The cable access technology business’s new, virtualized era has arrived for vendor Harmonic, which reported a 78% year-over-year spike in its fourth-quarter cable access revenue, to $43 million, driven by its CableOS software product.

San Jose-based Harmonic also touted two new but unspecified Tier 1 cable operator clients for CableOS, which converts the formerly hardware-intensive converged cable access platform (CCAP) of the typical cable hybrid fiber coaxial network into a virtualized software-based architecture.

CommScope, which acquired Arris last year, Cisco Systems and Casa Systems, respectively, led the old paradigm of supplying CCAP and cable modem termination system (CMTS) hardware. In a worldwide cable broadband business quickly migrating to virtualized schemes, look for these vendors to talk about their own virtualized cable access products on their fourth-quarter earnings calls.

Research company Dell’Oro Group, which closely tracks the cable access technology business, also said last week that revenue from virtual CMTS revenue will grow from $90 million last year to $418 million in 2024.

But overall, that migration from hardware to software won’t be great for business long-term. Dell’Oro also predicted that global cable access revenue will decline 5% over the same five-year span.

“Global operators continue to invest in their broadband access networks, but are increasingly delivering more capacity with lower-cost, virtualized hardware,” Dell’Oro Group senior research director Jeff Heynen said. “Virtualization, coupled with subscriber saturation in some mature markets will result in gradually declining revenue for broadband access equipment globally.”

Certainly, Harmonic, which suddenly finds itself in a position of market leadership, isn’t sweating that long-term projection.

The company now boasts five Tier 1 clients for CableOS, including Comcast, which signed a $175 million multiyear deal to use the product last summer.

Harmonic said it now has 23 CableOS clients in commercial deployment. Revenue for the product was up 78.3 in the fourth quarter. Overall revenue for Harmonic was up 7.6% to $122.2 million during the period.

“This is a market category that Harmonic largely invented that we’re leading today and that we’re well-positioned to lead going forward,” Harmonic president and CEO Patrick Harshman told investors Feb. 3 on his company’s fourth-quarter earnings call.

CommScope and the rest of Harmonic’s competitors certainly take heart in that, despite the early sales activity for CableOS, which is quite hopeful, the virtualized cable access market remains wide open.

Harshman conceded that while CableOS’s 23 operator clients collectively serve 45 million cable modems worldwide, only about 1 million of them are attached to CableOS at this point.

“We're focused on ensuring this first wave of 23 deployed customers continue to be delighted and moving towards leveraging CableOS across their entire footprint from approximately 45 million modems,” Harshman said.

Harmonic has announced another business win for its CableOs product, with the virtualized cable access solution deployed with DSA, a nonprofit antenna association in Denmark.

The software product will be managed by Harmonic’s local CableOS partner, Infowise.

Earlier this week, Harmonic attributed a 14% spike in Q3 sales to CableOS, which it said is now deployed with 19 cable operators globally.

Related: Harmonic Drives 14% Q3 Revenue Growth as CableOs Biz Takes Off

"Harmonic's CableOS solution will ensure our smooth transition to DOCSIS 3.1, allowing us to efficiently and cost-effectively increase broadband capacity through a flexible architecture to support the deployment of R-PHY in the future,” said Henrik Lindholm, chairman of DSA, in a statement.

"As operators around the world move to DOCSIS 3.1 and roll out Gigabit internet offerings, it's becoming obvious that choosing a software-based CMTS offers distinct advantages over hardware, including operational efficiency, accelerated introduction of new features and scalability," said Gil Katz, senior VP of cable access business operations at Harmonic. "Our CableOS offering features a unique virtualized architecture that empowers cable providers like DSA to deliver fast broadband speeds and significantly reduce their operating expenses."

Speaking to Investors during Harmonic’s first-quarter earnings call, CEO Patrick Harshman declared his company’s intention is to be “No. 1” in the cable access-network technology business, displacing incumbents Arris/CommScope and Cisco Systems.

But like an NBA team tied in the closing minutes of a playoff game seven, Harmonic faces some nervous moments as it seeks its title. The tech vendor is waiting for Tier 1 clients to get done with trials of its CableOS and actually start deploying the virtualized cable access product.

As leading operators such as Comcast move towards Distributed Access Architecture (DAA) and virtualization of key network components, San Jose, California-based Harmonic stands to seize sizable market share with its DAA-focused fiber nodes and CableOS virtualized cable access product, which turns giant pieces of hardware like the cable modem termination system into software.

“Harmonic has quite a bit of momentum; they’re really pushing the envelope in terms of distributed access technology,” analyst Jeff Heynen, research director of broadband access and home networking for the Dell’Oro Group, said.

CableOS Tests Wrap Up

Harmonic has said four of the top eight cable operators in North America and Europe are engaged in commercial trials of CableOS, one of which is widely known to be Comcast. The company also said it has 32 commercial deployments and field trials of the product currently underway, and that 670,000 cable modems are now tied to CableOS, up 24% from the fourth quarter.

In March, Harmonic announced a pact with the National Cable Television Cooperative to jointly offer the virtualized cable access solution to the co-op’s more than 750 members.

Harshman said one large foreign operator signed a $50 million contract for CableOS.

Unfortunately, Harmonic’s bottom line has yet to reflect this momentum. First-quarter revenue was off 11.1% year-over-year to $80.1 million. Notably, revenue from cable-access products was down more than 30% to $12.9 million.

Harmonic has offered shareholder guidance that cable access revenue will range from $100 million to $130 million for the year and needs to see business pick up significantly in the ensuing three quarters to come through.

Harmonic isn’t alone. Competitor Casa Systems, which reported a 56% Q1 revenue slide last week, also says it’s in a “holding pattern,” waiting for MSO customers to get off the dime with emerging access tech.“We’re seeing an industrywide slowdown as cable operators implement a shift to virtual CCAP and DAA,” Casa Systems CEO Jerry Guo told investors, describing a “quarter we’re not at all happy with.”

For his part, Harshman spent much of the April 29 earnings call assuring investment analysts that major deployments of CableOS are coming, starting in the second quarter.

“There were a couple of major architectural change decisions made by our lead customers,” the CEO said, explaining the deployment delays. “And going into the beginning of the year, frankly, there was a little bit of uncertainty about the exact time frame that those could be implemented and how we would kind of get back on track. But the good news is, all that work is just about done, and we feel as though we’re largely currently getting back on track.”

Harshman assured investors his confidence stems from hard evidence. “We’re not just talking about verbal dialogues here, we’re talking about very detailed spreadsheets,” he said. “And frankly, plans that we’re investing in.”

One analyst asked if the deployment delays could be caused by an unforeseen cable access competitor making a late-game play against Harmonic.

“We don’t know what we don’t know,” Harshman conceded. “We have not heard of anything else being demoed in the lab, successfully and competitively. It’s prudent not to be overconfident. But it’s hard to imagine, frankly.”

A Big Market to Fight Over

Harmonic and Nokia, which also serves the DAA and virtualization market, are competing for a big prize. Heynen said the cable access market was worth $1.5 billion in 2018 and is growing at a single-digit but still nice pace.

As the analyst explained to Multichannel News, the benefits of virtualization and DAA are myriad. “You can save on rack space, you save on power consumption and you save on hardware costs,” Heynen said. “Comcast is going to be a big driver of DAA. The question is, how fast does Comcast move?”

That’s a question that Harmonic shareholders would certainly like to have answered themselves.

After going public late last year, Casa Systems, a maker of cable and wireless network gear and software, said Q4 2017 revenues rose 18.9%, to $118 million, driven largely by software-based capacity expansions by cable operators.

RELATED: Casa Systems Shrinks IPO Size to 6M Shares at $13 Each

That was paired with GAAP net income of $28.9 million, down 27.6% versus the year-ago quarter.

For the full year, revenues rose 11.2%, to $351.6 million.

Though new wireless opportunities are starting to kick in, cable’s move to DOCSIS 3.1 to deliver gigabit-class speeds remains a key growth driver at Casa, company president and CEO Jerry Guo said Tuesday on the earnings call.

And while some operators, such as Comcast and WideOpenWest and Mediacom Communications, have moved aggressively with D3.1, Casa expects deployments to ramp up this year and into 2019.

Cable is generally at the “initial stage” of D3.1, Guo said, adding that there’s “a lot more to come.”

Though integrated Converged Cable Access Platform (CCAP) products have plenty of legs left, he also sees cable’s ramp toward distributed access architectures ramping up in 2019 and beyond.

RELATED: Ramping Up for Remote PHY

Casa also talked up its ongoing move into wireless – including a focus on 4G, small cells and cellular IoT cores -- recalling recently announced wins with Telefonica (for its 4G Apex Small Cells and small cell management platform); and with China Mobile and Sprint, which are both using Casa’s Axyom Small Cell Core product.

Casa said it expects revenues for fiscal year 2018 to be in the range of $380 million to $395 million, with non-GAAP net income of between $100 million to $111 million.

Some of Casa other known customers include Charter Communications (coming way primarily from Charter’s  acquisition of Time Warner Cable), Rogers Communications and Mediacom Communications in North America; Televisa/IZZI Mexico and Megacable Mexico; Claro Telmex Columbia; Liberty Global, Vodafone and DNA Oyj; and Jupiter Communications and Beijing Gehua CATV Networks in the Asia Pacific region.

Update: Via Twitter, Jeff Heynen, consulting director at SNL Kagan, noted that Casa’s turning in of a solid Q4 wasn’t a surprise, but wondered if Casa could maintain consistency throughout the year: 

Casa has historically had strong Q4s. The big question is whether the revenue troughs in subsequent quarters can be minimized. https://t.co/QyEjkbBGGs

— Jeff Heynen (@jeffheynen) March 7, 2018

Raymond James analyst Simon Leopold maintained his “Outperform” rating on Casa following its Q4 results, noting that the numbers exceeded expectations (sales of $118 million beat Wall Street consensus of $101.4 million), and Casa's 2018 forecast was a bit better than consensus.

“We expected seasonal strength in the software portion of Casa's business, which largely stems from capacity additions, but the results were well ahead of expectations at $50 million vs. our $38 million estimate,” he wrote, adding that the favorable mix fueled the gross margin to 77.1%, above his expectation of 69.9% and the Street's expectation of 68.5%.

Harmonic CEO Patrick Harshman said the company now has more than a dozen commercial deployments and “advanced field trials" underway for CableOS, the company’s virtualized Converged Cable Access Platform (CCAP).

Harshman, speaking Wednesday (February 28) on Harmonic’s Q4 2017 earnings call, didn’t identify them all, but said the biggest concentration is in North America and Europe. Harmonic has already identified Sweden’s Com Hem as its first deployment partner for Cable OS. Harmonic also has a warrants agreement with Comcast based on sales to the MSO and deployment milestones that include the CableOS product.

RELATED: Harmonic IDs a Real Deployment for its Virtual CCAP

When Harmonic announced Q3 results last October, the company said it had “material” commitments for CableOS with more than ten leading operators.

Virtualized CCAPs such as Harmonic’s are gaining traction as MSOs look to become more agile in their service launches, pump more capacity on their networks, and reduce the space, cooling and powering requirements that come with traditional, purpose-built CCAP chassis.  In the case of CableOS, key functionality is in software that runs on commercial off-the-shelf, Intel-based x86 servers.

RELATED: Harmonic Virtualizes the CCAP

Harshman stressed that there’s a “misperception” that CableOS is targeted exclusively at emerging Distributed Access Architectures. While CableOS is designed to “shine” in those scenarios, it also works on centralized CCAP solutions, with Com Hem being an early case in point, as it’s running CableOS on servers located where the legacy hardware-based platform was based.

RELATED: Gearing Up For Remote PHY 

In addition to direct sales, Harmonic is also eyeing opportunities for CableOS via a partnership with Arista announced late last year. Arista said its EOS and R-series router platforms have been certified with Harmonic’s CableOS.

Considering its progress with CableOS, Harmonic also maintained its target of cable edge-related revenues of $100 million-plus this year.

But some analysts aren’t completely convinced. For instance, Raymond James analyst Simon Leopold issued a note holding that checks around the industry regarding the acceptance of some new platforms, specifically around virtual CCAPs, indicate that Harmonic could fall short of its projections.

“We have no qualms with the strategy, but expect the road to recovery is a long one,” he wrote. “We conservatively model Cable Edge revenue below management’s target of $100 million in 2018, while acknowledging potential upside to our numbers from faster Cable OS ramps and trial progress.”

Moving forward, Harmonic will continue to grapple with CCAP rivals that have developed or are exploring virtualized version of those products, including Cisco Systems, Casa Systems, Arris, Huawei and Vecima Networks.

Looking to give MSOs more flexibility on how they buy and deploy access network capacity, Cisco Systems this week launched Infinite Broadband Unlocked (IBU), a licensing program for the cBR-8, a flagship converged cable access platform (CCAP) that supports cable services and the new DOCSIS 3.1 platform.

Cisco said the program aims to improve the economics of delivering multi-gigabit services using emerging distributed access architectures that employ Remote PHY and push key electronics toward the edge of the network.

RELATED: Cable-Tec Expo: Ramping Up for Remote PHY  

Rather than using traditional licensing models for CCAP devices that require MSOs to buy large numbers of new bandwidth licenses for every service group where they want to offer the expanded service, the IBU model has only one license type based on bandwidth consumption, Cisco said.

That gives cable operators the ability to provision all of the capacity of their CCAP platforms without restrictions or upfront licensing expense, the company claimed, noting that the IBU licensing plan is available for current and new Cisco cBR-8 customers worldwide.  

Further, Cisco believes that the approach will promote the provision of multi-gigabit service tiers across MSO footprints without the risk of stranding capital while also simplifying service group splits by eliminating the need to purchase additional license types.

“IBU helps cable operators be more competitive and gain subscriber market share,” Sean Welch, vice president and general manager, Cable Access, Service Provider Business, Cisco, said in a statement. “We have listened carefully to our customers, and with this new offer we have specifically focused on making DOCSIS licensing simple and aligned with their business objectives.”

Casa Systems’s IPO has apparently had a run-in with Dr. Shrinker.

Casa Systems, a maker of cable access and wireless network gear and software, said it has reduced the opening price of its IPO to $13 per share and cut the number of shares being offered to 6 million.

Casa Systems, which begins trading today on Nasdaq under the “CASA” ticker, announced plans earlier this month to offer about 8.4 million shares at $15 to $17 each.

UPDATE: Shares in Casa rose $1.40 (10.77%) Friday, closing at $14.40 each.

RELATED: Casa Systems IPO to Raise Up to $164.22M

Under the current plan, Casa Systems aims to raise about $78 million, well off the $164.2 million originally envisioned.

Casa Systems has also granted underwriters a 30-day option to buy up to 900,000 additional shares of stock at the IPO price. It added that Summit Partners, the company’s largest stockholder, has interest in acquiring up to 250,000 shares in the offering, “but in no event an amount that would have the effect of Summit Partners being the beneficial owner of 50% or more of Casa’s outstanding shares following the offering.”

Company president and CEO Jerry Guo has also expressed in interest in purchasing 100,000 shares in the offering, set to close on Dec. 19, 2017.

Morgan Stanley & Co. and Barclays Capital Inc. are acting as joint book-running managers for the offering, with Raymond James & Associates, Stifel, Nicolaus & Company, Macquarie Capital (USA), Northland Securities, Inc. and William Blair & Company acting as co-managers.

Casa, which has been pairing its wired network infrastructure portfolio with wireless systems, competes with vendors that include Arris, Cisco Systems, Harmonic, Huawei, Vecima Networks, and Nokia, which recently acquired virtual CCAP startup Gainspeed.

RELATED: Nokia Closes Gainspeed Buy

Casa’s customers include Charter Communications (coming way primarily from Charter’s  acquisition of Time Warner Cable), Rogers Communications and Mediacom Communications in North America; Televisa/IZZI Mexico and Megacable Mexico; Claro Telmex Columbia; Liberty Global, Vodafone and DNA Oyj; and Jupiter Communications and Beijing Gehua CATV Networks in the Asia Pacific region.

Casa generated revenues of $233.6 million through the first nine months of 2017 (with $125.3 million from North American customers), up 7.7%, and net income of $59.6 million, up 22% versus the corresponding year-ago nine-month period.

Arris International said it has reached general availability for its second-generation of active modules for its flagship converged cable access platform (CCAP), the E6000, that puts operators on a path to support Remote PHY architectures.

Read More: Complete coverage of Cable-Tec Expo 2017

The Gen 2 modules consists of the Downstream Cable Access Module 2 (DCAM-2), the Upstream Cable Access Module 2 (UCAM-2), and the Router System Module 2 (RSM-2).

The approach enables MSOs to upgrade existing E6000 Integrated CCAP (I-CCAP) chassis to “unlock” Remote PHY capabilities, Arris said, noting that the Gen 2 modules allow operators to boost the number of service groups and related channels over time, without consuming more rack space. Arris is showing off the new wares at this week’s SCTE/ISBE Cable-Tec Expo in Denver.

"The E6000 Gen 2 modules realize the potential of next-generation services and make it easier for providers and customers to seamlessly transition to Gigabit broadband and IP video services,” Dan Whalen, president of Arris’s Network & Cloud, said in a statement. “This upgrade dramatically increases the capacity of our market-leading E6000 CER as consumer demand for streaming high-bandwidth content continues to grow.”

Comcast is among MSOs that are using the new modules.

"Comcast is leading the way in Gigabit services with our wide-scale deployment of DOCSIS 3.1. The Arris Gen 2 modules support our objective of efficiently expanding these popular services," Dr. Robert Howald, VP, network architecture at Comcast, said. "The flexibility to be upgradeable to Distributed Access Architecture makes for a compelling addition to the E6000 platform."

Arris shares could face pressure after one of its key manufacturing partners whiffed on its fiscal Q2 financial results, according to Raymond James analyst Simon Leopold.

Plexus sales for the period were $604.4 million, down $30 million, or about 5%, below expectations. The largest portion came way of Plexis’s Networking & Communications segment, which came in at $16.8 million, about 13.4% below estimates. Plexus also forecast June sales of between $595 million to $625 million, well below consensus for $688 million.

This is all of potential concern to Arris, Leopold said, because it uses Plexus to manufacture its cable modem termination system (CMTS) platform, which represents the largest piece of Arris’s Network and Cloud unit. Arris is responsible for about 10% of Plexus sales.

“The announcement could present risk to ARRIS’ 1Q17 results; however, past results from Plexus have not always aligned with ARRIS’ results by quarter,” Leopold wrote.  “The weak Plexus results may already reflect the lower outlook reported by ARRIS last quarter.”

Leopold also pointed out that Arris is undertaking a CMTS “product refresh, so a pause has been ongoing,” and doesn’t see much risk to his firm’s Q2 2017 estimate for Arris, which stands at $1.63 billion, reflecting a 10% increase version the previous quarter, and 6% year-on-year.

Despite the potential risk from Plexus's Q2 results, Leopold maintained his “Strong Buy” rating on Arris shares.

Harmonic has begun revenue shipments for CableOS, its software-powered “virtual” Converged Cable Access Platform (CCAP) that runs on off-the-shelf hardware, the company confirmed Tuesday on its Q4 earnings call.

CableOS, announced last September at the SCTE/ISBE Cable-Tec Expo in Philadelphia, has reached its first general availability product release, Patrick Harshman, Harmonic’s CEO said.

RELATED: Harmonic Virtualizes the CCAP

CableOS has been “deployed into [a] live commercial environment delivering DOCSIS broadband service to paying European cable subscribers,” he said. Harmonic didn’t name that operator, but Harshman said it’s a “major cable operator in Europe.”

Last fall, Harmonic also announced a warrant agreement with Comcast based on sales to the MSO and deployment milestones involving the CableOS product.

RELATED: Harmonic, Comcast Strike Warrant Agreement

Harshman said the current version of CableOS provides the functionality of an “off the shelf” CMTS (cable modem termination system), adding that Harmonic is now set on adding additional features that will lead toward “2.0 functionality in the context of a virtualized system.”

He said Harmonic expects the revenue ramp for CableOS to accelerate later into the year.

Harmonic’s early progress with CableOS is a step toward the company’s “ambitious target” of hitting a $100 million run rate in the vendor’s Cable Edge segment, Simon Leopold, analyst with Raymond James, said in research note issued Wednesday. Leopold said he expects a “more material ramp” for the CableOS product in the back of 2017.

Harmonic’s push with a virtual CCAP follows a broader industry trend in which cable operators are looking to implement software-based access platforms and eventually steer away from today’s commonly deployed centralized, purpose-built CCAP chassis.

In a survey of 35 operators around the globe, Kagan Research analyst Jeff Heynen found that 61% of them plan to start virtualizing their Converged Cable Access Platforms (CCAPs) or begin the shift to a distributed access architecture (DAA) by the end of 2018.

RELATED: Cable Ops Poised for Push Into Virtualization, Distributed Architectures

That shift should open doors to new CCAP entrants, such as Nokia and Harmonic, that are trying to trying to elbow their way into a market that is presently been dominated by Arris, Cisco Systems and Casa Systems, Heynen said in an interview about the survey.

While the incumbent suppliers have virtualized platforms on their product roadmaps, Nokia entered the vCCAP game last year when it acquired a startup called Gainspeed.

On the financial front, Harmonic said sales to $113.1 million, helped the stronger-than-expected results from video product sales. The results beat Leopold’s estimate of $108.98 million as well as Wall Street’s expectation of $108.93 million.  

Leopold maintained the firm’s Underperform rating on Harmonic shares.

Harmonic shares were up 9.26% (49 cents), to $5.89 each in late morning trading Wednesday.

Harmonic said its chief financial officer, Harold Covert, will resign in the coming months, but will stay on until the vendor files its 2016 annual report and the appointment of a new CFO.

In a release about the transition, San Jose, Calif.-based Harmonic said Covert was resigning so he could spend more time with his family on the East Coast.

In a memo to Covert filed with the SEC, Harmonic said it understood the exec’s “desire to transition out of the CFO position because of the strain that your extensive travel has placed on your family.” Per the document, Harmonic will provide Covert with a one-time bonus equal to six months of his base salary under certain conditions, including his staying on through the filing of the aforementioned annual report.

Covert stepped down from the Harmonic board last fall to assume the CFO role, replacing then-CFO Carolyn Aver, who left to help her husband run their family winery.

Harmonic said it has launched a search for a new CFO and that Covert “has agreed to provide any needed assistance to ensure a smooth transition.”

“On behalf of the Harmonic Board of Directors and management team, I want to express my gratitude to Hal for stepping off the Board last year and into the CFO role during an important period of strategic change and acquisition integration,” Patrick Harshman, Harmonic’s president and CEO said in a statement. “We thank Hal for his contributions and his continued leadership during the transition period.”

Prior to his role at Harmonic, Covert served as CFO of several tech companies, including Lumos Networks, Silicon Image, Openwave and Adobe, and on the board of public companies that include Lumentum, JDS Uniphase and Harmonic.

In a research note issued today, Raymond James analyst Simon Leopold said the firm regard’s “C-level departures, in general, as a yellow flag that highlights potential risk.”

He also noted that the change comes as Harmonic looks to “restore the business to organic growth,” citing its plan to target the market for a new class of distributed Converged Cable Access Platform architectures and products, where it will face off with vendors such as Arris, Cisco Systems, Casa Systems, Huawei, and Nokia, which acquired virtual CCAP startup Gainspeed earlier this year.

RELATED: Harmonic Virtualizes the CCAP

For its part, Harmonic has introduced a virtual CCAP, called “CableOS,” Soon after, it announced a warrants deal with  Comcast based largely on sales and deployment milestones of the new CableOS platform.

With its integration of U.K.-based set-top maker Pace plc largely behind it, Arris posted Q3 sales of $1.735 billion, near consensus of $1.739 billion, but just slightly below a Raymond James estimate of $1.759 billion.

RELATED: Arris Wraps Pace Acquisition

Earnings of 77 cents per share hit the high end of guidance (72 cents to 77 cents) and beat the 76 cents per share from Raymond James, which maintained its “Strong Buy” on the stock.

Arris said three customers represented 10% or more of revenues in Q3, with that trio responsible for 52% of overall sales. International sales were $482 million, or 28% of total revenue.

“Although there are moving parts, we believe the story remains a good one and the stock offers upside from overblown worries around regulatory changes and cord cutting,” Raymond James analyst Simon Leopold said in a research note issued Thursday.

Arris said it expects Q4 revenues of $1.675 billion to $1.725 billion (excluding any impact of warrants agreements with Comcast and Charter Communications), and earnings of 68 cents to 72 cents.

Speaking on Wednesday’s earnings call, Bruce McClelland, Arris’s new CEO, said he is confident that the company is “on track” to hit full year revenue guidance of $6.6 billion to $6.8 billion, and sees non GAAP earnings per share to be “comfortably above” the $2.60 the company estimated earlier this year.

Despite that outlook, Arris shares were down $2.12 (7.18%) to $27.41 each in late morning trading Thursday.

A bright spot in the quarter was sales of set-tops and other consumer premises equipment (CPE), which were up 5% versus the prior quarter and up 52% year-over-year (thanks to the addition of Pace).  On the broadband end, Arris sales of DSL modems and gateways rose, while there was a small decrease in DOCSIS volumes.

“We began shipping DOCSIS 3.1 data modems to multiple customers to support trial activities, as well as early deployments,” Larry Robinson, president of Arris’s CPE division, said. “There is a growing focus and enthusiasm across the industry regarding DOCSIS 3.1, and we expect the portfolio to migrate in this direction as we go through 2017 and into 2018.”

With respect to D3.1 CPE, “We think there is a broader transition or migration that's going to happen…starting maybe in earnest in 2017, but certainly well into 2018 as well,” Robinson said.

RELATED: Arris Expands DOCSIS 3.1 Gigabit Gateway Family

On the other end, sales in Arris’s Network and Cloud unit dropped 11% year-on-year as the company transitioned to second-gen linecards for the E6000, the company’s flagship converged cable access platform (CCAP), McClelland said. But that drop was offset by a record quarter for Arris’s access technologies business, he said.

McClelland also noted that Arris is in the process of closing call centers it inherited from the Pace deal, and that the sale of its Moxi Whole Home Solution to Espial will result in about $50 million in lower sales annually, “but with minimal impact on operating income.”

RELATED: Espial Swings Deal for Arris’s Whole Home Solution

Looking ahead, McClelland noted that the shift toward distributed access architectures remains a hot topic in the cable industry. Arris demonstrated those capabilities at the recent SCTE/ISBE Cable-Tec Expo in Philadelphia, and expects to start lab and field trials in the first half of 2017.

Arris ended Q3 with $1.11 billion of cash resources, up from $903 million at the end of Q2. 

Keying on a major trend that will impact the future of the cable access network, Harmonic has introduced CableOS, a virtualized, software-based version of the Converged Cable Access Platform (CCAP).

Harmonic is entering the vCCAP game as cable operators start to consider a shift away from centralized, monolithic CCAPs, which combine the functions of the cable modem termination system and edge QAM, and eye more distributed, scalable architectures that can be controlled and manipulated by software in tandem with commercial off-the-shelf (COTS) hardware.

Get complete coverage of Cable-Tec Expo 2016

Harmonic said CableOS runs on COTS Intel servers installed in headends, hubs or data centers, and that MSOs can add servers as they need to tack on additional capacity.

Going with a virtualized approach could also help Harmonic gain more traction in a CCAP sector that is dominated today by Arris, Cisco Systems and Casa Systems, which are also working on vCCAP products. Harmonic will also be looking to fend off others that are aggressively pursuing this market, including Huawei and Nokia, which recently acquired a virtual CCAP-focused startup called Gainspeed.

RELATED: Nokia Puts Gainspeed Buy to Work

“We believe that this a great opportunity to address key challenges that current solutions don’t resolve,” particularly when it comes to space and power requirements as well as future capacity growth, Asaf Matatyaou, vice president of solutions and product management for Harmonic’s cable edge business, said. “We’re seeing unprecedented growth, and pain points that are reaching our customers’ operational and financial limits…We feel like we’ve solved the great equation.”

Harmonic’s new offering is a remote PHY platform that works in tandem with a software-based core that that works with the edge devices. That combination can also support centralized deployments as well, Matatyaou said. .  In centralized CCAP situations, Harmonic’s NSG Pro can serve as the video core/PHY shelf. 

RELATED: Casa Systems Intros Virtual CCAP

Harmonic claims that its approach can help MSOs reduce space and power by up to 75% when used in a centralized CCAP deployment or more than 90% in a distributed remote PHY scenario.

Regarding the remote PHY element, Harmonic plans to come out with modules that can fit into existing nodes from other suppliers as well as its own nodes that are tailored for the virtualized approach.

RELATED: Harmonic Seeks Edge With ‘Distributed’ CCAP

Matatyaou said a barrier has been crossed in terms of having access to the right mix of CPU power and software capabilities to bring a vCCAP to bear, and could lead to a day when operators can avoid having to go through upgrade cycles of purpose-built CCAP hardware – from cards to the chassis themselves.

Harmonic sees CableOS playing a role early on in systems where the centralized CCAPs are starting to be tapped out – from a space and power standpoint – and need a sustainable path forward as they add capacity.  That might not be the case across an MSO’s entire footprint, but could enter play where an operator is feeling the heat from a competitor like Google Fiber.

Harmonic said CableOS is in trials with multiple tier 1 cable operators in North America and Europe. Initial deployments of CableOS expected to begin in Q4 2016, Matatyaou said.

Harmonic (booth 1948) is debuting CableOS at this week’s Cable-Tec Expo in Philadelphia. 

Casa Systems said Jupiter Telecommunications (J:COM), Japan’s largest cable operator, are getting a bit tighter on the tech front. 

Casa said J:COM will tap its C100G converged cable access platform (CCAP) for the convergence of its data and video services on a unified platform. CCAPs are high-density platforms that support both the functions of the cable modem termination system and the edge QAM. 

Last April, J:COM picked Casa’s DOCSIS 3.1-capable C100G to support the rollout of broadband service that topped out at 320 Mbps in the downstream. 

J:COM’s deployment of Casa’s CCAP began earlier this year. J:COM serves over 5 million households. 

“Casa has proven its ability to deliver fully converged, commercial services over a CCAP,” Kazuhiko Masuda, J:COM’s senior corporate officer and GM of the MSO’s technology unit, said in a statement. “Now, we will be able to provide both video and data over one platform while reducing OPEX and network complexity.” 

Casa, which has been chasing Arris and Cisco Systems in the cable access network market, also counts customers such as Mediacom Communications, Wave Broadband and DNA, Finland’s largest operator. Time Warner Cable (now part of Charter Communications) has also been working with Casa. 

Nokia said it has wrapped up its acquisition of Gainspeed, a startup that has specialized in the development of a “virtual” Converged Cable Access Platform.

Nokia said Gainspeed’s product lineup will complement its current fiber access technologies for cable operators. Gainspeed will operate as part of Nokia’s Fixed Networks business group.

The deal gives Nokia a CCAP product that will enable it to compete in the next-gen cable access market against suppliers such as Arris, Cisco Systems, Casa Systems, Huawei, and Harmonic.

Founded in 2012 by Shlomo Rakib, a DOCSIS pioneer and co-founder of Terayon  Communication Systems (sold to Motorola in 2007), Sunnyvale, Calif.- based Gainspeed was founded in 2012. It raised about $55 million from investors that include NEA, Andreessen Horowitz, Shasta Ventures, Technicolor and Juniper Networks, which led Gainspeed's "B" round. 

Nokia, which announced its agreement to acquire Gainspeed on June 9, has not revealed financial terms of the deal. Nokia is scheduled to announce Q2 earnings on Thursday, Aug. 4.

High-level engineering execs from Comcast, Liberty Global and WideOpenWest all praised Nokia’s acquisition of Gainspeed when it was announced. Of that group, WOW said it was testing Gainspeed’s platform and “preparing for deployment.”

Gainspeed’s approach with a virtual CCAP distributes the MAC and PHY to the edges of the network while centralizing the control and management of the network in the data center.

Among its competitors, Arris last week noted that it is making “great progress” on remote PHY products that place the physical access layer of the DOCSIS CMTS into the fiber node and is also developing a “virtual DOCSIS core” that would appear to be directly competitive with the Gainspeed approach.

In a deal that will position it for cable’s shift to more efficient, next-gen access networks, Nokia has inked a deal to acquire Gainspeed, a startup that has been developing a “virtual” form of a converged cable access platform (CCAP) that will help pave the industry’s path toward an all-IP future.

Financial terms were not disclosed, but Gainspeed, a Sunnyvale, Calif.- based company founded in 2012, has raised about $55 million thanks to investors that include NEA, Andreessen Horowitz, Shasta Ventures, Technicolor and Juniper Networks, which led Gainspeed's "B" round and, until Nokia swooped in, was considered to be among the top potential suitors if Gainspeed sought an M&A exit. 

The deal is expected to close in Q3 2016, with Gainspeed becoming part of Nokia's Fixed Networks business group, which is led by unit president Federico Guillen. Gainspeed presently has about 70 employees, but it’s not yet known how many will be joining Nokia.

For Gainspeed, the acquisition should give its technology and products a much better shot at gaining significant adoption among larger operators, which tend to shy away from making major commitments to startups.  Gainspeed has not announced any trials or deployments with cable operators. However, top execs from Comcast, Liberty Global and WideOpenWest offered quotes in the announcement praising the deal (see below). Among that trio, WOW said it is "well down the path" with testing and "preparing for deployment" of Gainspeed's vCCAP. 

For Nokia, which closed its merger with Alcatel-Lucent earlier this year,  the addition of Gainspeed will complement its current fiber access products and arm it with a vCCAP as MSOs apply more weight to virtualized and more distributed hybrid fiber coax (HFC) network architectures amid the roll out the multi-gigabit DOCSIS 3.1 platform and their migration toward an all-IP service platform.

Nokia’s purchase of Gainspeed will also enable it to compete in a CCAP sector that includes companies such as Arris, Cisco Systems, Casa Systems, Harmonic, and Huawei, among others.

While today’s CCAPs are highly centralized and some vendors, such as Cisco, are pushing for remote PHY approaches, Gainspeed angle with a virtual CCAP will distribute the MAC and PHY to the edges of the network while centralizing the control and management of the network in the data center. These various approaches have formed the basis of a healthy debate in cable engineering circles. 

Gainspeed was founded by Shlomo Rakib, a DOCSIS pioneer and co-founder of Terayon  Communication Systems (sold to Motorola in 2007).

Former Harmonic exec Krishnan Padmanabhan joined Gainspeed as CEO on Sept. 2, 2014. He discussed his vision and near-term priorities for the company with Multichannel News soon after.

In that interview, Padmanabhan acknowledged that operators will not be eager to rip out their networks and start from scratch just to introduce virtual CCAP, offering that interest in the approach is “most likely a cap-and-grow strategy, meaning in a given headend or a city where they already have significant investments of edge QAMs and CCAPs in there.”

He was also confident that Gainspeed could resonate with bigger operators that don’t typically place big bets on products from startups because the technology it brings to the table can solve some important problems.

“If we were walking in selling some commodity and we’re the fourth supplier and the other three are big companies, I think it would be a very difficult task. The reality is, we’re not walking in offering a commodity. We’re walking in helping them solve a massive and pressing business problem with this IP traffic explosion.” 

Here are the statements from MSOs praising the deal:

“New and innovative services in broadband are important to us and to our customers.  We appreciate technology partners who make innovation one of their core values and look forward to Nokia and Gainspeed joining forces to bring new technologies and products to the industry.”

— Tony Werner, President, Technology and Product, Comcast Cable

“Gainspeed is one of the pioneers in the Remote PHY and Remote MAC-PHY architecture development. They have been committed to developing this solution for the cable industry, and I congratulate them on becoming part of Nokia. The combination of Gainspeed’s innovations and Nokia’s scale will be a positive contribution to the access solutions for our industry.”

— Balan Nair, Chief Technology Officer, Liberty Global 

“Gainspeed has been a leader in the broad industry shift toward Distributed Access Architectures to handle increased bandwidth demands and support of the network transformation to all IP. We are well down the path testing and preparing for deployment of Gainspeed’s Virtual CCAP solution and have been using Nokia access products for years. We are excited to see these technology leaders coming together, and view their solutions as a key strategic component in our network evolution and delivery of gigabit services.”

— Cash Hagen, Chief Technology Officer, WOW! Internet, Cable & Phone

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A year after Cisco Systems used INTX in Chicago to trot out its next-gen cable access platform, the vendor announced ahead of this year’s confab in Boston that the cBR-8 is approaching 100 customers worldwide, with 30 already in deployment.

Cisco said cBR-8, a high-density  Converged Cable Access Platform (CCAP) product Cisco is now also referring to as its “Giga box,” is also employing DOCSIS 3.1, the industry’s new multi-gigabit CableLabs spec for hybrid fiber/coax networks.

The device, Cisco added, is deployed with operators in countries and regions that include the U.S., Europe,  Asia Pacific, and Latin America, and is now being used to deliver services to more than 7 million pay TV subs. Recent wins include Midco, which has kicked off 1-Gig trials in Fargo, N.D., with plans to expand trials to Sioux Falls later this year. Quickline AG, meanwhile, has completed a migraiotn to the cBR-8 and is using it to help 21 cable operators deliver multi-Gigabit services for 400,000 customers in Switzerland.

Per a blog from Todd McCrum, senior director, strategy and product management at Cisco’s Cable Access Business Unit, the cBR-8 hardware shipping today also supports “Evolved CCAP” functionality, which includes DOCSIS 3.0, voice and MPEG video, plus DOCSIS 3.1 downstream and upstream and remote PHY.

Cisco is battling for dominance with other suppliers in the cable access market. Among individual companies, Arris held 53% of total revenues in the category at the end of 2015, followed by Cisco (26%) and Casa Systems (15%), according to SNL Kagan. In March, Jeff Heynen, senior research analyst for SNL Kagan, said Cisco has been picking up momentum in recent quarters as the cBR-8 gets into the field.

Arris chairman and CEO Robert Stanzione declared that the supplier of video and broadband gear is off to a “good start” as revenues rose 33% in the first quarter, but paired that optimism with concerns about possible pauses on the horizon in the second half of the year amid ongoing consolidation of some of its largest customers.

In its first earnings call since closing its acquisition of U.K.-based set-top maker Pace plc in January, Arris pulled in Q1 revenues of $1.61 billion, up $399.5 million, or 33%, versus the year-ago period. Aided by the addition of Pace, revenues were also up 47% versus the previous quarter. In Q1, Arris has three customers that represented 10% of more of revenue – together, those customers brought in $840 million, or 52% of total sales. Q1 sales beat Wall Street's expectation of $1.58 billion.

“We're off to a good start in 2016 and I can say that we're increasingly confident that we'll meet the 2016 financial goals that we outlined in our,” Stanzione said, referring to full-year guidance of between $6.6 billion to $6.8 billion in sales, and non-GAAP earnings per share of $2.45 to $2.60.

Arris expects second quarter sales of between $1.67 billion to $1.72 billion, and GAAP earnings of $0.09 to $0.14.

As for caution about the second half of the year, consolidation activities, such as  Charter Communications’ pending deal for Time Warner Cable and Bright House Networks, “give me some degree of concern that there might be a pause,” Stanzione said. “I don't think there's any reduction in the end demand for our products, but there could be some shifts.”

However, telco spending, a recent trouble spot for Arris, is starting to recover, Stanzione said, noting that Frontier  Communications is expected to be aggressive with upgrades following its acquisition of some of Verizon’s wireline properties in California, Texas and Florida. He also expects to see “more uplift” as the year goes along from AT&T/DirecTV now that they are starting to ramp up new programs.

Among individual product areas, Arris’s flagship cable access platform, the E6000, hit record revenues as well as total downstream and upstream channels shipped and downstream software licenses, according to Bruce McClelland, president of Arris’s Network & Cloud and Global Services unit.

Arris, which is already involved in most of Comcast’s initial DOCSIS 3.1 deployments, also inked a commercial agreement with a tier 1 international operator to deploy the vendor’s D3.1 products later this year, but didn’t identify the MSO.

McClelland said Arris in Q1 made its software release for D3.1 generally available. Arris is also working on second-gen line cards for the E6000 that will supportdirect fiber, passive optical network interfaces, and support for the new distributed access architectures. “The first of these new cards will begin field trials in the third quarter,” he said.

Stanzione was also asked to weigh in again on the FCC’s proposed set-top rules, which could impact Arris, the world’s largest supplier of set-tops.

“In the worst case, if it were to be enacted exactly the way the FCC is proposing, that would open up a retail market, one which we're pretty excited about anyway,” Stanzione said, pointing to a new retail home networking products launched by Arris last month that uses a combo of WiFi and G.hn-based powerline technologies.  “We're building up our retail channel and I think even if it goes in a direction that we don't like, we would still be okay and I think the effect is couple years away.”

Update: Raymond James analyst Simon Leopold maintained his "Strong Buy" rating and a $33 price target on Arris following Q1 results. Arris shares were up 96 cents (4.15%) to $24.09 each in mid-day trading Thursday. 

Cable broadband infrastructure spending dipped by 3% in 2015, compared to 2014 levels, thanks in part to dropping DOCSIS downstream channel prices and record shipments of super-dense converged cable access platform (CCAP) products, SNL Kagan found.

Shipments of total DOCSIS downstream channels rose 41% during 2015, topping 6 million, as cable operators continued to build out capacity amid growing deployments of FTTP networks by Google Fiber, municipal providers and other ISPs, SNL Kagan said.

But revenues did not keep pace with shipments as the rise in software licenses helped to push down the average price per downstream channel. Despite that boost in channel shipments, revenues in the category dropped 3%, to $1.74 billion, SNL Kagan found.

Among vendors, Arris ended 2015 as the market leader, holding 53% of total revenue among suppliers of cable broadband infrastructure, aided by key customers such as Comcast and Time Warner Cable.

Update: Jeff Heynen, senior research analyst for SNL Kagan, said Cisco Systems followed with 26% share of the market by year-end, while Casa Systems collected 15%. He said Cisco has been picking up momentum in recent quarters as its new flagship CCAP, the  cBR-8, gets into the field, and the company continues to line up customers for the product.

All three will benefit from cable’s transition to DOCSIS 3.1, Heynen said, reiterating that he does expect spending to remain relatively strong as MSOs add capacity amid competition with other providers. 

“The imminent availability of DOCSIS 3.1 linecards and full-spectrum channels won't slow the continued purchase and deployment of current DOCSIS 3.0 channels as cable operators must continue to increase throughput to reduce the likelihood of churn among their broadband subscribers,” Heynen said, in a statement. 

Comcast, Arris’s largest customer, is among those being most aggressive with DOCSIS 3.1. Last week, Comcast announced an “advanced consumer trial” of a DOCSIS 3.1-powered offering in Atlanta that pairs a downstream that maxes out at 1 Gbps with a 35 Mbps upstream.

Comcast has also announced that it plans to offer residential and business-class gigabit broadband using DOCSIS 3.1 in Nashville in “early 2016,” and follow with launches in Chicago, Detroit and Miami in the second half of 2016. Arris announced last month that its flagship CCAP, the E6000, is supporting the rollout in four of the initial five DOCSIS 3.1 deployment markets identified by Comcast.

Arris said Altice will deploy its flagship cable access platform, the E6000, to enable gigabit broadband services in multiple parts of the globe.

Altice will deploy the E6000, a DOCSIS 3.1-facing converged cable access platform (CCAP), via SFR in France, Orange-Tricom in The Dominican Republic, along with an expansion of the E6000 footprint at Suddenlink Communications, the U.S.-based MSO Altice acquired late last year.

Arris announced the deal ahead of an investor meeting being held today in New York. 

In February, Altice, which is in the process of acquiring Cablevision Systems, said it was committed to Operation GigaSpeed, a Suddenlink initiative announced in 2014 aimed at bringing 1-Gig broadband to 90% of the MSO’s footprint by 2017.

“Altice is fast-becoming a major player in the global pay TV market, and it's an exciting time for ARRIS to be collaborating with operators from the Altice Group around the world. Selecting the ARRIS E6000 CER is a strategic technology investment for Altice that benefits its global operations today and into the future,” said Bruce McClelland, president of Network & Cloud, Global Services at Arris, in a statement.

“Working with ARRIS assures us from both a technological and operational perspective as the ARRIS E6000 CER is a proven, global platform with a clear roadmap for the future,” added Max Blumberg, CTO of Altice. “We look forward to deploying the platform across the Altice properties as we strive to deliver the broadband speeds and services our customers demand from us.”

Arris isn’t the only network vendor factoring into Altice’s gigabit plans. Last April, Altice announced it would also tap Cisco Systems’s CCAP products as it poured its foundation for DOCSIS 3.1, a new platform that will bring multi-gigabit speeds to HFC networks. Cisco formally launched its flagship cable access network platform, the cBR-8, at last year’s INTX show.

CableLabs and Cisco Systems have announced the creation of a new software project aimed at enabling virtualization on cable networks.

That new software project, labeled "OpenRPD" and originally developed by Cisco, is targeted at what's called the Remote PHY Device (RPD). The RPD, they explained, is a physical layer converter commonly located in an optical node of the cable network. The open source software will reside in the Remote PHY Device and will be available to cable operators and RPD vendors around the world, they said. 

CableLabs said president and CEO Phil McKinney detailed the initiative at his keynote at this week’s CableLabs Winter Conference in Orlando, Fla.  

The effort will build on the original work around the Converged Cable Access Platform (CCAP), a high-density architecture that combines the functions of the cable modem termination system and the edge QAM. The open source software will help to virtualize those functions as they are distributed toward the edge of the network.

“More and more of the telecommunications infrastructure is running on open source platforms,” said Ralph Brown, CTO, CableLabs, in a statement. “CableLabs has a history of contributing to and hosting open source projects. The OpenRPD project helps launch CableLabs increased focus on open source projects for the cable industry.”

“This is open source for cable access. Not only does it help move the industry toward the future architecture but it also enables a new developer community,” added Dave Ward, CTO of engineering and chief architect, at Cisco. “Open standards, open source and an open ecosystem community for developers is a key trajectory for networking. We see the Remote PHY architecture and RPD evolving to a more generalized and virtualized architecture that can be applied to all types of access networks.”

“Our collaborative industry effort is about helping cable networks scale,” said John Chapman, Cisco Fellow and CTO of the company’s Cable Access business. “Remote PHY, OpenRPD and DOCSIS 3.1 are playing a pivotal role in expanding the capacity of the HFC plant in a reliable, cost-effective and scalable way.” 

Following recent DOCSIS 3.1 lab trials, Midco is moving ahead with plans to roll with a field trial of the emerging multi-gigabit platform next month in Fargo, N.D., and follow by a pilot in Sioux Falls, S.D., before the end of 2016.

As previously announced, Midco will be using Cisco’s cBR-8 converged cable access platform to power the network-facing side of DOCSIS 3.1. Midco hasn’t revealed which modems it will use, but CableLabs recently certified products from five suppliers, including Technicolor, which recently acquired Cisco’s CPE business.

Midco (formerly known as Midcontinent Communications) has committed to delivering gigabit to its entire service area by the end of 2017. The MSO serves more than 330,000 customers in nearly 350 communities across Minnesota, North Dakota, South Dakota and Wisconsin.

“Speed matters to our customers, and we have made it a priority to reshape our network to deliver the fastest, most reliable Internet service possible,” Jon Pederson, Midco’s CTO, said in a statement. “Cisco shares our vision for a fully scalable, efficient network that will take us into the future and manage the bandwidth demands of our increasingly connected lives.”

“Midco has been full speed ahead with its plans to deliver a DOCSIS 3.1-ready network,” added Kelly Ahuja, senior vice president, Service Provider business, products and solutions, at Cisco. “Through our collaboration, Midco customers will be among the first in the country to enjoy the fastest Internet connection available, unleashing a host of new experiences that can help make their lives better.”

Among other U.S. cable MSOs, Comcast announced plans to deploy DOCSIS 3.1 to a handful of markets this year. 

More light is being shed on the technical underpinnings of a residential 1-Gig offering that Mediacom Communications launched last year.

Casa Systems said the MSO is using its C100G converge cable access platform (CCAP) to power the network-side of the offering in its Columbia and Jefferson, Mo., markets.

Mediacom is also using a DOCSIS 3.0-powered modem from Hitron Technologies Americas to support the service, which teams a 1-Gig downstream with an upstream that maxes out at 50 Mbps for about $150 per months.

The deployment is another key win for Casa Systems, which is battling for CCAP share with market leaders, Arris and Cisco Systems, as well with suppliers such as Harmonic and Huawei Technologies.

“We are excited to bring our long experience providing commercial-grade gigabit services to our residential customers beginning with these communities in Mid-Missouri,” said JR Walden, Mediacom’s SVP of technology, in a statement. “Casa’s C100G was the right CMTS solution given our timing, facilities requirements, performance needs and desire to support the future evolution of our network and services.”

The Casa C100G is also capable of supporting DOCSIS 3.1, the emerging multi-gigabit platform for HFC networks. 

Casa Systems said Wave Broadband will use its C100G converge cable access platform to deliver gigabit speeds to residential and business customers in the Pacific Northwest.

Wave Broadband is rolling out the C100G, Casa’s CCAP that combines the functions of the cable modem termination system and the edge QAM. The C100G uses DOCSIS 3.0 today, but Casa has developed downstream and upstream modules that put the platform in position to support DOCSIS 3.1, an emerging multi-gigabit spec for HFC networks.

Wave has about 450,000 Internet, TV and phone customers in Northern California and parts of Oregon and Washington, and said it’s swapping out its legacy CMTSs for the gigabit plan, which will help the MSO deliver new bandwidth-intensive apps, including IP video.

Notably, Wave recently raised about $130 million in debt to help fund an aggressive buildout of its fiber optic communications network and aimed at bringing higher-speed connectivity to business customers.

"Driven by the incredible growth of streaming video, social media and other rich content, the gigabit era can't wait. To reinforce our investment in expanding gigabit services across our region, it was imperative we have the right infrastructure in place," said Harold Zeitz, president and COO at Wave, in a statement. "The C100G CCAP from Casa Systems is the solution that paves a seamless path to scale and supports next-gen technologies such as DOCSIS 3.1, wireless, PON architecture and virtualization that are poised to become competitive differentiators."

The win with Wave comes as Casa grapples for markets share against access network rivals such as Arris, Cisco Systems, Harmonic, and Huawei. 

The debate swirling about emerging distributed CCAP (converged cable access platform) architectures is a good news/bad news story today.

The good news? There are multiple options that can be made to work.  The not so good news? It’s not yet clear which approach is “right” one, as some might work better than another depending on the cable operator and its individual needs.

But there is agreement on what’s driving the cable networking world toward more distributed forms of the CCAP, which packs in the functions of the cable modem termination system and the edge QAM to support all services. The general thought is that more distributed architectures will help operators support the surging bandwidth demand that’s being driven by IP video, gigabit broadband services, Ultra HD video, WiFi hotspot proliferation and the so-called Internet of Things.  Cable headends space is expected to become tighter and tighter as more capacity is needed if the industry sticks with integrated CCAP architectures.

While there’s agreement that distributed approaches will help to deal with this future headend space-crunch, there are a set of possible options that have emerged:

1. Remote MAC/PHY that puts the edge QAM in the node
2. Remote MAC/PHY that doesn’t place the eQAM in the node
3. Remote PHY, which places the PHY in the node and the MAC processing in the headend.

“All are good, none are perfect. All have some issues,” Tom Cloonan, chief technology officer—network solutions at Arris, said Thursday at a workshop titled: Distributed CCAP Architectures: Breaking Up Is Hard to Do.

Arris recently conducted a study that looked at the pros and cons of each approach, and picked 26 attributes that, Arris believed, are among the most important to the cable operator.  That was then divided into four broader areas: opera tonal cost management, operational east of use, infrastructure compatibility, and design simplicity (which factored in vendor time-to-market).  Arris’s engineers then applied scores  that weighed how well each architecture served each.

Arris then tabulated those results to see how it all shook out. “What’s best?” Cloonan posed. “I don’t have the answer…In the end, I think that all of them are workable solutions and technically feasible.”

Given that, he expects that different MSOs will go in different directions  and possibly bifurcate the supplier market.

Cisco Systems, meanwhile, is fairly fixated on which approach it favors  – remote PHY, which relocates  the physical layer components to the node.

John Chapman, Cisco fellow and CTO of the company’s cable business unit, discussed how resiliency can be applied to a remote PHY architecture, and said part of the debate is whether operators want to centralize the software running the system (with remote PHY) versus a more decentralized form with remote MAC/PHY that puts those software elements in the node.

“It’s fair to say that they both work,” Chapman said. “We can make anything work across all of the designs.”

Chapman noted that the remote PHY approach uses standardized interfaces to connect the headend to the remote PHY devices using pseudowires/tunneling protocols.

While that sort of approach might seem complex and “makes the brain hurt a little bit,” Chapman said remote PHY offers benefits that make it worth it, including higher reliability and the implementation of lower-cost digital optics, higher bit rates for DOCSIS 3.1 and lower plant maintenance costs.

Cisco, he said, is also thinking through how to make the architecture redundant so that there is no single point of failure. While nodes aren’t redundant elements, operators will have methods to apply that establish multiple backhauls to ensure that these nodes stay connected.  Chapman’s suggested approach is to retain an active backup versus building an on-demand backup connection that might take a few milliseconds to fire up.

“It’s a design choice, but it’s not something we mandate,” he said, noting that Cisco will provide the tools to support multiple options. “All remote PHY is, is a pseudowire management scheme.” 

Casa Systems staked its claim of the emerging DOCSIS 3.1 Wednesday with the introduction of a downstream module designed for the CableLabs-specified multi-gigabit platform.

Casa Systems said the D3.1-compliant module, called the DS8x192, is for its C100G (pictured) and C40G Converged Cable Access Platforms (CCAPs), which are high-density access network systems that combine the functions of the cable modem termination system and the edge QAM.  Last year, Casa debuted the US16x8, a module that supports DOCSIS 3.1 in the upstream direction.

The company said the first DOCSIS 3.1-facing software release on the new downstream module is expected to be ready for customer lab testing in the late third quarter of 2015.

The new downstream module appears as operators, including Comcast and Liberty Global, look to move aggressively with DOCSIS 3.1, a platform for HFC networks that will drive cable’s all-IP transition and shoot for capacities of up to 10 Gbps down and at least 1 Gbps in the upstream. Comcast expects to kick off field market trials of D3.1 by the fourth quarter of 2015

It also shows up as CableLabs announced this week that it has “opened the door” to official certification and qualification testing of DOCSIS 3.1-based modems and network equipment. Vendors must submit products to CableLabs by the week of October 5 to get into certification wave 116, the last one scheduled for 2015.  The results from wave 116 will be shared in mid-January 2016, according to CableLabs.

Casa plans to submit product for official DOCSIS 3.1 qualification testing at CableLabs this year, a company offiicial said via email. 

Casa Systems will face some stiff competition in the D3.1 arena, as it will be contending with companies such as Arris, Cisco Systems, Harmonic and Huawei. Casa has gained lots of ground during the DOCSIS 3.0 era. According to IHS/Infonetics, Arris nabbed a 53% share of CCAP/CMTS revenues in Q4 2014, followed by Casa (23.5%) and Cisco (20%).

Positioning itself for gigabit speeds, Midcontinent Communications is deploying the cBR-8, a new Converged Cable Access Platform (CCAP) from Cisco Systems that’s being made to support DOCSIS 3.1.

DOCSIS 3.1, a platform specified by CableLabs, is designed to support multi-gigabit speeds – up to 10 Gbps downstream and at least 1 Gbps in the upstream.

Cisco introduced the cBR-8 (pictured) in May at the INTX show in Chicago. As a multi-service CCAP, it will house the functions of the cable modem termination system and the edge QAM. Altice Group, which is acquiring Suddenlink Communications, has been testing the cBR-8, which had carried the “Battlestar” code-name.

Midcontinent has more than 300,000 customers and serves parts of Minnesota, North Dakota, South Dakota and Wisconsin. Last June, it doubled speeds for customers, and launched a new 200 Mbps (downstream) tier. The operator has set a goal to make gigabit speeds available to about 600,000 homes and 55,000 businesses by the end of 2017.

Midcontinent will use the CBR-8 for DOCSIS 3.0 initially, but is expected to use it for D3.1-based services as well. The initial wave of D3.1 modems will be hybrids that can utilize both DOCSIS  3.0 and 3.1-based spectrum.

“Cisco’s cBR-8 aligns with our strategy and vision to deliver Gigabit-speed Internet experiences that will change the quality of life and spur business innovation in the communities we serve,” Midcontinent VP of technology Jon Pederson said, in a statement. “With our customers’ bandwidth consumption doubling every 15 months, we need the right technology in place to support our network demands now and in the future. The unique DOCSIS and Remote PHY capabilities of the cBR-8 will help us meet our commitments for the Midcontinent Gigabit Initiative.”

“Advancing its cable access architecture with cBR-8’s advanced multi-Gigabit DOCSIS 3.0 and 3.1 technologies and converged video capabilities is a key step in their well-planned network evolution strategy,” added Brett Wingo, VP and GM of Cisco’s Service Provider Infrastructure Group. 

The first quarter represented a mixed bag for cable broadband access network equipment suppliers as DOCSIS channel shipments climbed but overall revenues in the category dipped due to aggressive pricing and a surge in software licenses, according to a new report from IHS that tracks shipments of cable modem termination system (CMTS), converged cable access platform (CCAP) and edge QAM products.

Thanks to ongoing upgrades, DOCSIS channel shipments rose to 1.8 million in Q1, up 14% from the previous quarter and up 48% from the year-ago quarter, but revenues tied to combined shipments of CCAP, CMTS, CMC and edge QAM equipment fell 7% sequentially in the first quarter, to $474 million.

"The cable broadband market got off to a mixed start in the first quarter,” Jeff Heynen, research director for broadband access and pay TV at IHS, said in a statement. “Despite the first quarter typically being a slow one, DOCSIS channels increased yet again. But revenue was down due to a combination of aggressive pricing and a higher proportion of software licenses.”

While the scuttled Comcast-Time Warner Cable merger was expected to dampen the cable access market in North America, “the overall cable broadband market remained healthy, setting the stage for a strong 2015,” IHS said in its report.

Among vendors, Arris dominated the market in the first quarter, due in part to the early availability of the E6000, Arris’s integrated CCAP, IHS said. Arris rival Cisco Systems introduced its integrated CCAP, the cBR-8, in May during the INTX show in Chicago, noting that shipments were underway with MSOs such as Comcast and Altice Group.

Update: Heynen said Arris represented 51% of revenue share in the product category (CMTS, CCAP, edge QAM and CMC equipment) in the first quarter,  followed by Casa Systems (18.8%) and Cisco Systems (18.7%). 

Suddenlink Communications has begun to roll out the E6000, Arris’s flagship, high-density converged cable access platform (CCAP) that supports DOCSIS 3.0 today, and will be  upgradable to DOCSIS 3.1, cable’s emerging multi-gigabit IP platform.

With the E6000 (pictured), Suddenlink can provide customers with high-speed data services of 1Gbps and beyond, Arris noted.

Suddenlink’s deployment of the E6000 comes about nine months after the cable operator  announced “Operation Gigaspeed,” an initiative that will position Suddenlink to deliver 1-Gig speeds. At the time, Suddenlink said it will raise its top high-speed Internet speeds to 1 Gbps in 90% of its footprint by 2017.

"We're committed to providing consumers with the connected experiences they want, and as a result, our customer base is growing rapidly," Ivan Lamoureux, Suddenlink’s vice president of network engineering, said in a statement. "The E6000 CER is a key part of this commitment and our technology infrastructure."

The E6000’s “density saves valuable space and power while delivering remarkable downstream and upstream capacity,” Bruce McClelland, president of network and cloud and global services at Arris, added. “Most importantly, it protects customer investments, offering a clear path to the future transition to DOCSIS 3.1 and the ability to support data services of 1Gbps and beyond.”

Add Altice Group to the group of MSOs that are putting their weight behind DOCSIS 3.1, the emerging CableLabs-specified platform that deliver multi-gigabit capabilities to HFC networks.

The operator said it will deploy a Converged Cable Access Platform (CCAP) from Cisco Systems across its multi-country footprint, starting with Numericable in France, to serve as the foundation for its eventual move to DOCSIS 3.1.

D3.1, the successor to DOCSIS 3.0, is a more bandwidth-efficient platform that is being made to support downstream capacities of up to 10 Gbps and at least 1 Gbps in the upstream.

"This step is part of our long-term investment strategy,” Max Blumberg, CTO of Altice Group, said in a statement. “We are building the next generation of fixed mobile converged networks. With a combination of Cisco's Evolved CCAP, DOCSIS 3.1 and migration to NFV/SDN, Altice will continue providing the best customer experience, based on the highest bandwidth and cutting edge technology." 

"Cisco is working closely with Altice to provide them with a CCAP platform offering D3.0 plus D3.1 designed for long-term investment protection and full spectrum video, to simplify the evolution of their cable access network,” added Brett Wingo, VP and GM of Cisco’s Cable Access business Unit.”

Cisco is expected to support D3.1 in its next-gen CCAP, the cBR-8, a product also known by its “Battlestar” code-name.

Reaching a significant milestone in the deployment of next-gen cable access technologies, Casa Systems confirmed Monday that Time Warner Cable is delivering IP-based data and voice services and QAM-based video simultaneously in New York using the vendor’s integrated Converged Cable Access Platform (CCAP).

The achievement is significant because it’s the first known deployment in North America of a CCAP that is delivering both IP and QAM services via the same platform. The CCAP, a high-density, energy-saving platform, puts the functions of the edge QAM and the cable modem termination system under the same roof. While early CCAP-facing implementations have served as either super CMTSs or edge QAMs, the TWC/Casa deployment in New York is mixing both IP- and MPEG/QAM traffic on the same platform at the same time. 

According to Casa, TWC has “migrated hundreds of thousands of video subs” to the vendor’s C100G integrated CCAP (pictured), a product introduced in mid-2013.

Word of the achievement first emerged last month at a Light Reading event in Denver. “We still are the first to go out with CCAP with being able to provision MPEG-2 video on CCAP,” Mike Hayashi, the retiring executive vice president, architecture, development and engineering at TWC, said during a panel moderated by independent analyst and Multichannel News contributor Leslie Ellis. Hayashi also talked up the operational advantages of CCAP when it comes to assigning capacity to service groups and service types.

While Arris was the top provider of CCAP/CMTS gear in the fourth quarter of 2014, with a 53% share of revenues, Casa held about 23.5%, enough to move ahead of Cisco Systems’s 20%, according to Infonetics Research.

Arris Group said it has secured deals for its flagship cable access platform the E6000 Converged Edge Router – with Cable TV of East Alabama, and with Comporium, a provider that serves parts of North Carolina and South Carolina.

Among them, Comporium has begun to migrate its network, originally built on Arris’s C4 cable modem termination system (CMTS), to the E6000, a device that is starting out as a high-density CMTS, but will eventually add edge QAM capabilities and evolve into a full-fledged Converged Cable Access Platform (CCAP).

Cable TV of East Alabama, meanwhile, will use the E6000 to increase bandwidth for its IP voice, video and data services by licensing capacity as needed.

According to Infonetics Research, Arris represented 37% share of revenues for combined CMTS, edge QAM, and CCAP-pointing products in the first quarter of 2014,  followed by Cisco's 32%, Casa's 21%, and Harmonic's 7%.

Arris’s new flagship cable access product – the E6000 Converged Edge Router --  stayed on a roll with word that Liwest Kabelmedien of Austria will tap the platform to help the MSO boost broadband speeds.

Liwest said it will use E6000 to support a 250 Mbps (downstream) cable modem tier, with an eye toward 1 Gbps. Liwest is pairing the E6000 with the Arris TG682, a DOCSIS 3.0 cable modem/gateway.

The E6000 is currently shipping as a high-density cable modem termination system (CMTS), though Arris plans to add edge QAM capabilities later that, when incorporated, will turn the device into a fully-fledged Converged Cable Access Platform.

The latest win for Arris comes as revenues for CCAP-pointing gear jumped 177% in the first quarter, according to Infonetics Research.  Among individual vendors, Arris led the way with 37% of revenues for combined CMTS, edge QAM and CCAP-based products, followed by Cisco Systems’ 32%, Casa Systems’ 21%, and Harmonic’s 7%.

Arris said the E6000 was deployed in systems reaching more than 5 million subscribers by the end of the first quarter, up from 2 million at the end of 2013.

NOS of Portugal has “validated” a Converged Cable Access Platform (CCAP)-facing product mix from Cisco Systems that features the vendor’s flagship uBR10K cable modem termination system and its high-density RF Gateway 10 edge QAM.

As part of this build toward CCAP, NOS is complementing the combo with Cisco’s 3GSPA, a card that can effectivel double the downstream density of one uBR10K chassis (from 576 to 1,152 downstreams), and the DS384, an eight-port line card with support for up to 128 QAMs per port.

The aim is for NOS, which also uses Videoscape, Cisco’s multiscreen video platform for service providers, to more efficiently deliver a mix of video and DOCSIS services via a uniform platform.

"We have seen consistent growth in our IP delivered video services since the launch of our Iris platform, which has in turn increased pressure on our broadband access network. By converging the two, we are ensuring that we can invest the right capacity in the right places at the right time,” said NOS CTO Miguel Veiga Martins, in a statement.

Cisco is also working on the cBR-8, a fully integrated CCAP that will succeed the uBR10K as the vendor’s flagship cable access product. That device, code-named “Battlestar,” will be in ten customer trials this summer ahead of its anticpated launch in the first quarter of 2015.

And, for Cisco, the sooner the better. Infonetics Research said CCAP-related sales surged 177% in the first quarter, allowing Arris to jump ahead of Cisco in combined CCAP and CMTS  revenue share during the period.

Aiming to broaden its pursuit of a budding next-gen cable network market, Harmonic Inc. has introduced the NSG Exo, a “distributed” form of a Converged Cable Access Platform (CCAP) that will eventually pack in the functions of both the edge QAM and the cable modem termination system (CMTS).

By targeting deployments deeper, toward the edge of the cable network, the NSG Exo is designed to complement Harmonic’s NSG Pro, a centralized integrated CCAP chassis that has started out as a super-dense, downstream-only edge QAM that will eventually tack on upstream and full CMTS capabilities. By comparison, the NSG Exo will support the the CMTS component first and add edge QAM capabilities further down the road (the original article, now corrected, had stated that the NSG Exo would support both the CMTS and edge QAM functions upon its commercial release).

“We support CMTS out of the chute and while the hardware supports the EQAM functionality, the software will be available in the future,"Asaf Matatyaou, Harmonic’s director of cable edge solutions, noted in an email to Multichannel News.

The NSG Exo, due out in the third quarter of 2014, will be Harmonic’s first commercially available CMTS.

Harmonic believes this dual-product approach with CCAP will address a broader range of access architectures, allowing for deployments that require highly-centralized CCAPs that serve individual homes and subscribers, as well as more distributed forms that are well-suited for businesses, hotels, college campuses, and apartment buildings, Matatyaou said.

Boiled down, Harmonic is billing the NSG Exo as a low power yet dense device that shifts the RF componentry from the headend or hub to the edges of the operator’s network. It takes digital fiber in, and outputs DOCSIS, MPEG-based video and other RF-based services.

The initial version of the NSG Exo is a 1-rack unit-high indoor enclosure, with a hardened, outdoor unit expected to launch sometime later this year.

Matatyaou said an NSG Exo can support in the range of 250 to 500 customers, noting that the distributed architecture of the product has not just the potential to serve traditional cable operators but also telcos that terminate fiber to multiple-dwelling units but still need to run services on in-building coax-based network.

He said Harmonic has multiple trials underway with operators “across regions.”

With the NSG Exo, Harmonic is the latest vendor to bring forth a distributed form of a CCAP-based product, though different schools of thought are emerging. Cisco Systems, for example, is pursuing a similar idea that deploys the PHY elements remotely, but keeps the DOCSIS processing in the hub. Gainspeed, a startup, is developing a software-controlled “virtual” CCAP with Juniper Networks and other technology partners that aims to distribute the MAC and PHY, with some processing for DOCSIS and MPEG still occurring in the hub.

Arris has also revealed that it has a virtual CCAP on its roadmap. Aurora Networks, now part of U.K.-based set-top giant Pace, has developed a distributed device called the Node QAM.

They’re all chasing a CCAP market that, according to Infonetics Research estimates, will be worth about $1.7 billion by 2018.

Harmonic said it will show off the NSG Exo at ANGACom, set for May 20-22 in Cologne, Germany.

Los Angeles – Cisco Systems has been showing off the cBR-8, its next-gen cable access platform, in the so-called “whisper suite” at recent trade events, but used this week’s Cable Show here to put it out for all to see.

The cBR-8 will serve as the new cable access flagship for Cisco, succeeding the uBR10012 cable modem termination systems. In addition to offering a high-density CMTS, the cBR-8 will also be a fully integrated Converged Cable Access Platform (CCAP), meaning it will also contain edge QAM functions and essentially put all of cable’s services under one roof.

And it turns out that the product, which has been in development for years, has an interesting code-naming lore that sci-fi geeks will certainly love.

As John Chapman, CTO of Cisco’s Cable Access Business Unit, pointed out, he and two other Cisco engineers are big fans of the reimagined version of Syfy’s Battlestar Galactica, so they decided to use names and monikders from the popular series for the major components of the cBR-8.

For starters, the product itself was code-named “Battlestar,” since this was to become the new flagship, and the CCAP device that would be used to defend Cisco’s turf against rivals such as Arris and Casa Systems, as well as CCAP newcomers that include  Harmonic, CommScope, Gainspeed, a startup that is teaming up with Juniper Networks.

Chapman said the cBR-8 blades were designated as “Cylons,” a reference to the series’ iconic cybernetic characters. We never quite pinpointed which component took on the “Athena” name, but Chapman said that plus several others were used to complete the Battlestar Galactica thematic ensemble.  

So, who says cable engineers, who came up with archaic techno-labels like the Data Over Cable Service Interface Specification and the Downstream External PHY Interface Specification, don’t have something creative to offer the marketing folks?

Here at the show, Cisco showed off the cBR-8 in DOCSIS 3.0 mode, bonding 32 downstream channels and eight upstream channels. But it’s also got DOCSIS 3.1 in its sights.

As Joe Cozzolino, Cisco’s SVP and GM of the vendor’s Service Provider Video Infrastructure group, told me for this feature story on cable’s next-gen data platform, the cBR-8 will be DOCSIS 3.1-ready “at the line-card level” when the product is launched in the first quarter of 2015.

During a briefing here this week, Cozzolino noted that the cBR-8 is in labs with five customers now, expanding to ten by this summer.

Juniper Networks and Gainspeed, the startup formed by DOCSIS pioneer Shlomo Rakib, fleshed out earlier disclosed plans to develop a virtualized  form of the Converged Cable Access Platform (CCAP), a super-dense architecture that will run all services under the same roof and combine the functions of the edge QAM and the cable modem termination system.

Juniper, whose  VC arm headed up a $10 million “B” round in Gainspeed late last year, said it will integrate Gainspeed’s vCCAP technology with  its MX Series 3D Universal Edge Routers and EX Series Switches.

Those details emerge more than a month after Gainspeed identified four initial vendors that it will partner with on the development of an interoperable virtual CCAP ecosystem. In addition to Juniper, Gainspeed is also working with CommScope, Netgear and JDSU to help it create an interoperable ecosystem. CableLabs, which handles interoperability specs for the cable industry, has initiated a project that will investigate a vCCAP, with a technical report expected to come out by the second half of the year.

Gainspeed and Juniper said one aim of the architecture, which is more distributed than first wave of more centralized, monolithic CCAP-pointing products, is to help operators better automate and scale their edge/access network infrastructure while also reducing costs.

The resulting vCCAP architecture isn’t rolled out yet, but the vendors claim that their approach can reduce total cost of capacity by as much as 67% by reducing power, space and cooling constraints on existing facilities and by eliminating the “physical” CMTS.

And the approach appears to be gathering some interest among the operator community.

"We are excited to see innovation in our DOCSIS edge and pleased to see a networking partner like Juniper working with an innovative company like Gainspeed to help bring this forward,”  Sam Chernak, SVP of network architecture at Comcast, said in a statement.

"The rapid transition to IP-based video services has turned the cable industry on its head. Cost effectively delivering new IP-based services will require new and innovative approaches. We're excited to be working with Juniper Networks and Gainspeed. Their new Virtual CCAP solution promises to revolutionize the network and enable an accelerated migration to IP,” added WideOpenWest chief technology officer Cash Hagen.