present itself in slightly different ways for different manufacturers.”

The group also published a white paper accessible on the site. They hope that ISPs and other tech firms release firmware updates and patch any vulnerabilities.

Broadcom said it released several firmware fixes last year. Others have released fixes, too. Meanwhile, ZDNet, which had engineers probe the vulnerability, described an attack using Cable Haunt as being “very hard to pull off.”

Arris continues to struggle with the global shortages of key electronic components, which it said was the principal cause of a 13% drop in CPE sales in the second quarter.

“Most companies like us are in an environment where trying to secure supply is on a week-to-week basis and prices fluctuate pretty significantly,” Arris CEO Bruce McClelland told investment analysts during the company’s second quarter earnings call last week.

“We're not in a position we can absorb those costs. And so, we've been pretty upfront and open with customers on what the price increases are,” McClelland added.

Related: Arris to Be ‘More Selective’ With Its Set-Top Box Business

Arris conceded in March that it has been among the suppliers affected by spiking global demand for dynamic random access memory (DRAM) chips. During its Q2 call, the company also conceded that the strained supply of multilayer ceramic capacitors (MLCC) is also taking a toll on business.

MLCCs are used in a wide range of electronic devices—everything from modems and gateways to smart phones to pay TV set-tops. In June, the National Cable TV Cooperative issued a warning to its operator constituents to expect delays on product shipments. And one Midwestern operator has admitted to switching its modem supplier from Arris to Hsinchu, Taiwan-based supplier Hitron.

For his part, McClelland said he visited Asia himself in July to meet with key parts suppliers.

“It's a reality of the entire market at this stage and we'll stay close both on the supply side and on the customer side to be as optimized as we can around the cost of production,” he said.

Related: Arris to Unload Taiwan-Based Set-Top, Modem Factory

Arris saw revenue in its CPE division decline from $1.15 billion in the second quarter of 2017 to $1 billion. Broadband device revenue declined 17.1% year over year to $405 million, while video CPE revenue declined 7.6% to $603 million.

In addition to raising prices to account for rising components costs, Arris said it was shifting focus to profitability and eliminating “low-contribution customer engagements.”

For Arris, and a broad array of other similarly situated companies rooted in electronics manufacturing, the shortages might not ebb soon.

With sectors like the automotive industry using exponentially more MLCCs these days, the leading global manufacturer of these parts, TTI, released a memo in April that indicated a somewhat intractable problem.

“We have reached a point that some manufacturers are concentrating their future activity on smaller case sizes and less commoditized technologies of the market like high voltage and flexible termination, with a particular focus on high-reliability end-markets such as automotive and medical,” the company said. “So while manufacturers are adding capacity, it’s generally not for commercial commodity parts—making this market condition even more difficult to navigate.”

Don’t set your watch by the anticipated release date of the SB8200, Arris’s first DOCSIS 3.1 tagged for retail. It’s been a moving target.

RELATED: Arris DOCSIS 3.1 Retail Modem to Sell for $199.99

Earlier this week, the Arris store cited an expected release date of Jan. 30, and this morning that date was changed to Feb. 10 (so, you know...keep that in mind as you consider whether to purchase a speedy D3.1 modem for that someone special in your life for Valentine's Day). At last check, a specific expected release date has been replaced with a message that the SB8200 is “available for pre-order only.”

But the release date should not be far away, as the SB8200 has also shown up for pre-order on Amazon. The initial retail price on the SB8200 has held steady at $199.99.

Notably, the current  Amazon listing notes that the SB8200 has been approved only by Cox Communications so far, adding that similar approvals from Comcast and Charter Communications and other MSOs are “pending.”

RELATED: Mediacom Launches 1-Gig Across Iowa Footprint

As reported earlier, packaging for the SB8200 that appeared on the DSL Reports message board indicated that the brands for Xfinity (Comcast) and Cox would appear on the box, so it’s plausible that Arris might just waiting for the green light from Comcast before it pulls the trigger.

Arris didn’t offer a specific reason for the shifting anticipated release dates, but stressed that it means that such dates aren't carved in stone.

“As the term ‘expected’ indicates, these dates are relatively close estimations and subject to slight changes,” Arris said.” The launch of the SB8200 is coming soon, which is why you see it available for pre-order on Amazon. We are pleased to see such anticipation and excitement for its launch. With two gigabit internet ports, it will be THE retail modem delivering fast D3.1 speeds to the most connected devices.”

After pushingback theoriginal expectedretail debut of the SB8200, Arris has held firm that it will become available in “early 2017.”

Pushing ahead with a plan to sell cable modems and other broadband products directly to cable operators and other service providers, Zoom Telephonics said it has hired industry vet Barry Hardek to the newly created post of service provider sales director.

The hire expands the sales focus of Zoom, which has traditionally focused on retail sales of DOCSIS modems and gateways. Of late, it’s been using Zoom as its “value brand” and utilizing the Motorola brand for a new line of premium-level cable modems, gateways, and other broadband products.

Retail Modem Market Small, but Active (Subscription Required)

Zoom inked a five-year licensing deal in May 2015 that gave Zoom the exclusive rights to use the Motorola brand in cable modems/routers and set-tops sold at retail in the U.S. and Canada. Zoom has since secured worldwide rights to the Motorola brand for modems, gateways, WiFi routers, range extenders and other WiFi products.

RELATED: Zoom Cable Modems, Set-Tops to Carry Motorola Brand

Frank Manning, Zoom’s president and CEO, hinted on the company’s recent Q3 call that Zoom would add a service provider sales angle to its business. 

“We’re seriously looking at giving it a try,” he said, noting then that Zoom was already in discussions about a potential hire focused in that area. “Think of it as an experiment; [there’s] no guarantees that we’ll be successful.”

Well-known in cable circles, Hardek most recently was managing director of SmartRG’s cable modem business, and has also held senior sales positions at Worldwide Supply, as well as two DOCSIS modem and gateway suppliers -- SMC Networks and Ubee Interactive.

“Barry comes on board at a great time,” Manning said in a statement. “Our Motorola brand cable modems are well-respected, and we now have a broad Motorola product line with excellent performance that is well suited to the service provider market.”

“I’m excited to join a company whose core business is customer premise equipment (CPE) in general, and DOCSIS CPE in particular,” added Hardek. “Zoom has a broad line of cable modems with proven performance, and plans for new cable modem products including DOCSIS 3.1 products.”

Zoom, which competes in the cable modem sector with companies such Arris, Netgear, TP-Link and Belkin/Linksys, said Q3 revenues rose 78% year-on-year to $6 million, driven by sales of its new Motorola-branded product line. 

RELATED: Linksys Reenters Cable Modem Retail Market

Though the vast majority of cable high-speed Internet customers still lease modems and gateways from the operators, vendors have been ramping up their game in pursuit of the smaller retail market.

Zoom Telephonics, for example, is already seeing sales spike following the launch of a DOCSIS modem product line emblazoned with the Motorola brand. Linksys, meanwhile, has reentered the retail cable modem market under its new owner, Belkin.

Both companies are looking to challenge competitors with a sizable lead in the retail market. Arris had about 57.7% of the retail share for DOCSIS modems, followed by Netgear (26%) and TP-Link (3.4%) , according to NPD data from late October. Linksys hasn’t been back in the fold for long, but it has already secured about 5.2% of the market, NPD said.

They are all fighting for a slice of the overall DOCSIS consumer premises equipment market. Jeff Heynen, consulting director and senior research analyst in SNL Kagan’s Media & Communications unit, estimates that retail sales make up 10% to 15% of the total market.

He projected total DOCSIS CPE shipments in North America will hit 24.14 million units, meaning that the retail split this year will likely be in the range of 2.4 million to 3.62 million units.

RENTAL FEE SAVINGS

A Linksys-sponsored survey of 1,007 U.S. adults conducted last year by IDC found that one-in-five consumers purchased their cable modem from a retailer, and three-quarters did so to avoid monthly rental fees.

“People still, by and large, rent their modems through the operators,” Heynen said, noting that cable operators have been adept at bundling in WiFi and managed services, as well as integrated devices that support their VoIP services. “They’ll accommodate [retail], but they certainly won’t go out of their way.”

Linksys formally rejoined the cable-modem retail market in June, debuting a trio of DOCSIS 3.0-based modems based on Intel silicon, including a high-end model that can bond up to 24 downstream channels. Its renewed focus on retail followed Belkin’s acquisition of Linksys from Cisco Systems in 2013 and added it to Belkin’s home-networking business (Cisco acquired Linksys in 2003 for $500 million).

Linksys, which hawks modems at outlets such as Walmart, Best Buy and in its own online store, has seen a “nice lift” in sales since it started selling the new product line in April, a spokeswoman said.

Also making noise is Zoom, which introduced its first Motorola-branded retail cable modem products in February.

The product launch followed a five-year licensing deal announced in May 2015 that gave Zoom the exclusive rights to use the Motorola brand in cable modems/routers and set-tops (as well as cable modems inside set-tops) sold at retail in the U.S. and Canada. Motorola branding rights were previously with Arris, which now uses the SURFboard brand.

Zoom has since secured worldwide rights to the Motorola brand for modems, gateways, WiFi routers, range extenders and other WiFi products.

Zoom, which uses its own moniker as a “value brand,” has already seen a lift from the Motorola brand, which it uses for “premium” level products. Its Q3 revenues reached $6 million, up 78% from the year-ago quarter and up 51% from Q2.

Zoom expects to expand to six Motorolabranded products before the end of 2016. Frank Manning, Zoom’s CEO, said in an interview that the company is also working on a Motorola modem based on DOCSIS 3.1, cable’s new multigigabit platform for hybrid fiber-coax networks, and hopes to submit it to CableLabs for certification testing this year. “All the sales growth is coming from the Motorola brand,” he said on the company’s recent Q3 earnings call.

SHELF SPACE NEEDED

Zoom estimates that it has cable modem placements in more than 5,500 retail outlets, and offers products in stores such as Best Buy, Walmart and Target stores, as well as outlets like Amazon.

“We need to get more SKUs [stock keeping units] and shelf space,” Manning said. He sees $30 million of sales per year as Zoom’s break-even point, and an annual revenue run-rate of $50 million as an “achievable” goal.

He said dislodging incumbents from that shelf space has been “harder than expected … There’s a position of power when you’re on the shelf.”

And though retail is Zoom’s primary focus, Manning also opened the door to direct deals with MSOs. “We’re seriously looking at giving it a try,” he said, noting that Zoom is already in discussions about a potential hire focused in that area. “Think of it as an experiment; [there’s] no guarantees that we’ll be successful.”

Following up on plans announced at CES in January, Linksys has launched two DOCSIS 3.0-powered cable modem products for sale at retail, with a third model that will become available this summer.

Here’s Linksys’s initial lineup:

-CM3008, an 8x4 modem for $59.99 (for plans under 100 Mbps)

-CM3016, a 16x4 modem, set for release this summer (for plans up to 250 Mbps; pricing to be announced).

-CM3024, a 24x8 modem for $129.99 (for plans over 250 Mbps).

Linksys’s new models are built on Intel’s Puma 6 chipsets.

Linksys said its new retail products have been deemed compatible with Charter Communications, Comcast, and Cox Communications.

In January, Linksys also announced plans for the CG7500, a gateway device that combines a 24x3 D3 modem with dual-band 802.11ac WiFi, four Gigabit Ethernet ports and a USB 2.0 port.  At the time, Linksys slated the CG7500, set for a summer release, and a price of $249.99.

The company’s renewed focus on retail comes after Belkin acquired Linksys from Cisco Systems in 2013 and added it to Belkin’s home networking business (Cisco acquired Linksys in 2003 for $500 million).

Linksys’s reentry will put some retail pressure on suppliers such as Arris, Netgear and Zoom Telephonics, which launched a new line of Motorola-branded modems earlier this year.

Linksys is selling the its new products at Linksys.com and via retailers such as Amazon, Frys, MicroCenter, Newegg and Staples. Among other retailers, the CM3008 is only available at HH Gregg and Walmart, while the CM3024 only will be available at OD Max and Fred Meyer.

Linksys will target broadband subscribers who want to avoid monthly product lease fees. It cited an IDC study it sponsored that found that two-third of consumers who get their modems from a cable operator are paying rental fees of about $10 per month. Just one in five purchased their modems from a retailer, and 75% did so in order to avoid the fee, the study found.

“Consumers can save up to $120 a year if they purchase their own cable modem instead of paying monthly rental fees,” Brian Nickell, cable modem product manager at Linksys, said in a statement. “With rental fees being on average $10 a month, consumers can have our CM3008 paid off in as little as six months and have the latest high performance modem that matches the broadband plan they have subscribed to.” 

Charter Communications is on the hook for $640,000 following a Consent Decree from the FCC‘s Media Bureau that settles its probe into allegations that the MSO had prevented high-speed Internet subs from using cable modems bought at retail over a prolonged period.

The Bureau started to investigate in July 2015 after Zoom claimed that Charter was infringing the rights of Charter subs to attach “non-harmful” cable modems to its network. The investigation found that for a period of about two years, starting in 2012, Charter customer service reps were instructed to tell subscribers that they would no longer be permitted to attach new customer-bought modems, and later added models to its list only after they passed a litany of tests “which did not relate to harm to the network or theft of service.” Additionally, Charter’s website indicated that for new and plan-switching customers that the MSO would also not allow customer-owned modems on the MSO’s network.

In addition to the $640,000, the settlement calls for Charter to adopt a three-year compliance plan with reporting requirements, has revised its cable modem testing procedures, including performing only three weeks of limited testing.

Per the compliance plan, Charter may prohibit the attachment of a retail modem under a set of specific conditions, including if it does not support DOCSIS 3.0 or higher, doesn’t support 802.11i-based encryption, has integrated MoCA capability. Charter also has 14 days to notify the Bureau if it won’t allow any retail cable modem to attach to its network.

Modem makers such as Zoom must obtain DOCSIS certification from CableLabs to clear modems for retail sale to show that they are interoperable with DOCSIS-qualified network gear.

Zoom, which recently began to sell retail modems under the Motorola brand thanks to an exclusive, five-year licensing deal originally signed with Google last year, had asked the FCC to deny the Charter-Time Warner Cable merger primarily over the retail cable modem issue.

The Consent Decree,spotted earlier by Ars Technica, was adopted April 25 and released May 10.

Zoom Telephonics inked a deal last year to use the Motorola brand in cable modems, routers and set-tops sold at retail, and the company has since followed through with the launch of a set of products that are being sold at outlets such as Best Buy and Amazon.

Zoom launched three Motorola-branded DOCSIS 3.0 modems late last month:

-MB7220, a model that supports eight downstream channels and four upstream channels.

-MB7420, a D3 modem with a 16x4 configuration.

-MG7310, an 8x4 D3 modem/router with integrated WiFi (802.11ac)  and four Gigabit Ethernet LAN ports.

According to the spec sheets for those products, all three use silicon from Broadcom. Through a quick search at Amazon, the MB7220 lists for $109.99 ($79.99 for Prime members); the MB7420 fetches $129.99 ($89.99 for Prime members); and the MG7310 can be had starting at $166.31.

“We anticipate introducing three additional Motorola products and dramatically expanding the number of retail outlets at which the Motorola products are available during the second quarter of this year,” Zoom president and CEO Frank Manning said in a statement.

With the Motorola brand in hand, Zoom will be looking to create more competition at retail with rivals such as Arris and Netgear. And they'll all have company in the form of Linksys, which last month announced plans to re-enter the retail cable modem game with a set of DOCSIS 3.0-based products that will debut this spring and be powered by Intel Corp.’s Puma 6 silicon. Belkin bought Linksys from Cisco Systems in 2013.

Zoom announced its five-year licensing deal last May, locking in a deal that allowed it to be the exclusive user of the Motorola brand in cable modems/routers and set-tops (as well as cable modems inside set-tops) sold at retail in the U.S. and Canada starting in January 2016. Zoom is essentially taking over Moto branding rights that had previously been with Arris (which bought Motorola Home in April 2013), which is now pushing ahead at retail using its own SURFboard brand. Arris announced last October that it achieved record retail shipments of cable modems and gateways in the third quarter of 2015 (Arris posts Q4 2015 results tomorrow). 

According to Zoom, its initial lineup of Motorola products are available at select Best Buy stores, BestBuy.com, all Micro Center stores, Amazon, as well as through retailers supplied by existing Zoom distributors.

Zoom, which has set up a web site for its new Motorola cable products, said its initial three models have been certified by CableLabs, a requirement for retail distribution, as well as by Comcast, Time Warner Cable, the FCC, and Bureau Veritas.

Speaking on an earnings in November, Zoom president and CEO Frank Manning said the company intended to establish Motorola as its “premium brand,” to use Zoom as its “value brand” for cable modem products.

Zoom envisions plenty of financial upside from the Moto branding deal. Manning said then that Zoom could grow its revenues by “at least $50 million in 2016 with the Motorola brand.” Zoom has not yet posted Q4 2015 results, but it reported Q3 net sales of $3.37 million, with cable modems and gateways accounting for 89% of total revenues in the quarter.

Zoom, by the way, is part of a coalition that is fighting the proposed Charter-Time Warner Cable merger.

A big question about DOCSIS 3.1 was answered this week as five vendors became the first to achieve CableLabs certification for the cable industry’s emerging multi-gigabit platform for widely deployed HFC networks.

Another big one still to be answered definitely is how much are these new devices going to cost?

One thing’s for sure – D3.1 devices are going to cost more, based on the mere fact that the initial hybrids are like two modems fused together: one side that can handle DOCSIS 3.0-based traffic, and another end that can support fresh swaths of D3.1-based spectrum.

It’s difficult to do a direct apples-to-apples comparison on D3.0 versus D3.1, since many new classes of gateways  bake in a lot more than the modem – advanced WiFi radios, MoCA technology, etc.

When I broached the D3.1 cost delta question to several vendors last fall, the general expectation was that the new class of modems will cost between 30% to 50% more in the early going, and then decline as volumes increase.

While that sounds like a hefty premium, it’s nowhere near the delta that was initially seen between DOCSIS 2.0 and DOCSIS 3.0 modems. Back then, it was estimated that the first D3.0 models cost 300% to 400% more than D2.0, in large part because of the additional tuners required. A lot of that functionality got baked into the chipsets, volumes exploded, and the costs came down considerably.

But one supplier did offer up a more exact pricing expectation with D3.1, noting that the first wave of DOCSIS 3.1 modems will cost about $25 more than their DOCSIS 3.0-only counterparts – which would put them in the 50% delta range.  Prices, the exec said, will drop from there are MSOs rev up their mass deployment plans.

So, it’s a price difference that MSOs will need incorporate as they seed their networks for D3.1, but the difference is a fraction of what they were dealing with when the DOCSIS 3.0 era was getting underway. 

We'll have more DOCSIS 3.1-related analysis to share in the January 18 issue of Multichannel News. 

Arris said the risks are “low” with respect to a report from a Brazilian researcher who claims that about 600,000 cable modems from the supplier are vulnerable to previously undisclosed “backdoors” that could leave the devices open to hackers.

"While researching on the subject, I found a previously undisclosed backdoor on Arris cable modems, affecting many of their devices including TG862A, TG862G, DG860A," Bernardo Rodriques noted in this blog item posted November 19. He said the backdoor affects “over 600.000 externally accessible hosts.”

In an email to Multichannel News in response to Rodriques’s findings, Arris noted that the company had implemented this access method on certain cable modem products to provide access to technicians, but has since disabled that access in order to minimize any risks to subscribers.

“Security is a top priority at ARRIS,” the company said, in a statement. “When it comes to our network and customer premises equipment products, we work actively with security organizations and our Service Provider customers to identify and quickly resolve any potential vulnerabilities to protect the consumers who use our devices. We are aware of the recently reported password vulnerability. The risk related to this vulnerability is low, and we are unaware of any exploit related to it. However, we take these issues very seriously and review them with the highest priority. Our team has been working around the clock on modem updates that address this reported vulnerability.”

Per Rodriques’s findings, firmware in the affected modems shipped with an undocumented "libarris_password.so" library that essentially acted as a backdoor for privileged account logins that supplied a different custom password for each day of the year. “ARRIS password of the day is a remote backdoor known since 2009,” he explained. 

A Comcast employee noted on the DSL Reports message board that the MSO does not use the Arris default password of the day, and filters external access to the modem.

However, a network engineer claiming to be with a “large MSO in Mississippi,” said the operator learned about the backdoors last week “and have been scrambling to close the holes.”

Zoom Telephonics president and CEO Frank Manning reiterated Tuesday that the company is on track to launch a new line of Motorola-branded cable modems in 2016, and that it has “at least” five Moto-branded products in the pipeline.

Thanks to an exclusive five-year licensing agreement announced in May, Zoom can use the Motorola brand in cable modems/routers and set-tops (as well as cable modems inside set-tops) sold at retail in the U.S. and Canada starting in January 2016. Zoom will essentially take over Moto branding rights that have been with Arris, which is pushing ahead at retail using the SURFboard brand.

Speaking Tuesday on Zoom’s third quarter earnings call, Manning said the plan is to establish Motorola as its “premium brand” and to continue to use the Zoom moniker as the company’s “value brand” for cable modem products.

Manning also repeated a claim that Zoom can grow its revenues by “at least $50 million in 2016 with the Motorola brand,” as the company looks to amp up competition at retail with rivals such as Arris and Netgear. Manning also estimates that the retail market for cable modems will be worth more than $150 million in manufacturer shipments this year.

Notably, Arris announced that it achieved record retail shipments of cable modems and gateways in the third quarter of 2015. But Arris (and Comcast) recently had to handle a technical hiccup with the SB6190, a retail DOCSIS 3.0 modem that can bond up to 32 downstream channels. After consumers encountered trouble getting the SB6190 to provision and install to the Comcast network correctly, the MSO developed an updated configuration file that created a technical work-around that resolved the issue. 

If Zoom is as successful as it thinks it can be using the Motorola brand, it would mark a huge increase in overall revenues for the Boston-based company. In Q3, Zoom posted net sales of $3.37 million, down 1.1% from $3.40 million in the year-ago quarter. Cable modems and gateways accounted for 89% of Zoom’s revenues in the quarter. Zoom also posted a net loss of $8,000, compared with a net profit of $22,000 in the year-earlier period.

Manning said Zoom is making progress getting five Moto-branded products designed, built and certified for volume shipments starting in Q1 2016 (it needs CableLabs certification to sell DOCSIS modems at retail). “There’s still a lot more to do, but we’re on track,” he said.

Zoom, he said, also has plans to develop modem products based on DOCSIS 3.1, the emerging multi-gigabit platform for HFC networks. But  the timing, he said, will be determined on how rapidly MSOs deploy the technology.

Zoom, by the way, has asked the FCC to deny the Charter- Time Warner Cable merger over concerns about access to third-party modems.

Zoom Telephonics is “on track” to debut a lineup of cable modem products in January 2016 that bear the Motorola brand and will be offered via various retail channels, Zoom president and CEO Frank Manning said earlier this month on the company’s second quarter earnings call.

Zoom, under an exclusive five-year licensing agreement announced in May, will use the Moto brand in cable modems/routers and set-tops (as well as cable modems inside set-tops) sold at retail in the U.S. and Canada starting in 2016. At that time, Zoom will take over Moto branding rights that have been with Arris, which acquired the Motorola Home division from Google in April 2013 for $2.35 billion

 “We are on track with the Motorola opportunity,” Manning said, noting that Zoom has made “great progress in product development, certifications and discussions with retailers, specifically.”

The focus now is to introduce a new line of Motorola-branded products starting in January 2016, Manning said, noting that Zoom’s initial plan is to offer six products and that the company has been working with a third-party industrial company on new designs. Zoom’s Motorola products won’t carry the Zoom brand, but Zoom also plans to continue selling cable  modem products that use the Zoom brand.

Manning didn’t go into further detail about the coming Motorola-branded product line, but said the initial focus is on modems with various downstream and upstream speed capabilities, with hopes that it will expand into other product areas. While DOCSIS 3.0 modems with 8x4 configurations are among the most popular models at retail, the latest D3.0 chipsets support 24x8 and 32x8 configurations. 

Arris, thanks in part to the Motorola brand, has dominated the retail market for DOCSIS cable modems and gateways. Manning estimates that about 10% of cable modem sales come way of retail, with the rest sold via direct-to-MSO deals. But he said Zoom is prepared to target retail aggressively.

“We don't just want to maintain the Motorola market share; we want to grow it,” he said, reiterating that he believes the Motorola plan represents a $50 to $100 million per year revenue opportunity for Zoom. “The fact is, Motorola is the strongest brand for cable modems, so that gives us an important advantage." 

Manning was also optimistic that Zoom will be able to draft a bit off of Lenovo’s acquisition of Motorola’s smartphone business from Google. While cable modems and smartphones are obviously different products, “there are things you can do to give a consistent brand image,” Manning said. 

Manning said it’s too early to say how much shelf space his company will get at retailers, as those discussions are ongoing. He also expects continued competition at retail.

“Clearly Arris is not giving up and running away,” he said. “They’re trying to compete [at retail].”

He said Arris has yet to compete with “severe” pricing tactics, but believes having a known brand, rather than deep cuts on pricing, represents the path to retail success.

“We already know that it doesn't work. Zoom's had a great price and we're on the shelf,” Manning said. “We do reasonable sales, but Motorola dominates our sales right now. I think that says a lot about the importance of brand." 

Though retail is Zoom’s cable modem focus, the company is also preparing to engage more directly with MSOs, particularly those that are outside the top three. Manning said Zoom, which has butted heads with Comcast and Charter Communications (subscription required), is looking to hire sales managers who have expertise in selling directly to MSOs, noting that the Technicolor’s proposed $600 million acquisition of Cisco Systems’ CPE business is “probably going to leave some people looking for jobs." 

While that deal offers some potential possibility, Zoom is also working with search firms and industry groups as it sizes up that direct-to-operator market.

While Zoom believes the Motorola brand  will give it a leg up in the retail market, it’s overall business is dwarfed by its bigger competitors. Zoom posted Q2 net sales of $2.59 million, and a net loss of $106,000. The vast majority (98%) of revenues are from U.S. sales, and 85% of net sales are from cable modems.

The company recently raised $268,740 in a rights offering that involved the sale of 298,600 shares at 90 cents each.  "While this is a modest capital raise, it's sufficient for the near term,” Manning said, adding that Zoom hopes to raise more funding later this year. 

STMicroelectronics officially tossed its hat into the DOCSIS 3.1 ring Tuesday with the unveiling of a chipset designed for an emerging platform that will deliver multi-gigabit speeds over HFC networks.

STMicro’s new D3.1-based chip, the STiD325 (codenamed “Barcelona”), is currently sampling with “lead customers.” The chipmaker, which will compete in the DOCSIS 3.1 CPE sector against Broadcom and Intel, has not announced any vendors that will use the STiD325 in broadband CPE products, but noted that it has participated in the CableLabs Acceptance Test Plan development committees and interoperability tests.

The company also stated that the Barcelona “early platform” operated successfully in what it called the world’s first end-to-end DOCSIS 3.1 field test conducted earlier this year. STMicro didn’t go into further detail, but Comcast has been conducting field trials of DOCSIS 3.1-based traffic, and revealed last month that it expects to follow with a market trial in the fourth quarter of 2015.

STMicro, which is demonstrating its new cable broadband tech at this week’s CableLabs Summer Conference in Keystone, Colo., said the STiD325 is for a wide range of broadband CPE products, including stand-alone cable modems, embedded media terminal adapters (which support cable  VoIP), as well as video gateways. Barcelona also supports RDK-B, a version of the Reference Design Kit software stack that’s made to work with broadband devices and set-top boxes. Comcast, Time Warner Cable and Liberty Global are managing the RDK.

STMicro’s Barcelona chipset will be a hybrid in the sense that it will support both DOCSIS 3.0 and DOCSIS 3.1 traffic. On the D3.1 side, it will handle two blocks of 196 MHz-wide OFDM downstream spectrum, and two 96 MHz-wide OFDM-A upstream channel blocks; on the D3.0 end, the chipset will support 32 single-carrier QAM downstream channels and 8 upstream QAM channels. While DOCSIS 3.1 is designed for capacities of up to 10 Gbps downstream and at least 1 Gbps upstream, the initial wave of D3 .1 modems will support about 5 Gbps/1Gbps when fully loaded.

"Prepared to be among the first commercial DOCSIS 3.1 deployments, our innovative platform architecture supports our ambition to make Barcelona a reference in the Cable industry," said Philippe Notton, group vice president and general manager of STMicroelectronics' Consumer Product Division, in a statement. "As a standalone for multi-gigabit cable gateways or combined with our Monaco SoC for an UltraHD media gateway, ST can offer complete solutions for fast design."

As Charter Communications’ proposed acquisitions of Time Warner Cable and Bright House Networks move forward (see Cover Story), expect the angst among suppliers to build as they position themselves for the outcome.

Some could find themselves on the outside looking in, while others are firmly in the catbird’s seat. For still others, notably Arris, it presents a mixed bag.

The future is not set, of course, but here’s a snapshot of some potential winners and losers from the deal.

CABLE MODEMS/ROUTERS/GATEWAYS

Winners: SMC Networks, Cisco Systems, Netgear

On the residential end, SMC Networks and Cisco Systems are Charter’s primary suppliers of cable modems, sources have said. Netgear, meanwhile, has locked in a slot to supply Charter subs with WiFi routers, including a new high-octane model that uses 802.11ac outfitted with Charter-specific middleware.

A dark horse winner in this category is French supplier Sagemcom, said to have Charter’s gateway business for smaller business customers and to be gearing up for an aggressive residential play.

Losers: Arris, Technicolor and Ubee Interactive

These three vendors are the approved gateway suppliers for TWC’s residential broadband service, so their hold could loosen should Charter apply a modem-plus-router strategy while continuing to eschew the use of integrated wireless cable modem gateways.

SET-TOP BOXES

Winners: Cisco, Humax

They are the initial suppliers of the Worldbox, Charter’s new set-top box platform that will support cloud-based apps, including the MSO’s new Spectrum Guide, and a new downloadable security system that will enable the device to run on any Charter system.

Possible Losers: Humax, Samsung and Arris

Humax finds itself in both camps, because it has also been tapped to supply TWC with its first set-top client based on the Reference Design Kit, the software stack for Internet prototcol-capable devices being managed by Comcast, Liberty Global and TWC. Charter has not divulged any specific plans for the RDK, at least not yet (expect something on this in next week’s issue).

Samsung is a known supplier to TWC and Bright House, but has not announced anything involving Charter’s Worldbox program. However, it does supply boxes to Cablevision Systems that utilize the same “open” architecture that Charter is using in its Worldbox platform.

Arris has been supplying TWC with a souped-up six-tuner “enhanced” DVR for the MSO’s “TWC Maxx” upgrade initiative. It’s not yet known how those rollouts will continue once Charter expands its Worldbox strategy.

MISCELLANEOUS VIDEO TECH

Winners: Cisco, Arris, ActiveVideo and Zodiac Interactive

They’re all involved in the video end of Charter’s Spectrum initiative, Cisco (downloadable security), Zodiac (set-top software stack), and ActiveVideo (user interface cloud TV platform), which is now co-owned by Arris and Charter.

Also sitting pretty is Michael Willner-led Penthera, which last week announced deals to supply its secure video-downloading platform to Charter and TWC, while reupping its agreement with Comcast.

Time Will Tell: Envivio

Envivio has bet a lot of chips on TWC. On last week’s first-quarter earnings call, the multiscreen video specialist said it received significant orders from Comcast and TWC, and that those two customers represented 57% of revenue in the period.

BILLING AND CUSTOMER CARE

Winner: CSG Systems

It’s coming off a new deal with Charter that’s good through the end of 2019, and includes a framework that, presciently, allows for the consolidation of additional customers that Charter might obtain through M&A activity. CSG also has existing deals with TWC and BHN.

Arris will no longer use the Motorola brand as of the end of 2015, but Arris confirmed that it owns the “SURFboard” brand and will continue to utilize it for retail products.

Motorola has used the SURFboard label on its cable modem products for many years, and Arris, which acquired Motorola Home in April 2013, has been using it in retail products that, of late, have been affixed with both the Motorola and Arris logos (see photo).

Zoom announced this week that it had inked an exclusive five-year license agreement with Motorola Mobility to use the Motorola brand in connection with Zoom’s consumer cable modem products, including cable modem bridges, cable modem/routers and cable set-tops that are manufactured, marketed and sold in the U.S. and Canada, starting in 2016.

Arris said in this blog post that it’s been preparing to take a run at retail without the Motorola banner.

“Since our acquisition of Motorola Home two years ago, we’ve anticipated this transition by accelerating our investment in making ARRIS the trusted name and global leader it is today, the company said. “Now, we’re ready to usher in the next wave of industry innovation under the ARRIS brand…The SURFboard is the most widely recognized and most popular retail cable modem —with more than 135 million sold, covering 90% of the market. It’s the retail standard.” 

Zoom Telephonics is a small company that will soon gain access to a big name brand – Motorola.

Zoom, under an exclusive five-year licensing agreement announced earlier this week, will use the Moto brand in cable modems/routers and set-tops (as well as cable modems inside set-tops) sold at retail in the U.S. and Canada.

The deal, Zoom CEO Frank Manning said Tuesday on a conference call, carries “significant upside with some risk.”

The upside is obvious – Zoom, which sells cable modems and gateways at outlets such as Best Buy, Micro Center, Staples and Walmart, believes it stands to sell more products at retail using a better-known consumer brand.

“We’ll be doing the same for the Motorola brand and we should be able to expand the number of retailers and service providers who buy from us,” Manning said. “This won’t be easy. Zoom will… compete with powerful companies, including Arris and Netgear for shelf space and sales." 

Now, the risks. Zoom has not announced the specific terms of the licensing agreement other than to say it has agreed to pay Motorola Mobility a one-time set-up fee and a royalty based on net sales, but Manning acknowledged that his company has “made significant financial commitments” in doing the deal.

Zoom will be also paying to use Motorola’s brand on products that are already affixed with notoriously thin margins (even with the retail markup), but Manning believes the Motorola label will help it overcome that challenge.

“Even with those [financial] commitments, we believe that Zoom’s cable modem margins after licensing fees should stay the same or increase given Motorola brand's power,” he said.

Zoom, he added, also plans to raise additional funds to provide working capital to finance the growth it hopes to generate with the new branding strategy, but said it was too early to provide those details.

Manning also believes that Arris, which has rights to the Motorola brand through the end of this year, is taking on some risk by leaving the Motorola brand behind.

Arris seems to agrees that it could face some challenges at retail without Motorola on its banner.

“Shelf space in retail outlets can also be impacted by how recognizable a brand is by customers,” Arris said in this recent 10-Q filing. “If we are unable to successfully rebrand those products, our sales in those regions and channels may decrease. Further, the loss of the use of the ‘Motorola’ brand may result in a lower amount of shelf space, or space in less desirable areas, which may impact our sales.”

Arris has been trying to build consumer awareness of its brand through initiatives such as its sponsorship of Carl Edwards in the No. 19 Toyota Camry. But how much Arris truly has at stake at retail is not easy to determine, since the company does not break out how much cable CPE revenues comes in from that channel. On Tuesday’s call, Manning helpfully estimated that Arris’s Motorola brand sales are presently in the range of $50 million to $100 million per year.

Zoom would do well if it’s able to grab just a portion of that, as the Boston-based company generates annual sales of about $12 million. In the first quarter of this year, Zoom posted revenues of $3.06 million, down slightly from the year-ago quarter primarily to reduced sales of dial-up modems.

Arris, meanwhile, is in the cat bird’s seat of cable broadband CPE. According to Infonetics Research, Arris ended 2014 with 36% share of global revenue in the category, followed by Cisco Systems (19%) and Technicolor (13%).

Jeff Heynen, the research director for broadband Access and pay TV at Infonetics, said Zoom and other cable modem makers could see greater opportunity at retail as more consumers cut the pay TV cord and go broadband only, paired with the trend toward rising equipment lease fees.

Manning also discussed Zoom’s plans to use the Moto brand on products other than modems and routers, noting that the roadmap includes CPE that can support cable VoIP services as well.

The branding license also covers set-tops should Zoom decide to branch off in that direction.But don't hold your breath. 

“We're not even sure that we will enter the [set-top] area, but we wanted to have that right to [use] the Motorola brand,” Manning said. “As hard as the cable modem business is to enter, I think the set-top box business is even harder." 

When it comes to cable modems and set-tops, the Motorola brand will endure, at least for a few more years.

Zoom Telephonics announced Monday that it had struck an exclusive five-year license agreement with Motorola Mobility to use the Motorola brand in connection with Zoom’s consumer cable modem products, including cable modem bridges, cable modem/routers and cable set-tops that are manufactured, marketed and sold in the U.S. and Canada.

Zoom said the agreement begins on Jan. 1, 2016, and runs through the end of 2020. Financial terms were not disclosed, but Zoom has agreed to pay Motorola Mobility a one-time set-up fee and a royalty based on net sales during the term of the license deal, according to an 8-K filing.

Arris has been using the Motorola brand as part of an agreement negotiated with Google, which sold the Motorola Home division to Arris in April 2013 for $2.35 billion. Following the closing of that deal, Arris had one year to phase out use of the Motorola brand, but ended up signing a two-year extension. Arris has stressed that it intends to continue selling cable products through retail channels.

Zoom will be taking that brand forward with respect to cable modems and set-tops starting next year, and has plans to develop an “extensive line” of Moto-branded cable modems, Frank Manning, Zoom’s president and CEO, said in a statement.

"Motorola is a leading brand of cable modems at retail, and we're honored and thrilled to be licensing this powerful brand," Manning added. "This license has the potential to grow Zoom's sales dramatically. We are committed to the hard work necessary to take advantage of this significant opportunity to grow Zoom's business, and we are looking forward to working with Motorola Mobility and Motorola cable modem retailers, distributors, and service providers to make this transition smooth and successful for them.”

Zoom has set a conference call for Tuesday at 10 a.m. ET to discuss the agreement in more detail.

Zoom, which already sells a variety of cable modems at retail under its own brand (this DOCSIS 3.0 modem, for example, sells for $69.99 via BestBuy.com), has had some run-ins with cable operators over their respective policies for cable modems sold at retail. 

Of recent note, the FCC, at the request of Zoom, had been vetting Charter Communications’ third-party cable modem certification practices (subscription required). Zoom had filed a petition to deny the now-defunct Comcast-Time Warner Cable merger, but had also asked the FCC to apply a condition that Charter state unsubsidizied pricing for leasing cable modems and not “unreasonably” refuse to allow “nonharmful” modems to attach to its network.

In 2011, Comcast and Zoom jointly filed a request the FCC to dismiss Zoom's complaint about Comcast’s certification testing requirements for modems sold at retail, after the two companies reached a settlement on the issue. Terms of the settlement were not disclosed.

MaxLinear’s lowered outlook for the third quarter announced Monday caused its stock to drop more than 17% and that apparently applied pressure on Arris shares, which dipped almost 7%.

MaxLinear, a maker of silicon for cable modems and set-top boxes, cut its third quarter revenue forecast to $32 million to $33 million, down from previous guidance of $36.5 million to $38 million.

The reason: a 25% decline in cable revenues related to a push-out of requests for top-of-the-line  DOCSIS 3.0 cable modems that can bond 24 downstream channels, apparently caused by a build-up in the first quarter of 2014. MaxLinear was expecting a sequential decline in cable revenues in the range of 2% to 5%.

MaxLinear’s reduced forecast was “likely the largest factor pressuring Arris stock today,” Raymond  James analyst Simon Leopold wrote in a research note Tuesday, pointing out that Arris, at 28% of revenue, is MaxLinear’s largest customer.

Arris also presented at Raymond James’ North American Equities Conference in London Tuesday morning, and Leopold said he did not attribute the sell-off of Arris shares to anything management said there, which included a reiteration of recent concerns about a possible spending pause tied to further carrier consolidation – notably the pending Comcast/Time Warner Cable and AT&T/DirecTV mergers.

Leopold said Arris maintained third quarter guidance of $1.37 billion to $1.41 billion in sales with pro-forma EPS in the range of $0.69 to $0.74, as it has already built possible market softness into its guidance “along with some share shifts from ARRIS in favor of Pace at Comcast.”

Leopold, who kept his "strong buy" rating on Arris shares, also pointed out  that MaxLinear only represents about $9 million, or less than 1% of Arris’s cost of goods sold.

MaxLinear said it’s also seeing preliminary indications of a slower product ramp for some satellite gateway platforms, too.

“We are continuing to review these trends, which could also affect our upcoming fourth quarter 2014 revenue guidance," said Dr. Kishore Seendripu, president and CEO of MaxLinear, in a statement. “Despite the near term challenges in our business, we remain enthusiastic about our long-term growth prospects and design win traction across our Cable and Satellite markets.”

MaxLinear shares closed down $1.51 (17.22%) to $29.44 each Tuesday. Arris closed down $2.09 (6.63%) to $29.44, but was up 1.94% in after-hours trading.