Dell’Oro Group analyst Jeff Heynen has revised his five-year forecast for global spending on broadband access equipment and CPE, and is now estimating that the market only dropped 2% in 2020. 

Heynen’s latest estimate, highlighted in a Dell’Oro Group blog posting, revises a prediction made last summer that the market would drop 7%. In fact, this was Heynen's second revision of his 2020 forecast--pre-pandemic, in January of last year, he had the market dropping by 5%. 

"The combination of significant residential subscriber growth and increased capacity utilization rates noted by global broadband providers nearly offset the negative impacts of trade tussles, component shortages, and labor limitations," Heynen wrote. 

"In the first half of 2020, we heard from countless service providers that their projected capacity utilization rates for the entire year were reached by March or April,” he added. “A second surge in consumption in the fall, driven by children returning back to school and attempts at re-opening economies forced many operators to add even more capacity. With much of the world still dealing with the impacts of the COVID-19 pandemic and with remote work and online education continuing well into 2021, we see no slowdown in broadband capacity utilization, forcing service providers to once again balance accommodating traffic growth with managing overall spending."

For cable operators, Heynen said the ample DOCSIS channel capacity that spiked network access equipment revenue in 2018 and 2019 helped operators as they sought to address sudden spikes in both upstream and downstream usage. 

“In most cases, cable operators used the software tools available as part of DOCSIS 3.1 to ensure adequate bandwidth for all subscribers. In other cases, operators purchased additional DOCSIS licenses as part of accelerated node split programs to address systems with the greatest need,” Heynen wrote. 

“Regardless, after two years of under-investing in infrastructure, the overall cable infrastructure market will see a steady increase in revenue throughout our forecast period, as mid- and high-split projects in North America and Western Europe, designed to increase upstream capacity, are accelerated. Investments in outside plant equipment, particularly new amplifiers and taps, will also continue as operators begin the multi-year process of preparing their networks for DOCSIS 4.0 and its ability to enable extended spectrum DOCSIS (ESD), low-latency DOCSIS, and full-duplex DOCSIS (FDD),” Heynen added.

The year that was…

2020 was a year like no other. The pandemic drove an unprecedented acceleration of digital enablement, as companies and organizations of all types adopted virtual substitutions to in-person experiences, such as remote work, online education, and telehealth. This drove a massive consumption of bandwidth, upstream and downstream, and led cable operators to add 1.32 million subscribers in 3Q 2020 alone.

Broadband service providers have added capacity at a furious rate in 2020 to meet the exploding demand. Due to the short-term circumstances, some broadband providers, and more specifically cable operators, had to temporarily put aside their longer-term plans, such as virtualization and the re-architecture of the access network, and use more traditional tools to add capacity. 

The massive need for capacity in the upstream has prompted operators to reconsider tools they had in their arsenal, such as mid-split, which allocates 85 MHz of spectrum to upstream, and high-split, which allocates up to 204 MHz but may require the spectrum to be extended to 1.2 GHz to preserve downstream capacity. Another technology that received renewed attention in 2020 is orthogonal frequency division multiple access, which is part of the DOCSIS 3.1 specifications and improves spectral efficiencies, resulting in added capacity.

The year ahead

High levels of bandwidth consumptions will continue

Although the level of growth will taper off in 2021, high levels of bandwidth consumption will continue in 2021 as some of the digitally enabled business models will persist and evolve to become an essential part of the strategic framework. For example, many companies will retain some version of flexible work arrangements well beyond the pandemic, and some predict that about 20% of remote work will never return to in-person; another example is healthcare where the limits on in-person treatment drove almost a five-fold increase in telehealth-based treatment. Healthcare regulation is expected to continue to be relaxed in 2021, and telehealth utilization is expected to persist, and indeed grow, as the industry evolves business models toward more comprehensive virtual care modalities that include solutions such as remote patient monitoring and age in place. In addition to driving bandwidth consumption, these solutions will over time accelerate the comprehensive re-planning of the communications and computing infrastructures.

Technologies that gain traction in 2021

Mid-split and high-split: The trend that started in 2020 will continue, as the need for capacity in the upstream will exceed the capacity of most existing cable access infrastructures.

Low latency DOCSIS: More and more applications, such as gaming, are demanding latency as low as 5–10ms. New applications are emerging where continuous remote health monitoring of patients in their homes complemented by real-time remote data analytics that inform medical treatment may also require low latency data in the near future. Furthermore, augmented reality and virtual reality (VR) applications are increasingly finding important applications in medicine. For example, at Cedars-Sinai hospital in Beverly Hills, California, a study is focused on using VR for a nondrug approach to treating lower back pain.

The Distributed Access Architecture (DAA): DAA took a relative backseat in 2020 as operators used largely proven methodologies to meet capacity demands. However, continuing to add capacity with node splits and more hardware in the headends is not sustainable over the long term. Therefore, DAA remains the most viable architecture over the long term, with fiber moving ever closer to the customer. The debate between Remote-PHY and Remote MACPHY seems to have subsided somewhat, and the recently introduced Flexible MAC architecture, which gives operators flexibility in the location of the MAC, is gaining industry traction. 

Virtualization and cloud native implementations: As operators raced to meet the capacity surge, a clear shortcoming they faced is their inability to elastically scale capacity with demand. If the level of demand does not sustain at the level for which they planned, some of the capacity added will not be utilized, resulting in stranded capital. One of the main advantages of virtualization is the velocity and flexibility that operators gain in introducing new services and features, in scaling capacity with demand, and in gaining more visibility into their networks, leading to fault mitigation and better reliability. The move toward a virtualized headend, already under way, will continue and even gain momentum as the operators exit fire-fighting mode. 

DOCSIS 4.0: As demand for upstream bandwidth continues to grow, operators will need capacity beyond mid-split and even high-split. The DOCSIS 4.0 specifications, released in early 2020, enable operators to increase upstream capacity to 6 Gb/s. Although field implementations are still years out, operators will begin to decide their DOCSIS 4.0 strategy. Operators have two approaches to consider: Extended Spectrum DOCSIS, which involves increasing the highest plant frequency from 1.2 GHz to 1.8 GHz and later to 3.0 GHz; and Full Duplex DOCSIS, which works within 1.2 GHz using overlapping frequencies for upstream and downstream but may impose restrictions on the number of amplifiers and other legacy equipment between the node and the subscriber.

Passive Optical Networks (PON): Another approach that operators are considering for achieving 10G capacity is FTTx implementations via PON solutions, which allows them to build on their HFC investments to deliver even higher speeds. 

WiFi 6 and 6E: The need for more capacity and performance will continue to drive deployments of WiFi 6, and as WiFi 6E is introduced in 2021, which delivers even more capacity, operators will start supporting the new technology.

Automation: The recent pandemic, social distancing requirements, the increasing complexity of the networks, for example DAA deployments and 5G backhaul densification, will drive operators to implement more automation in the networks.

New business models will be explored

As bandwidth consumption shifts to homes and other locations, and as bandwidth is increasingly used to replace in-person activities, new frameworks around who pays for broadband will start to be explored, as discussed in a prior blog.

Beyond broadband networks

Although the focus has been on bandwidth capacity, and justifiably so, major currents are underway in the broader telecom industry. As digital enablement accelerates, companies in many verticals and consumers in their homes will need increasingly complex applications. Delivering connectivity, while essential, will no longer be sufficient. Offering complex solutions that include connectivity, computation, automation, and generic and vertical-specific application modules will emerge; service providers have the opportunity to play a major role in this emerging area. However, this will require investments, new partnerships, and innovative business models.

Guest blog author Liliane Offredo-Zreik is a principal analyst at ACG Research, where she is responsible for cable access infrastructure market research and consulting practice. Offered-Zreik is also president and founder of boutique advisory firm The Sannine Group.

Canadian tech company Vecima Networks has announced the purchase of a large portion of Nokia’s cable access product portfolio.

The acquisition, terms for which weren’t announced, includes Espoo, Finland-based Nokia’s EPON and DOCSIS Provisioning over EPON (DPoE) products. Also included are Distributed Access Architecture technologies Nokia took over when it purchased startup Gainspeed in 2016.

Nokia will retain cable-related products including mobile, routing, transport, fiber, and fixed wireless access technology, along with network operations and customer experience-related solutions.

Vecima’s newly acquired DOCSIS DAA and EPON/DPoE technology and product portfolios will be integrated with its existing Entra-branded Distributed Access product suite.

Nokia employees associated with these technologies will be shifted to Vecima Networks, although it’s not clear as to how many of them will take the British Columbia-based company up on the offer.

“Our cable access solutions have played a very important role in helping to redefine next generation cable solutions and our customers' strategies for addressing evolving network demands using distributed architectures,” said Sandra Motley, president of fixed networks at Nokia, in a statement. “However, the industry continues to go through significant shifts, and we believe the timing is right to transition our cable access business to Vecima Networks. Vecima has the focus, resources and complementary product portfolio needed to support these changes and help operators move toward a Distributed Access Architecture.”

Added Sumit Kumar, president and CEO at Vecima Networks: “Nokia’s portfolio to be acquired aligns perfectly with Vecima Networks’ strategy to provide open, independent, and future-proof cable access solutions that support a multi-vendor ecosystem. The addition of these products and world-class talent broadens our DAA platform and adds 10G-EPON products to our portfolio. In addition to expanding the products and services we are providing to existing customers, we look forward to partnering with service providers around the globe we don’t currently do business with.”

MaxLinear has emerged as the successful buyer of Intel Corp.’s Home Gateway Platform Division, paying $150 million in cash for the unit that makes chips for home gateway products.

The addition of the Intel unit delivers Carlsbad, Calif.-based MaxLinear a new Wi-Fi processor product line, along with other broadband products, to complement its radio frequency and mixed-signal processors used in high-speed cable, fiber optic and ethernet Internet networks.

The move positions MaxLinear to compete head-one with Broadcom as a vendor of processors used in DOCSIS-enabled home routers and gateways, as well as Wi-Fi access points and ethernet broadband gear.

“These assets add significant scale to our entire business while enabling us to provide a compelling Wi-Fi product offering with tremendous growth opportunities inside and outside of the connected home, including expanding the portfolio to include Internet of Things solutions,” said Kishore Seendripu, chairman and chief executive of MaxLinear, in a statement.

MaxLinear expects to add $60 million to $70 million in quarterly revenue from the deal. The deal is expected to close in the third quarter.

Intel had been shopping its Home Gateway Platform Division for several months, with the Silicon Valley giant divesting underperforming divisions as of late. In 2019, for example, the Santa Clara-based company sold its smartphone cellular modem division to Apple for $1 billion.

Business dynamics remain healthy

Despite headwinds from so-called cord cutting because of the increasing consumption of online video content and attrition from myriad and growing SVOD and other online video competitors, cable operators had a good year in 2019 as growth in the broadband business continues unabated, and business services become a major contributor to revenue. In fact, the stocks of the two largest MSOs Comcast and Charter, posted sequentially 60% and 25% growth through December 2019 (albeit in a buoyant stock market).

According to a recent report by analyst firm MoffettNathanson, cable operators are projected to continue to grow their broadband business for the foreseeable future, grabbing more share from the telcos. At the same time, business services remain a healthy and growing revenue contributor, and the more innovative MSOs have created vibrant business offerings with services such as SD-WAN to the SMB market. Comcast’s revenue from business services was 13.4% of cable revenue for the nine months ending September 30, 2019.

It is true that there are rumblings in the industry about the potential competitive threat from 5G in the form of fixed wireless access; although 5G might over the long term become competitive with cable both in the forms of wireless broadband substitution and fixed wireless access, the state of the technology and cost parameters do not make such solutions economically viable in the near term, and furthermore, cable may indeed reap economic value from 5G (more on this later).

Software-based solutions will gain field traction

Although it is true that 2019 through end of September was not a good year for CCAP vendors in aggregate, with the nine months revenue declining about 30% over the same period in 2018, a closer examination of the revenue make-up tells a different story. The revenue of vendors whose solutions are primarily hardware-based declined about 33% in that period; vendors with software-based solutions saw about 11% in revenue growth, with 41% revenue increasing in the third quarter. Although it is true that some operators slowed down capital investments as their DOCSIS 3.1 rollouts tapered off and as they deployed already purchased equipment, but as they look ahead, many operators are also assessing whether their traditional playbook will continue to sustain their future growth and competitiveness or if they should explore more forward looking alternatives. 2020 will see more meaningful growth in deployments of software-based solutions, particularly as more solutions come in the market. Looking back, 2019 may have been a transition year.

Remote-PHY, Remote-MACPHY or Remote-X

It is unquestionable that the distributed access architecture (DAA) has been getting some traction, led by Comcast’s public commitment to Remote-PHY. This technology, based on the CableLabs specifications issued in 2015, has gained a beachhead over its cousin, Remote-MACPHY, whose spec is under development at CableLabs. Although some operators and vendors have settled on an architecture, there is a growing trend toward flexibility with vendors offering the option to locate the MAC either centrally or on a remove device. DAA will get more traction in 2020, as deployments are now real, and the new technologies are field proven and showing clear benefits.

DOCSIS 4.0 will inch closer to reality

CableLabs is expected to issue the DOCSIS 4.0 specifications, which include Full Duplex DOCSIS (FDX) and Extended Spectrum DOCSIS (ESD), for spectrum up to 1.8GHz to enable symmetrical upstream and downstream bandwidth. This will help the vendor community chart its way forward on meeting the need for significantly increased upstream bandwidth. Deployments of this technology are well beyond 2020.

Business services

Cable operators will continue to generate an increasing share of their revenue from lucrative business services. Having established a beachhead in the SMB market where they have a natural affinity, they are putting more emphasis on the middle market and the enterprise market. SD-WAN is a particular area of promise for cable operator. Comcast, which entered this market early and aggressively, will continue to grow its momentum. Other operators have started their deployments and will grow from there. Other promising services include WIFI and security.

5G will progressively materialize as an opportunity for MSOs

It is undeniable that cable operators have become a force to be reckoned with in wireless, largely through their MVNO based service offering. However, it is also well understood that a business largely built on reselling a competitor’s service is not the best way to create long-term value, and indeed MSOs have been exploring a number of alternative business models. Charter has made no secret of its plans to use CBRS to supplement its HFC reach in some areas and may well introduce this solution in 2020. An even more intriguing opportunity is the use the extensive HFC network to backhaul 5G traffic. 5G will require a dense infrastructure of small cells; the cable HFC network, with assets and power in the local access network, may prove to have the right infrastructure for the 5G small cells backhaul. This said, 5G will require very low latency, which today’s DOCSIS technology cannot provide but a new industry effort, Low Latency X-Haul (LLX), is striving to resolve this limitation. Much progress will be made on this front in 2020, potentially setting the stage for an exciting opportunity for MSOs for years to come as 5G becomes a market reality.

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

As cable operators around the world enter the finishing stages of DOCSIS 3.1 deployment, it’s still unclear as to how much current demand there is for 940 Mbps downstream services, the technology’s current speed threshold.

Read More: Cable-Tec Expo 2018

But as it has at each Cable-Tec Expo over the last several years, Arris is challenging the industry to see 1-gig downstream as just a signpost coming up fast. With internet of things putting more connected devices in the home, and applications like 4K streaming and virtual reality emerging, the vendor says cable operators are going to need to bring 20 Gbps into the home in the next 10 to 15 years.

While compounded annual growth rates (CAGR) of downstream traffic on the internet have stabilized a little of large, “upstream is actually accelerating, 25-30%, which is quite a bit higher than the 20% it used to be,” said Tom Cloonan, chief technical officer of Arris’ Networks Solutions unit, noting that the Suwanee, Georgia-based vendor is now focusing on technologies that improve upstream capacity and latency.

Related: Comcast testing FDX with MaxLinear, Other Vendors

In doing so, Arris is walking a bit of a marketing tight rope, as it tries to sell a more immediate network upgrade, Full Duplex DOCSIS (FDX), and a separate, theoretical one that is further out, Extended Spectrum DOCSIS.

As subscriber bandwidth demands grow and equipment capacities increase, MSOs will need to expand their upstream spectrum, and FDX provides a somewhat immediate opportunity to do just that, Cloonan said.

FDX enables DOCSIS 3.1 hybrid fiber-coax (HFC) networks to support shared 10 Gbps transmission capabilities in both the upstream and downstream directions. The current technology, DOCSIS 3.1, will support 10 Gbps downstream and only 1 Gbps upstream, once all of the standard’s features are finally actualized.

With CableLabs completing the specifications for FDX a year ago, Cloonan and his team will be using Cable-Tec Expo to show off network solutions based on the second generation E6000 Converged Cable Access Platform, with an eye for FDX upgrades occurring in the next two years.

Indeed, at the booths of multiple technology vendors, Full Duplex will be in the here and now this year, with operators including Comcast, for example, looking to swap in FDX-capable nodes as they transition to Distributed Access Architectures (DAA). And for its part, Arris has already been in the market touting the FDX upgrade potential of its DOCSIS 3.1 network solutions, such as one recently deployed by Australia’s NBN earlier this year.

To make FDX a reality, Cloonan explained, operators will need to be able to move quickly to a node+0 environment and be willing to upgrade their Cable Modem Termination Systems (CMTSs), nodes and CPE.

Of course, that’s asking a lot for some cable companies.

Further out and currently in the research and development phase, Extended Spectrum DOCSIS, Cloonan said, may be better suited for cable operators that want assurances that their future high-capacity networks will work in existing node+X environments that may not support FDX operation, which requires node+0.

“There are a lot of operators who have no intention of getting to a node+0 environment in next 10 years,” Cloonan said. “It’s going to take a while to run fiber deep enough to get to node+0.”

Capable of working in node+6 configurations, and delivering theoretical symmetrical speeds as high as 60 Gbps, Extended Spectrum DOCSIS (aka “DOCSIS 4.0”) is being championed by operators including Cox Communications.

With Extended Spectrum DOCSIS, operators would use more—a lot more—than the 1.2 GHz of plant spectrum they currently exploit for DOCSIS 3.1. In fact, they’d use more than the 1.8 GHz leveraged by FDX. Extended Spectrum’s visionaries see as much as 3 Ghz, or even 6 GHz, being used.

It was Cloonan who first pitched the Extended Spectrum idea two years ago, with the technologists proposing the use of 6 GHz of spectrum and Fiber Deep to deliver symmetrical speeds as high as 50 Gbps.

Earlier this year, Jeff Finkelstein, executive director of advanced technology for Cox, told Lightreading that he had a team of Georgia Tech graduate students perform calculations suggesting the concept could actually work.

“A lot more work has to be put into it to prove it will work,” added Cloonan, who envisions a go-to-market for Extended Spectrum sometime in the mid-2020s range. “It’s not going to be put into the field next week.”

Of course, all of this work on advanced DOCSIS technologies is unfurling as Arris continues to support the current DOCSIS 3.1 standard.

“From Arris' point of view, we’re still developing 3.1 features,” Cloonan said. “The spec is several thousand pages long, and certainly, not every feature was turned on on day one. We’re still rolling features in. It’s still a very active program.”

Serving up a potential breakthrough that could factor heavily into cable’s future deployments of small cell networks, CableLabs and Cisco Systems said recent tests of a proposed technique called the “Bandwidth Report” (BWR) prove that super-low latencies can be achieved by extending a technical bridge between DOCSIS and LTE.

While the goal of the BWR test was to achieve upstream latencies of sub-5 milliseconds, the test, following some manual tuning of this “pipelining” of the DOCSIS and LTE schedulers, reduced latency to about 1.1 milliseconds.

“So, it worked,” John Chapman, a fellow at Cisco Systems who is also CTO of the company’s  Cable Access unit, proclaimed Thursday during a CableLabs-hosted webinar entitled Enabling Cable Networks for Mobile Backhaul.

The test, they said, shows that DOCSIS can become a viable backhaul for LTE and could play a major role as cable operators start to develop LTE-based small cell networks, and as they also look to complement their mobile and wireless strategies using the CBRS [Citizens Broadband Radio Service] 3.5 GHz band.

RELATED: Comcast Wants to Test CBRS in Philly

Notably, the BWR proposal is also extensible to future 5G networks, Chapman explained.

But the issue that’s being solved with BWR is to reduce inherent upstream latency in DOCSIS networks to a level that is required for 4G and 5G small cells – certainly beneath the 5 millisecond mark.

So, in order to play that key backhaul role, DOCSIS must provide a low latency path between neighboring small cells, Jennifer Andreoli-Fang, a distinguished technologist at CableLabs, said.

BWR, a method that was described in detail at last fall’s SCTE/ISBE Cable-Tec Expo in Denver, aims to overcome a mismatch between the schedulers for DOCSIS and LTE by having them work together and hit the latency goal.

And there’s quite a chasm to overcome.

For the DOCSIS upstream, 5 milliseconds has been the “minimum latency,” though it’s typical to see it at 11 milliseconds, and grow to 30 milliseconds or 50 milliseconds if there is contention in the upstream, Chapman said.

The goal with the BWR proposal is to shrink that number down 2 milliseconds or lower.

Fundamentally, BWR enables the DOCSIS and LTE schedulers to talk to each other through a technique called “pipelining,” with BWR serving as a request into the DOCSIS system.

“It’s fundamentally an API into the DOCSIS scheduler” that allows an external component, like a small cell, to ask for a certain number of bytes at some future point in time, Chapman explained.

While this allows the LTE and DOCSIS scheduling systems to communicate, the BWR method essentially “hides” the DOCSIS latency beneath LTE and reduces the latency by taking advantage of the predictive nature of the LTE scheduler, he said.

For the trial, CableLabs and Cisco set up a physical LTE and DOCSIS test bed that includes a commercial LTE user device talking to an open source LTE small cell that was being backhauled on a commercial DOCSIS 3.1 modem and a Cisco cBR-8 CCAP/CMTS.

A small amount of code was inserted into the LTE MAC layer, which didn’t change the scheduler, but instead sent out a scheduling decision that is put into the form of a BWR message, Andreoli-Fang explained.

That message was then sent out on the DOCSIS uplink and received by an API on the cBR-8. A series of packets were then sent from the LTE user device to the CMTS, and the results showed that the method provided a clear latency advantage.

The results showed that “DOCSIS is well positioned as a viable backhaul technology for LTE,” Chapman claimed. “The path to success is actually having mobile and DOCSIS technologies working together as one."

The proof-of-concept is now moving to the next phase, as CableLabs has kicked off a committee that will explore the possible specification of the BWR protocol and have it become part of the DOCSIS scheduling system, Andreoli-Fang said.

“It’s something we can define at CableLabs,” Chapman said, adding that LTE will also have the ability to write to that API.

What’s not known is when BWR might become a more formal piece of the puzzle.

Fellow webinar panelist, Craig Cowden, SVP of wireless technology at Charter Communications, stressed that there’s time for that to develop, noting that the FCC is still working out rules for the use of CBRS and that the broader product ecosystem still needs to come together.

RELATED: Charter Puts Wireless Broadband to the Test (subscription required)

“There is some time, for us anyway, to see this evolve,” he said.

But the underlying work is “incredibly important as we talk about how we could be able to enable our DOCSIS HFC networks for true fixed mobile convergence, particularly as we talk about 4G, and especially 5G, where those lower latency requirements are essential,” Cowden said earlier in the webinar.

Altice USA said it has spooled up a 1 Gbps (downstream) broadband tier in its Kinston, N.C., market, which includes the city itself, as well as Lenoir and Wayne Counties, and Lagrange and Walnut Creek.

In addition to launching the 1 Gigabit Internet service over its DOCSIS network, Suddenlink is also boosting the speeds of some existing broadband tiers, with its 75 Mbps and 100 Mbps offerings moving up to 100 Mbps and 200 Mbps, respectively.

The standard Suddenlink residential internet download speeds in Kinston are now up to 50, 100, 200, and 400 Mbps, along with the up to 1 Gig service, said Altice USA, which closed its acquisition of Suddenlink in late 2015.

Those upgrades follow some other similar, recent ones in several other Suddenlink systems serving Bastrop, La.; Fort Ord, Calif.: as well as Bullhead City, Ariz.; Nacogdoches and Collin and Denton counties in Texas, Branson, Mo.; and Truckee, Calif.

While Suddenlink systems have been targeting 1-Gig speeds with DOCSIS technology, Altice USA is pursuing an ambitious FTTP upgrade strategy in the Optimum (former Cablevision Systems) footprint.

Update: Altice USA also plans to deploy FTTP to most of its Suddenlink footprint during its five-year deployment timeframe. .

RELATED: Altice USA In a ‘Unique Spot’ For FTTP Upgrade

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.”

Touting a strategy to bring more MSOs into the fold from around the globe, CableLabs announced that Chongqing Cable Networks of China has become the organization's 55th cable operator member.

CCN serves more than 5 million digital subs, including those taking HDTV, interactive video and broadband services, according to this blog post by CableLabs COO Chris Lammers,

“CCN’s CableLabs membership is the latest step in CableLabs ongoing effort to provide value to the cable industry on a global basis,” Lammers wrote, noting that China represents a market with nearly 250 million video subs and 15 million broadband subs. “Over the past two years, we have added new members across Europe, Latin America, and Asia, increasing total membership today to 55 members representing over 150 million video subscribers.”

That expansion, he said, provides CableLabs with scale to collaborate on tech standards and strategies on a global scale.

That focus took hold in August 2013, when CableLabs Europe merged its activities with CableLabs and began to integrate C-DOCSIS, a flavor of DOCSIS that has been tailored for the Chinese cable market. CableLabs completed the C-DOCSIS specs in the fall of 2014.

Incorporating C-DOCSIS  into the DOCSIS 3.1 platform establishes DOCSIS as a “unified standard for all markets,” Lammers said.

He said CableLabs is moving ahead with plans to add more Chinese cable operators, as well as those located in Korea, India, Thailand, Australia and Latin America.

CableLabs, Lammers added, also plans to beef up support in Asia by adding resources for the region, including collaboration with regional cable laboratories such as JLabs (Japan) and Klabs (Korea).

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.

When Google in February of 2010 unveiled an “experimental” project to build a fiber network capable of pumping out Gigabit speeds — and started a selection process to pick a city to take part in the fun — it generated lots of interest and even more questions

Was Google Fiber truly just an experiment? Is Google doing this merely to hasten the industry’s pursuit of 1 Gigabit-per-second speeds? Or (gasp!) is Google building a fiber-optic Trojan horse, planning a profitable business that wreaks havoc on the broadband businesses of incumbent telcos and cable operators?

Fast-forward six years, and no one is closer to a bona fide motive. Google Fiber is still a small player in the TV and broadband industry, but it is expanding into new markets, testing new deployment models and broadening its mix of services.

And its true intentions remain maddeningly mysterious. It was widely believed early on that Google Fiber was entering the broadband picture to apply pressure on Internet-service providers to accelerate upgrades. Some analysts wonder if Google is, indeed, in this for the long haul.

BUSINESS OR HOBBY?

“For a while, I thought perhaps they were just doing some dabbling,” Teresa Mastrangelo, principal analyst at Broadbandtrends LLC, said. “But they’ve been at it for five or six years, so the dabble part of it is no longer applicable to them because they are expanding market share and they are continuing to do new things.”

One of those new things surfaced last week, in the form of Google Fiber’s fresh twist on an old thing — the landline phone. Edging it closer to the ability to offer a triple-play bundle, Google Fiber unveiled Fiber Phone, a $10 per month optional add-on that will eventually be offered in all of its markets.

But Mastrangelo said she still wonders if Google Fiber will eventually hand off some of its operations to municipal partners after deployments are firmly established. “I think that’s always a possibility because they are working with so many cities … but I don’t think the play is temporary,” she said, noting that the current rollouts ensure that Google’s products and apps are part of the service bedrock in those markets no matter who runs the operations.

Craig Moffett, principal and senior analyst at MoffettNathanson, offered a slightly diferent view. Google Fiber is testing and refining ways to team up with local partners and stimulate the deployment of broadband, but Google isn’t necessarily interested in building a lot of broadband infrastructure itself, he said.“They seem to seem to want to showcase every different variety of public-private partnership that they can come up with to create a menu of options for municipalities to follow,” he said. “I think it speaks to what we’ve always believed with Google Fiber — that their goal isn’t to see how many homes they can cover [but] to see how many homes they can prompt someone else to cover instead.”

If Google Fiber’s aim is to prod ISPs to move more rapidly on 1-Gbps upgrades — a move that would further open the floodgates to over-the-top video services — then it has already accomplished its mission.

Cable operators and telcos are now pushing forward with new fiberbased services and DOCSIS-fueled offerings that deliver residential Gigabit speeds. Among them, AT&T continues to broaden the reach of its fiberbased “GigaPower” platform (now available in 20 markets, with 36 more in the works) and Cox Communications expects to have 1-Gbps speeds available in all of its markets by year-end. Comcast has launched “Gigabit Pro,” a targeted (and pricey) 2 Gbps fiber-to-the-premises residential service, along- side an aggressive plan to deploy DOCSIS 3.1, a new multi-Gigabit platform for hybrid fiber-coaxial networks. Mediacom Communications and Suddenlink Communications also have major Gigabit initiatives underway.

Moffett agreed that Google Fiber has successfully induced cable operators and telcos to deploy broadband service more quickly while also influencing the policy debate in areas such as network neutrality.

But Google Fiber (whose executives were not available to be interviewed for this story) has also influenced pricing for super-fast broadband. A case in point is AT&T. The standalone price for the telco’s 1-Gbps service is $70 per month in Google Fiber markets, mirroring Google’s pricing, but it asks $110 a month for the same service elsewhere.

“Google Fiber has had a downward impact on pricing,” Moffett said. “Ultimately, that might be their most important legacy.”

But it has had less influence on broadband caps. Google Fiber’s service is uncapped, but Comcast, AT&T, Mediacom Communications and Suddenlink Communications are all employing or testing usage-based policies.

NEW DEPLOYMENT WRINKLES

Based on Google Fiber’s expansion plan, and some recent tweaks to its deployment model, it appears as though it has no near-term intention of slowing its pace.

Google Fiber currently offers service in parts of Kansas City, Kan.; Kansas City, Mo.; Provo, Utah (via its $1 acquisition of the iProvo network); and in Austin, Texas. It has also committed to deploy operations in a handful of other markets, and is considering expansion to several other major hubs, including Chicago and Los Angeles.

Google has also been implementing new strategies aimed at accelerating the availability of its services without having to build networks from scratch.

For instance, Google Fiber has started to tap into existing infrastructure to reach parts of San Francisco and Atlanta. Google has also inked a deal to offer services on a fiber network that Huntsville Utilities is building in Alabama. Those approaches could serve as a blueprint for more rapid growth.

“The process has been slow for Google,” Mastrangelo said. “But I think they are trying to look at more ways to accelerate the deployment of their services.” Google Fiber said it remains open to employing various deployment approaches.

“Since we started Google Fiber, we’ve built the majority of our networks from scratch. But over time, we’ve learned that every city is unique, and we can bring service to more areas by taking different approaches to expansion,” Chris Levendos, head of network deployment and operations at Google Fiber, said in a statement to Multichannel News. “In Provo, we purchased a network from the city. In Atlanta, we’re constructing our own network as well as using existing fiber to provide Google Fiber to some apartment buildings. And in Huntsville, we’ll be working with a muni-owned network to bring our high speed service to the city. We think there’s a lot of value in continuing to pursue new models — ultimately, it means we can work with more cities to help bring Google Fiber to more people.”

Meanwhile, a new report from Moffett shed some light on Google Fiber’s subscriber progress, at least from a pay TV standpoint.

Google Fiber ended 2015 with more than 53,000 video subs, he found, according to data culled from the U.S. Copyright Office. That, Moffett noted, would make Google Fiber one-seventh the size of midsized cable operator Cable One, the smallest distributor his firm covers.

Though small, those numbers don’t represent the full extent of Google Fiber’s progress, because it leads with broadband. And it doesn’t say how many customers opt for its free basic Internet service (at speeds of 5 Mbps downstream and 1 Mbps upstream). The new structure of Alphabet, Google’s parent company, does offer a hint at Google Fiber’s financials. Alphabet’s “Other Bets,” areas covering moonshot projects such as self-driving cars and Google Fiber, lost $3.56 billion in 2015 on revenues of $448 million.

“Google Fiber will continue to be, we expect, the biggest consumer” among the Other Bets, Ruth Porat, Alphabet’s chief financial officer, said on the company’s last earnings call, a small indicator of Google’s commitment to the fiber project.

Other industry analysts are more bullish about Google Fiber’s prospects. In a report issued last fall, Bernstein Research senior analyst Carlos Kirjner held that the market is “too dismissive” of Google Fiber. It has a “better- than-good chance to build a profitable local-access competitor,” he said.

Nor are Google Fiber’s competitors ignoring the threat. Comcast, for example, has been distributing flyers in Atlanta urging people not to “fall for the hype” of Google Fiber and touting the features of its products, including X1.

As for the broadband side of the equation, Mastrangelo said she believes that cable still holds the high ground, in part because its networks are already built and can be upgraded relatively quickly.

“I think cable still has the upper hand on being the provider of fast speeds in the U.S., despite what Google and others are doing, simply because they have the time-to-market advantage,” she said.

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.

Back in the early 2000s, CableLabs’s DOCSIS certification crew had its hands full running tests on DOCSIS cable modems and reference designs from companies like Com21, 3Com, Panasonic, Scientific-Atlanta, Linksys, Tellabs, Texas Instruments, Toshiba, Terayon Communication Systems, HighSpeed Surfing, US Robotics – companies that are all no longer in the cable modem business for one reason or another (they bugged out of the market, got bought, or just plain died).

Another in that group was Ericsson, which I'm sure everyone remembers sold its cable modem business to a Canadian company called Aastra Technologies in January 2002 (Aastra merged with Mitel in 2014, and cable modems are no longer part of the product lineup from what I can tell).

Ericsson, which made DOCSIS gear under the “PipeRider” brand (see photo), exited the cable modem business as the sector was busting at the seams with suppliers, product margins were shrinking, and the whole smash was in need of a heavy dose of consolidation.

So my curiosity was piqued when I noticed that an Ericsson DOCSIS 3.0 modem came away with CableLabs certification in June following wave 114. The last time Ericsson’s name came up on the list was in December 2001 (cert wave 20), when it got a modem stamped for DOCSIS 1.1, a spec that added QoS to the mix for services like VoIP.

So, again, I was curious. Clearly, it made zero sense for Ericsson to jump back in and sell cable modem products at retail. You need CableLabs certification for that, but MSOs still require vendors to get the CableLabs stamp even on products that are sold directly to cable operators.

Maybe, I thought, Ericsson is working on some fancy IPTV cable video gateway powered by DOCSIS. After all, it’s a licensee of the Reference Design Kit, a software stack managed by Comcast, Liberty Global and Time Warner Cable. Plus, it now has Mediaroom and recently launched a cloud-focused video platform for pay TV and OTT providers called MediaFirst. Maybe that’s the connection, I thought.

Nope. Turns out to be something that’s much less interesting (to me, anyway).

Ericsson got back to me on it, reminding me that they offer a range of WiFi access points to the cable industry, that those products contain integrated D3 modems, and have been in the portfolio for some time. Still not clear is if Ericsson is making that DOCSIS module itself or sourcing it from someone else.

So, mystery (mostly) solved. The PipeRider will not ride again.  But it was fun to take the WayBackMachine for a spin.

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. 

For the cable industry, FTTP is no longer a four-letter word.

Thanks to increased competition and the emergence of over-the-top video and other bandwidth-gobbling services, fiber-to-the-premises architecture is now an accepted part of the cable industry’s lexicon, albeit still in a limited way.

For more than a decade, cable operators have been well-served by a hybrid fiber-coaxial (HFC) network matched with DOCSIS (Data Over Cable Service Interface Specification) technology, and that combination still dominates the broadband landscape. The top 10 U.S. MSOs accounted for 60% of the residential broadband market, and 86% of all broadband net additions in Q1 of 2015, per Leichtman Research Group.

But fiber-fueled competition is heating up, particularly among incumbent telcos and overbuilders, despite Verizon Communications’s recent sale of wireline assets to Frontier Communications and an apparent de-emphasis on FiOS.

Among the newcomers, Google Fiber is putting a scare into the cable sector as it pushes ahead with expansion into four metro areas — Atlanta; Charlotte, N.C.; Nashville, Tenn.; and Raleigh-Durham, N.C. — building on earlier commitments in Kansas City; Provo, Utah; and Austin, Texas. Google Fiber represents a tiny portion of the market, but has successfully put 1-Gig on the front burner while setting the bar on price at $70 per month for a standalone offering.

Of potential greater concern to MSOs, though, should be what’s afoot at AT&T. As it looks to get approval for its proposed merger with satellite-TV provider DirecTV, telco AT&T disclosed in a recent public-interest fi ling that it has committed to expand its fiber-based GigaPower platform to a total of 11.7 million homes — about 9 million more homes than in its previously announced commitments.

That bigger commitment is “less than meets the eye” because it factors in a broader set of customer locations that include businesses, vacant homes and apartments, Moffett Nathanson principal and senior analyst Craig Moffett said in a recent report. Nonetheless, Moffett also expressed surprise that “[c]able stocks haven’t reacted more strongly to the news.”

“[B]y the simple but closely watched metric of ‘fiber overlap,’ AT&T’s latest announcement is a meaningful change,” Moffett said, outlining assumptions that cable broadband will capture just 40% of share in markets where it faces off with FTTP, versus 55% when pitted against fiber-to-the-node competition and 60% where it’s up against plain-vanilla digital subscriber line (DSL) service.

Among some large MSOs, Comcast has a 32% overlap with AT&T’s U-verse platform, versus Time Warner Cable (26%), Charter Communications (32%), Bright House Networks (25%) and Cox Communications (25%). In the most extreme case, AT&T’s new commitment could translate into a 2.4% decline in cable’s share of the residential broadband market, Moffett said.

And all of this is happening as over-the-top video gains popularity and momentum, fed by the likes of Netflix, Amazon Prime Instant Video, Hulu, Sling TV and CBS All Access, as well as new standalone offerings from HBO and Showtime.

Meanwhile, consumers have been lulled into thinking they need Gigabit speeds ASAP, thanks in large part to Google Fiber, whose cachet and persuasive marketing have fed the perceived need for speed.

“There’s some sort of magic associated with fiber,” John Caezza, president of Arris’s Access Technologies division, said. “Everyone thinks it’s better than [HFC].”

There is still plenty of magic left in the HFC network, MSOs have maintained, but many are starting to use FTTP in a limited, targeted way while also pushing fiber closer to the home elsewhere to punch up their DOCSIS-delivered speeds.

Cox Communications, for example, has been among the most active major U.S. cable operators with “G1GABLAST,” an initiative that will see the MSO begin market- wide deployment of Gigabit services by the end of 2016.

While DOCSIS 3.1, cable’s emerging multi- Gigabit platform for HFC, will factor heavily into that plan, Cox is initially offering speeds of 1-Gigabit per second in select markets using fiber. Cox’s Gigabit deployments currently include targeted FTTP overlays in Omaha, Las Vegas and Phoenix, and FTTP in all of its new-build systems.

GOING ‘PRO’ WITH FIBER

Comcast, the nation’s largest cable operator, is also taking a precision-based approach to FTTP, but potentially at a much larger scale.

Offering 2 Gigabits per second both downstream and upstream, Comcast’s just-launched residential “Gigabit Pro” service is spendy — it carries a limited promotional price of $159 per month (with a three-year commitment), about half of the regular price of $299 per month (with a two-year commitment), plus up to $1,000 in installation and activation fees.

But Gigabit Pro will be made available to about 18 million homes by the end of the year, as homes within one-third of a mile of Comcast’s fiber network will be eligible to get the service.

It’s a success-based approach. Comcast will run fiber and install the necessary equipment, including the Optical Network Terminal, only to customers who sign up for Gigabit Pro.

Comcast is also spinning fiber into some of its coming consumer-facing products. The multi-service Gigabit Gateway that the MSO showed at INTX in May focused on DOCSIS 3.1 and advanced WiFi, but Comcast is developing a version of the device with a direct fiber input as well.

While the vast majority of Comcast’s residential customers don’t need 2 Gbps, the new service ensures that the MSO will have something available to those that do.

“Gigabit Pro is really for those customers who have got extreme needs,” Tony Werner, Comcast’s executive vice president and chief technology officer, said.

Early Gigabit Pro deployments will use the Metro Ethernet system that serves Comcast’s midsized business customers, but “very quickly … we are migrating to the same PON [passive optical network] technology that we’ll be using in some of the greenfield and in some of the other major complexes, like apartment buildings or new developments.”

Comcast hasn’t announced which flavor of PON (GPON or EPON) it will ride long-term, but Werner said the analysis is complete, the decision has been made and the MSO has already issued requests for proposals (RFPs) for Gigabit Pro to vendors.

Cable operators that opt for PON have some new tools at their disposal that will make their new FTTP systems fi t into their legacy operations. CableLabs has already developed DOCSIS Provisioning of EPON (DPoE), specifications that allow cable operators to use DOCSIS-style provisioning for EPON deployments. A version for GPON has also been developed.

Going forward, FTTP will likely be the order of the day for new builds at Comcast, since the bulk of the costs for it are construction and labor.

“Once the trench is open, the incremental economics are close enough that we will do fiber-to-the-prem, unless it’s a very small stub off of existing plant,” Werner said.

Cable’s FTTP projects “tend to be opportunistic; it’s greenfield work,” Phil McKinney, president and CEO of CableLabs, said, noting that cable’s research consortium is staffing up and boosting its work on next-generation fiber technologies.

“If you’re opening up a piece of ground and you’re going to run a conduit in, you’re laying fiber,” McKinney said.

DOCSIS 3.1: CABLE’S WORKHORSE

While cable is using FTTP like a sniper’s bullet to deliver gigabit speeds, DOCSIS 3.1 represents the shotgun blast that will be used to deliver big speeds in “brownfields” served now by HFC.

“I think it [HFC] has tremendous life, and we are going to be riding it all day long,” Werner said, noting that even FTTP is HFC in the sense that fiber is connected to the home, but in most cases, services in those homes are delivered over coax.

DOCSIS 3.1 “is definitely going to be our go-to animal,” he added. “Due to ubiquity, we can go out and virtually serve all of our plant very quickly.”

Comcast and other MSOs are also keen on DOCSIS 3.1 because there’s no service disruption and hardly any friction to the customer.

Comcast is testing DOCSIS 3.1 in the field in anticipation of future deployments. “There’s basically zero surprises on it at this moment,” Werner said, noting that a significant amount of Comcast’s cable-modem termination systems (CMTSs) can be upgraded via software to DOCSIS 3.1 for the downstream, and will require new cards for the upstream.

Broadcom’s DOCSIS 3.1 silicon for modems is “working well,” Werner said, while Intel’s new chip has “just tapped out,” which means it is nearing the final design cycle. STMicroelectronics is also expected to toss its hat into the DOCSIS 3.1 ring.

Adoption of DOCSIS 3.1 will be global and quick, according to a recent IHS study. Asked what share of their residential base would be passed by DOCSIS 3.1-enabled headends or hubs, MSOs responded collectively that it would reach about 35% by 2017.

CableLabs’s latest DOCSIS 3.1 interoperability event was slated to end on July 17, putting vendors one step closer to formal certification and qualification testing this summer. “As we find issues through the interop and through the early devices going through cert wave, we’re going to close that loop pretty tightly,” McKinney said, calling DOCSIS 3.1 “job one for me.”

Though MSOs will deliver Gigabit speeds through a mix of HFC and FTTP, McKinney wonders if the “cable” label is even suitable anymore.

“The cable industry has more fiber in the ground than each fiber provider in the world,” he said. “If you look at total fiber strand miles, there’s more fiber under management and under control of the [cable] operators than anybody else combined.”

Cable operators, on average, still serve about 400 homes from each cable node. “But the trend is absolutely moving down,” Caezza said, noting that some MSOs are skipping the next logical step of 200 homes per node by driving fiber to service groups of 100 to 125 homes per node.

That’s already happening to a degree at Comcast. In some Gigabit Pro markets, the MSO is already in that 100-homesper- node neighborhood, Rob Howald, Comcast’s vice president of network architecture, reportedly said at the recent Gigabit Cities Live! conference in Atlanta.

David Eckard, chief technology officer of Alcatel-Lucent’s Fixed Networks Division, said he sees a “storm coming” in which MSOs upgrade to a distributed architecture (CableLabs recently issued the specifications for several approaches) and consider operationally tricky “mid-splits” that expand the amount of upstream capacity.

“Everybody’s end game, whether you’re a telco or an MSO, is fiber,” Eckard said. “The question [for cable operators] is, how deep is that fiber going to be?”

A Vote for DOCSIS 3.0

Much of cable’s Gigabit fanfare centers on FTTP and the emerging DOCSIS 3.1 platform. But Suddenlink Communications will ride DOCSIS 3.0 as it enters the Gigasphere.

As part of the MSO’s Operation GigaSpeed initiative, Suddenlink is offering a highly asymmetrical service — up to 1 Gigabit per second downstream and 50 Megabits per second upstream — in a handful of markets: Bryan-College Station, Texas; Nixa, Mo.; and Greenville and Rocky Mount, N.C.

According to pricing data for Suddenlink’s system in Bryan, Texas, obtained by Multichannel News, the standalone 1-Gbps service fetches $109 per month, though it’s expected to sell for less when bundled with other services.

Suddenlink confirmed its use of DOCSIS 3.0 technology early on, noting that with “equipment upgrades and channel bonding, we are able to deliver more than 1 Gig to the modem.”

State-of-the-art DOCSIS 3.0 modem chips from suppliers such as Intel and Broadcom can bond up to 32 downstream 6 MHz-wide channels — enough to support downstream bursts of 1.2 Gbps in North American DOCSIS systems.

Suddenlink unveiled Operation GigaSpeed in August 2014, announcing that it intended to raise its top downstream high-speed Internet speed to 1 Gbps in 90% of its footprint by 2017. The initiative encompasses network upgrades, including all-digital migrations that free up valuable bandwidth for things like DOCSIS channel bonding, and the replacement of remaining deployed DOCSIS 2.0 modems with DOCSIS 3.0-based equipment.

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%). 

Bright House Networks said its Florida systems will serve as the launch site of a new 300 Mbps broadband tier that will be paired with an upstream that maxes out at 15 Mbps.

The faster tier, to become available to all of the residential customers in the operator's Tampa Bay and Central Florida service region later this month, will sell for $199 per month as a stand-alone or as little as $95 more when bundled with other services, Bright House said.

Bright House, which serves about 2.5 million customers, has not announced when it will launch the new 300/15 service in its other systems serving parts of Alabama, Indiana, Michigan and California.

Bright House also markets residential high-speed broadband tiers of 150/10, 75/5, 35/2 and 15/1. It’s also helping to head up an FTTP-based 1-Gig offering for a new housing development in Tampa.

"We continually look for ways to provide the best available choices to our customers. Just a few months ago, we increased our maximum bandwidth offering to 150 Mbps, and now we are making available an additional product at 300 Mbps," Kevin Hyman, executive vice president, cable operations, Bright House Networks, said in a statement. "We've opted to make this product available to our entire Florida footprint meaning millions of Floridians will have this choice available to them."

In a deal that will further consolidate the silicon market for set-tops, high-speed home networking and cable broadband modems gear, MaxLinear announced Tuesday that it has inked a deal to acquire Entropic Communications. 

Under the deal, Entropic shareholders will receive $1.20 per share in cash and 0.2200 shares of MaxLinear common stock for each Entropic common share outstanding. MaxLinear said the implied total transaction value of the deal is about $287 million, with an implied enterprise value of $181 million, net of Entropic’s cash balance as of Dec. 31, 2015. MaxLinear expects the deal will achieve operating synergies in excess of $20 million in the first full calendar year post-close.

Shares of Entropic were up 21 cents (7.78%) to $2.91 each in after-hours trading Tuesday.

MaxLinear, which expects to close the deal in the second quarter of 2015, is making its move following a recent rough path for Entropic, a San Diego-based  maker of set-top chipsets and Multimedia over Coax  (MoCA) technologies.

Last June, Entropic announced a major restructuring, followed in September with word that its board had authorized the company to pursue “strategic options.” In November, Entropic announced that troubled, former president and CEO Patrick Henry was leaving, naming Dr. Ted Tewskbury (pictured) as its interim president and CEO. At the time, Entropic also said it would discontinue all new set-top box SoC product development.

MaxLinear, which counts Broadcom among its competitors, said the deal with add significant scale to its analog/mixed-signal business, allow it to expand its addressable market, and bolster its intellectual property, noting that Entropic has about 1,500 issued and pending patents.

"We are very excited about the opportunity to bring together two talented and largely complementary teams, as we increase our capabilities to solve the most difficult analog and mixed-signal RF challenges in Broadband markets," said Dr. Kishore Seendripu, CEO of MaxLinear, in a statement.

"I share Kishore's enthusiasm for this combination, which we believe maximizes value for Entropic's shareholders, employees and customers,” added Tewskbury, who will join the MaxLinear board when the deal is wrapped up. “These are two excellent companies in the industry, and I believe our stakeholders will benefit from the resources and scale that the combination will provide."

MaxLinear also reaffirmed fourth quarter guidance, with revenues expected to be in the range of $32 million to $33 million. MaxLinear is to report Q4 results on Feb. 9, 2015.

Entropic announced fourth quarter results on Tuesday (February 3), posting revenues of $42.6 million, and a net loss of $25.5 million, or 28 cents per share. Entropic pulled in revenues of $191.6 million for all of 2014, down from $259.4 million for 2013. 

Arris remained the top dog from a revenue perspective in a global cable access market that raked in $445 million in the third quarter of 2014, up 8% versus the previous quarter, according to a new report from Infonetics Research.

That figure factors in worldwide revenues for cable modem termination system (CMTS), converged cable access platform (CCAP), edge QAM and coax media converter (CMC) equipment. CCAP is a next-gen high-density platform that combines the functions of the CMTS and the edge QAM, while the CMC is a stripped down form of a CMTS that is becoming popular in China and other markets that are focusing on more distributed architectures. The CMC was historically tied to C-DOCSIS, an architecture that has been integrated with the CableLabs DOCSIS specifications. 

Of that combined equipment market, Arris pulled down 50% of the revenues in the third quarter of 2014, followed by Cisco Systems (30%), Casa Systems (18%), and Harmonic (3.5%), according to Infonetics.

Cisco, once the market’s leader, could start to catch up when it releases the cBR-8, its next-gen, integrated CCAP product, for general availability. 

“Everyone is waiting for the cBR-8,” Jeff Heynen, principal analyst for broadband access and pay TV at Infonetics, said.  “Once it’s ready, the market is going to go gangbusters.”

Not that the market’s doing shabbily now. Although shipments of total upstream and downstream DOCSIS channels, at 1.2 million, were down some on a sequential basis in the third quarter of 2014, they were up 95% versus what was shipped globally a year ago, according to Heynen.

Additionally, CCAP revenues rose 7% in the third quarter, to $360 million, versus the previous quarter. Heynen said the shift to CCAP is currently most acute in North America.

Infonetics expects the number of DOCSIS channels shipped globally to nearly triple from 2013 to 2015. According to the research firm’s current projections, about 4.5 million DOCSIS channels will ship this year, and surge past 6 million in 2015.

Aiming to replicate the work it’s already been doing with EPON, CableLabs has an interoperability initiative underway that will enable cable operators to use DOCSIS-style provisioning on GPON networks.

Those specs, to be called DOCSIS Provisioning of GPON, or DPoG, are currently in the draft/review phase, a CableLabs spokeswoman said via email. “CableLabs anticipates releasing the first public version [of the DPoG specs] later in 2014,” she added.

Some of that work came to light Tuesday, when Calix announced that its Open Link Cable system, already in use by Grande Communications, is designed to align with the emerging DPoG specs and is “based on concepts” introduced by the current DOCSIS Provisioning of EPON (DPoE) specs.

The latest batch of work will pave the way for cable operators to utilize their existing DOCSIS provisioning on both EPON- and GPON-based network deployments, which have been largely relegated to limited greenfield residential buildouts and for fiber-based services tailored for business customers.

The CableLabs DPoE effort has already produced a sizable initial batch of vendors that have achieved qualification for the 1.0 version of the specs, including Alcatel-Lucent, Aurora Networks, CommScope, Huawei, Sumitomo Electric, ZTE, CTDI, and Finisar. Qualification means those products have been deemed interoperable.

In the DPoE world, the DPoE System is analogous to the cable modem termination system (CMTS), while the Optical Network Unit (ONU) behaves as the modem at the customer premises.

Supporting DOCSIS provisioning on GPON will benefit MSOs that use that particular flavor of fiber-to-the-premises technology, rather than limiting it only to operators that have rolled out EPON technologies.

Separately, CableLabs has also sparked an effort that seeks to bring unity to the PON standards governed by the Institute of Electrical and Electronics Engineers (IEEE) and the International Telecommunications Union (ITU). That CableLabs effort, called “OnePON,” aims to bridge some of the technical differences separating EPON and GPON as the standards bodies move ahead on new generations of those platforms.

The idea for OnePON was spawned after it became increasingly clear that EPON and GPON are naturally coming together through the common use of Ethernet transport, Curtis Knittle, director of optical technologies at CableLabs, said in an earlier interview (subscription required), noting that CableLabs is looking to facilitate that discussion among the standards bodies.