It's a disrupted period in the business of cable network technology, as the top two U.S. operators, Comcast and Charter Communications, make huge investments to shift to the DOCSIS 4.0 standard and Distributed Access Architecture (DAA) alignment. 

Some vendors are floundering. Casa Systems just declared bankruptcy, and CommScope is flirting with Chapter 11, as the two companies struggle to transition from selling hardware like Cable Modem Termination Systems (CMTS) to software that duplicates CMTS processes on servers. 

Other companies, like Canada's Vecima Networks, which is trying to buy Casa's broadband tech business, are trying to ramp up. 

Then there’s Harmonic, which has emerged as the early leader in the business of supplying virtualized, multi-gigabit cable network tech.

Since Tuesday, when the San Jose, California-based tech company reported exceeding revenue guidance in the first quarter, Harmonic's stock is up about 17% to nearly $11 a share, with early adoption of DOCSIS 4.0 and DAA by Comcast and Charter supplying nearly half of Harmonic's revenue. (Here's Harmonic's Q1 earnings release.)

Revenue was down for Harmonic in the first quarter to $122.1 million versus $157.6 million in the first quarter of 2023, with broadband segment sales declining to $78.9 million versus $100.4 in the year-ago quarter.

But in a lumpy business determined by when purchase orders for two huge clients come in, Harmonic expects sales to pick up significantly in the second half of 2024.

Harmonic, which reported $84.3 million in cash on hand, also expects improvement from its video segment, which was recently taken off the sales block. Video revenue came in at  $43.2 million, compared to $57.3 million in Q1 last year.

The company also expects to announce more new clients beyond Comcast and Charter.

“We continue to focus on further diversifying our business. This is showing positive results with larger portion of our business coming from others in the marketplace,” said Nimrod Ben-Natan, who just took over for the retiring Patrick Harshman as Harmonic's CEO.

"We are seeing an expanding pipeline of opportunities from these other operators, driven by urgency to modernize their architecture to enable greater reliability and higher upstream and downstream speeds," Ben-Natan added. 

Shares for Harmonic are down nearly 17% Tuesday, with the San Jose, Calif.-based technology company announcing a change at CEO, as well as a decision to pull its video business off the sales block following a review (yes, a strategic one).

Nimrod Ben-Natan, a 28-year product strategy veteran at the company, will step into the lead role, replacing Patrick Harshman, who is set to retire as president and CEO in June. Ben-Natan has led Harmonic's broadband business as senior VP and GM since 2012.

“Nimrod is ideally suited to lead Harmonic and our talented global team into its next chapter of innovation and growth,” Harshman said in a statement.

Added Raymond James analyst Simon Leopold: “While we see C-level transitions as a risk, we know Ben-Natan, and we expect a smooth transition.”

As for Harmonic's video unit, the company initiated a review back in October, with Harshman at the time telling equity analysts, “Due to changes in the marketplace and our customer strategies, synergies between our broadband and video businesses are now less compelling.”

Harmonic has a huge market lead in virtualized cable-network technology and is now making that an area of focus. Ben-Natan has overseen those initiatives. 

However, the company doesn't seem to have received a compelling offer for its video assets. 

"The board concluded its review and determined that current market conditions do not support its value creation objectives for the video business,” Harmonic said in its Tuesday statement. 

Canadian cable-tech vendor Vecima Networks is joining the vCMTS fray, competing in an emerging market that, early on, has been dominated by upstart Harmonic. 

Vecima this week introduced its Entra virtualized cable modem termination system, which is part of the cloud-native Entra Cloud software suite designed to transform expensive, power-hungry physical appliances on cable networks into applications running on garden-variety x86 servers. 

Entra is interoperable with Vecima’s widely deployed Remote PHY devices. 

Also read: Harmonic Reports 20% Broadband Segment Revenue Growth in Q4 as CableOS Customer Base Expands to 108

Harmonic has already signed deals with major tier-1 cable companies including Comcast and Charter Communications in the U.S., as well as Rogers Communications and Vodafone in Canada, to deploy its market-leading CableOS vCMTS platform. 

But with the vast majority of smaller cable operators (i.e. those not as big as Comcast and Charter) just ramping up on their upgrades to virtualized DOCSIS 4.0 configurations, the market is still young. Casa Systems and CommScope have also recently introduced vCMTS products. 

“Through over a decade of pioneering investment and development of Distributed Access Architecture, Vecima has built the comprehensive Entra portfolio with the singular purpose of supporting our operator partners as they transform their world-leading networks to the multigigabit era,” Vecima president and CEO Sumit Kumar said in a statement.

Driven by what is currently booming business with the top two U.S. MSOs, cable-tech vendor Harmonic on Tuesday reported a 20% year-over-year revenue surge in the fourth quarter for its broadband division, with revenue reaching $115.2 million. 

Sales of CableOS virtualized cable modem termination system (CMTS) software, as well as Remote-PHY technology, to Comcast accounted for 41% of this revenue, Harmonic said during its earnings call. Sales of similar products to Charter Communications added up to 15% of overall broadband sector revenue. 

You can read Harmonic's full Q4 earnings release here. 

Harmonic said its CableOS customer base has now expanded to 108, up 19% since the beginning of 2023, and the technology is now serving 26.3 customer cable modems worldwide. That's 15% of all cable modems globally. 

"We had several new customer wins during the fourth quarter, including a new top 10 North American operator for whom we made initial shipments," Harmonic CEO Patrick Harshman told equity analysts. "Our pipeline of new customers remained strong, mostly by the expanding breadth and depth of our competitive advantages. An important area of expanding competitive differentiation for Harmonic is DOCSIS 4.0. Our software core has seamlessly accommodated the new standard as have our Remote PHY edge device designs."

Overall Harmonic revenue in Q4 was down 1.7% to $167.1 million, with sales for the company's struggling video sector down 24% to to $51.9 million. 

Harmonic said back in October that it considering selling its video division. 

With its focus now on the cable industry's transition to next-generation virtualized DOCSIS 4.0 networks, San Jose, California-based tech vendor Harmonic has received what it says are several purchase offers for the video side of its business and it’s evaluating a possible sale. 

“Due to changes in the marketplace and our customer strategies, synergies between our broadband and video businesses are now less compelling,” Harmonic CEO Patrick Harshman told equity analysts Monday during the company's third-quarter earnings call. (Seeking Alpha has a full transcript of the event here.)

“Additionally, we have received interest from several external parties for our video business,” Harshman added. “These factors coupled with capital allocation planning led us to initiate the strategic review. Together with financial and legal advisers, we're assessing a range of alternatives for the video business with a clear goal of optimizing long-term value. Walter will provide additional color momentarily.” 

Also Read: SCTE 2023: Harmonic Adds New Capabilities to Its Disruptive Virtualized Network Platform ... Formerly Known as ‘CableOS’

No timeline for the review was revealed. 

For the third quarter, Harmonic reported revenue of $127.2 million, with sales down for both its video and broadband operations. 

Video represents about 40% of the company's overall business, with Q3 sales of $51.4 million representing a 19.5% year-over-year downtick. However, sales of the company’s cloud-based SaaS (software as a service) solutions for streaming companies were up 42% to $12.5 million. 

“With live sports still in the early innings of migrating to streaming platforms, we believe there are substantial runway for growth in our video SaaS,” Harshman said. 

Meanwhile, as Comcast and Charter Communications roll out major modernizations to their networks, the CEO added that Harmonic is “uniquely positioned for a sustained period of network investment.” 

The company reported a 17.5% decline in Q3 broadband segment revenue to $75.8 million, a decline Harshman said was expected with cable operators “bleeding down” accumulated inventories of DOCSIS 3.1 technology. 

But with 104 operators around the world deploying Harmonic's cOS solution for virtualized networks (formerly known as CableOS), Harshman said the company has “significant footprint expansion opportunity still in front of us.”

Harmonic shares are up more than 10% since Monday’s earnings report. 

DENVER — It's not hyperbolic to say that CableOS, the cloud-based virtualized software platform, now marketed as “cOS” by Silicon Valley company Harmonic, has revolutionized cable broadband, with both Comcast and Charter Communications making it an essential ingredient in the ongoing rollout of their DOCSIS 4.0 networks.

So it's noteworthy when Harmonic, which reached $625 million in annual sales last year and now has a $1.15 billion market capitalization, touts new cOS product features, as it did Tuesday as the cable industry’s biggest technology conference, SCTE Cable-Tec Expo, unfurled here in the Mile High City.

The erstwhile CableOS now offers unified support for the DOCSIS 4.0 specification, including full duplex (FDX) and extended spectrum DOCSIS (ESD), as well as 10G fiber. Additionally, new cOS platform capability called BoostD 3.1 supports the new class of cable modems currently coming to market.

Also read: Comcast Set To Light Up World’s First DOCSIS 4.0 ‘10G’ Deployment in Colorado Springs Next Week

The cOS platform has also added a feature to simplify device timing synchronization across networks deployed in distributed access architectures (DAA), allowing service providers to easily circumvent requirements related to utilization of specific timing protocols when necessary.

And in a move to further enhance its Profile Management Application (PMA) capabilities, Harmonic has integrated OpenVault's OV PMA software (previously marketed as “Nimble This”) with the cOS platform. This integration reduces PMA cycle durations and provides operators with an advanced, automated solution to ensure optimal network performance at scale.

“The cOS platform is unique in the marketplace today, making it even easier for operators to address the very real economic, environmental and technical requirements they face, while also ensuring greater agility and versatility to strategically extend high-speed services to more subscribers,” said Nimrod Ben-Natan, senior VP and GM of broadband business at Harmonic, in a statement.

In terms of specialty vendors serving the cable network-technology niche — i.e. excluding broad-based Silicon Valley giant Cisco Systems — Harmonic has risen quickly to become King of Cable Tech. 

San Jose, California-based Harmonic saw its Nasdaq price soar nearly 20% after it showcased for investors huge gains in its cable-network virtualization software in Q1.

Harmonic’s CableOS now controls around 10% of modems connected to cable companies’ DOCSIS 3.1 networks worldwide, about 18.4 million total. 

Also read: Charter Chooses Harmonic for Key Piece of Network Virtualization Upgrade

CableOS, which both Comcast and Charter Communications have licensed in the U.S. as they overhaul their networks to next-generation “10G” standards, replaces expensive cable modem termination system (CMTS) hardware in networks with software that can run on widely available servers. 

And as operators like Comcast and Charter upgrade their cable networks to the new DOCSIS 4.0 tech standard over the next three years, and with fiber-to-the-home network operators also deploying CableOS, Harmonic still has most of its runway still in front of it for its core network virtualization product. 

As of now, CableOS is deployed by 94 network operators worldwide, 22% of which have signed on in the last year. 

“We see ourselves still as in the very early, exciting days here,” Jeremy Rosenberg, Harmonic’s senior VP of business development, told equity analysts during Monday’s Q1 earnings conference call. (Hat tip to Seeking Alpha for the transcript.)

With CableOS’s rapid proliferation, Harmonic’s broadband segment revenue was up 23% in the first quarter to $100.4 million. Meanwhile, on the video side of the operation, advances by Harmonic's cloud-based VOS360 video software-as-a-service (SaaS) product pushed revenue up 13% in Q1 to $57.3 million. 

Total company revenue in the first quarter was up nearly 7% to $157.6 million, a record. 

For Harmonic, the rise has occurred, well, virtually overnight. 

On April 29 of last year, the company was trading at only $8.30 a share. Jump forward to Tuesday, and its share price has nearly doubled, its market cap now approaching $1.8 billion. 

That’s big, especially when you consider that CommScope, previously the cable industry’s largest specialty tech vendor, recently saw its market cap dip under $1 billion. 

At least in the early phase of the global cable industry's migration to virtualized network tech, San Jose, Calif.-based Harmonic is cleaning up. 

Charter Communications said that it will use Harmonic's virtualized cable network termination system (CMTS) software product, CableOS, and make the vendor its “strategic technology partner‘ as it embarks on a national upgrade of its networks to a multi-gigabit-cable transom built around distributed access architecture (DAA) and DOCSIS 4.0 standards. 

It's yet another major cable network virtualization win for Harmonic, which has already secured, according to one analyst's estimate, around $450 million worth of business from Comcast, with the No. 1 U.S. cable operator well on the way to establishing its own virtualized network upgrade. All told, Comcast accounted for nearly 40% of Harmonic’s revenue last year. 

“We could envision a similar sized opportunity for Harmonic at Charter,” wrote Raymond James analyst Simon Leopold. 

Harmonic has recently secured other big CableOS contracts with cable operators, including Canada’s Rogers Communications and the U.K.’s Vodafone, as well as tier 2 MSOs GCI and Buckeye Broadband in the U.S. 

Now, Charter, the No. 2 U.S. cable operator, is embarking on a three-year, multibillion-dollar upgrade journey, similar to Comcast, to what the cable industry calls “10G,” a marketing term to describe networks that deliver symmetrical speeds of 5 gigabits per second or more. 

Last week, another cable tech vendor, British Columbia-base Vecima Networks, announced that a "major tier 1 U.S. service provider has selected its Entra distributed access architecture (DAA) solution with ERM3 Remote PHY Devices to support its enterprise-wide fixed broadband network upgrade to 10G." 

That MSO is widely believed to be Charter. 

And like Comcast, Charter will also be ditching expensive proprietary hardware appliances in its network, notably CMTS, and replacing them with CableOS software that runs on standard computer servers. 

Harmonic share prices on the Nasdaq are up around 9% since the Charter deal was announced Monday. 

Charter’s Harmonic announcement comes just days after Casa Systems broke disappointing news to its investors that wouldn’t be receiving any virtualization tech business from Charter in fiscal 2023. But Casa said it did secure an unnamed major European MSO for its vCMTS product. 

And with other competitors, including CommScope, circling with their own vCMTS offerings, it's still somewhat early days in the global transition to the technology. 

In November, for example, research company Dell’Oro Group released results of a survey in which it asked 50 cable operators around the world if they plan to deploy vCMTS architecture in the coming 24 months. All of them answered yes. ■

The cable broadband technology business is a competitive sector right now, with incumbents like CommScope trying to hold off insurgents including Harmonic as cable operators upgrade and virtualize their networks for the ”10G“ future. 

Harmonic, which received a $175 million commitment from Comcast three years ago, with the No. 1 U.S. cable operator developing its future network virtualization framework around Harmonic’s Distributed Access Architecture (DAA) technology, believes it's on the cusp of yet another huge customer victory. 

“There’s a growing industry consensus that the particular variant of DAA we pioneered with Comcast and other early customers that its virtualized CMTS paired with remote PHY nodes is the most architecturally advantageous and market-proven solution and consequently, the best way to go,” Harmonic president and CEO Patrick Harshman said during the company’s third-quarter earnings call Monday. 

Light Reading reported last week that Charter Communications is now following the same DAA recipe of virtualized cable modem termination system (vCMTS) paired with remote PHY (R-PHY). 

Harshman was careful Monday to add that the “growing consensus” he mentioned several times ”isn’t complete.” 

Also last week, for instance, the biggest cable tech vendor, CommScope, revealed that the No. 5 U.S. cable operator, Mediacom Communications, had signed on to use the tech company's "MACPHY" DAA solution — a technology that also extends MAC (media access control) processing to the outer node-level edges of the network, in addition to CMTS functions. 

“We are prepared and capable of supporting MACPHY,” Harshman noted. 

Cable operators are replacing bulky, expensive proprietary network hardware with virtualized solutions such as Harmonic’s CableOS, which runs on commodity-level computer servers. It’s a step to a broader agenda referred to in cable industry marketing-speak as 10G — symmetrical downstream and upstream delivery of multi-gigabit speeds using the next generation of the industry's core-level DOCSIS technology, DOCSIS 4.0. 

And right now, the vendor market is heated. 

“It’s just becoming a much more competitive market for traditional cable operators,” Harshman said. “I think some of them are deciding that the time to evaluate different technology alternatives is over and the time to begin planning to get on with it is at hand.”

Of course, on Wall Street, the narrative of a tech company on the cusp of possibly controlling the future of American wireline broadband only carries so much clout. 

For the third quarter, Harmonic beat forecasts on revenue with a 23.3% year-over-year sales uptick to $155.7 million. Still, revenue from its video segment was down, and the company’s stock price had cratered more than 10% in late-morning trading Tuesday. ■

Harmonic said that it added six new customers in the fourth quarter for its cloud-based virtualized cable access solution, Cable OS, including an unnamed “Tier 1 North American cable operator.”

Since we already know that Comcast entered into a $175 million multi-year deal in 2019 to deploy CableOS, process of deductive reason suggests there aren’t too many  other Tier 1s on the continent. Notably, Raymond James analyst Simon Leopold wrote in a note to investors that revenue from Charter Communications could become “meaningful” for Harmonic in 2022.

Also read: Harmonic Touts Another CableOS Customer Win: Taiwan’s TWT Digital Communication

As for 2020, the Silicon Valley-based Harmonic finished with 44 cable operator customers for CableOS worldwide, up 91% from the fourth quarter of 2019. The software product is now reaching 2.6 million cable modems globally, up 149% year over year. 

Speaking to investors, Harmonic president and CEO Patrick Harshman conceded that the global cable access tech business is “still in the early stage of market transformation” to software virtualization.

“CableOS has so far been rolled out to only approximately 5% of the over 50 million cable modem served by our early customers,” he said. 

For the full 2020 frame, Harmonic reported total revenue of $378.8 million, down 6% year over year. But Q4 revenue was up 7.7% to $131.5 million.

And annual revenue from the company’s cable segment grew 56% on an adjusted basis after excluding the one-time upfront revenue benefit of $37.5 million from the $175 million CableOS software license agreement with Comcast.

Harmonic continues to rack up customer wins for its virtualized converged cable access platform solution, CableOS, announcing deployment with Taiwan’s TW Digital Communication.

The operator, which touts 500,000 homes passed, is using the San Jose, Calif.-based tech vendor’s CableOS software solution for delivering DOCSIS 3.1 services. For TWT, CableOS has been deployed in a centralized architecture with Harmonic’s Reef Remote-PHY shelves located in remote facilities. 

TWT has also purchased Harmonic’s Cable OS Central, a cloud management service that provides real-time, data-driven network systems monitoring. 

Harmonic announced during its third-quarter earnings call in October that CableOS is now controlling the 1s and 0s that go into 2.1 million cable modems from 38 different cable operators around the world, a 122% increase from a year prior. Of those 2.1 million modems, 1.4 are served by distributed access architecture (DAA) hardware and software products provided by Harmonic. 

"TWT Digital Communication has created a broadband network that will ensure superior service quality for customers today and in the future," said Gil Katz, senior VP of cable access business operations for Harmonic, in a statement. "As the most trusted virtualized cable access platform deployed worldwide, the CableOS Platform will help TWT Digital Communication adapt to fluctuations in broadband usage efficiently and economically.”

Added said Kady Hsiao, VP of TWT: ”Harmonic's CableOS Platform enables us to address spikes in network traffic with increased velocity, scalability and efficiency. Rolling out virtualized CMTS software, DOCSIS 3.1 and R-PHY was quick and simple with Harmonic's technology expertise. Incredibly, we deployed a world-class broadband infrastructure in a few months."

Harmonic, a key technology vendor to cable operators and video service providers, reported an 18% year-over-year slide in third quarter revenue, to $94.9 million.

However, after a particularly slow second quarter, when the pandemic shifted the priorities of its clients, the San Jose, Calif.-based company revealed rebounding sales across its important cable access and video product lines in Q3. 

Also read: Cable-Tec Expo: Harmonic Debuts New Gigabit-speed Upstream Solution

In fact, cable access sales were actually up 28% sequentially, with Harmonic’s CableOS software product, which virtualizes key functions that used to be handled by expensive hardware appliances in cable networks, continuing to show strong growth. 

CableOS is now controlling the 1s and 0s that go into 2.1 million cable modems from 38 different cable operators around the world, Harmonic said, a 122% increase from a year ago. Of those 2.1 million modems, 1.4 are served by distributed access architecture (DAA) hardware and software products provided by Harmonic. 

Harmonic is currently in trials to expand CableOS’s reach beyond the hybrid fiber-coaxial (HFC) networks operated by cable companies, into networks that deliver fiber straight to customers.

“This is an important strategic milestone, demonstrating the extensibility of our cloud-native CableOS platform beyond traditional cable applications and, specifically, the opportunity for Harmonic to address the large and growing fiber-to-the-home market," Patrick Harshman, CEO of Harmonic, told investment analysts during a conference call Tuesday. 

Harmonic’s video business, meanwhile, saw a 15% sequential bump in revenue to $54.6 million. The company ended the third quarter with more than 48,000 live streaming channels deployed, a 15% year-over-year increase. 

The bandwidth demands of the COVID-19 pandemic pushed cable networks to the edge, and forced forward-looking plans to transition networks into modern paradigms including network function virtualization (NFV) and distributed access architecture (DAA) to the back burner. 

But as a flurry of announcements from the recently wrapped virtual iteration of the SCTE•ISBE Cable-Tec Expo conference revealed, business for the hybrid fiber-coax (HFC) network technologies of the future is finally starting to heat up. 

CommScope, for instance, which had previously announced remote PHY deployments with Danish operator Stofa, touted new DAA customer wins with Germany’s Tele Columbus AG and Hungary’s Vidanet. 

At the Expo, midsized cable operator Mediacom Communications presented at the “10G” DAA network trial, featuring core CommScope tech. Even bigger, the vendor announced that Comcast is actually deploying its E6000r High Density Remote PHY Shelf in its ongoing DAA rollout. 

Comcast has deployed the virtual converged cable access platform (vCAAP) in select portions of its national network, leveraging Harmonic’s CableOS software virtualization solution. And earlier this month, the top U.S. cable company announced a Florida trial involving a live network built on full virtualization and DAA using Remote PHY, delivering symmetrical 1.25 gigabits-per-second service to a Florida residence.

Ripple+ Makes Waves

Harmonic also used the forum of Cable-Tec to tout ongoing involvement with Comcast’s Florida trial. The San Jose, California-based tech vendor said Comcast is the first operator to trial its Ripple+, a new component in CableOS that promises to deliver gigabit-level upstream speeds for operators.

“Upstream bandwidth demand continues to intensify as more people work from home and participate in distance learning,” said Nimrod Ben-Natan, senior VP and general manager of cable access business at Harmonic. “Leveraging our latest CableOS cloud-native and distributed network edge platforms, the cable industry now has the tools to meet growing bandwidth demand and offer market-leading symmetric gigabit services today, without costly cable-modem or set-top-box replacement.”

Harmonic said it added 11 new CableOS customer deployments in 2020, including DNA in Finland, Canada’s Access Communications and Seaside Communications and a leading operator in Asia. Including its multiyear, $175 million deal with Comcast to deploy CableOS in the United States, Harmonic now counts 38 customers for the virtualized solution. 

Going into Cable-Tec Expo in 2019, NFV and DAA business was also slow, with operators waiting to get clarity on their future network needs and holding off for the resolution of conflicting product development paths, such as Full Duplex DOCSIS versus low latency DOCSIS. 

The publishing by industry consortium CableLabs of the broad, umbrella-like DOCSIS 4.0 standard harmonized the road leading forward for HFC networks. But the COVID-19 pandemic, which diverted CTOs’ thoughts to the immediate, triage-like need for additional capacity within existing DOCSIS 3.0 and DOCSIS 3.1 networks, once again sidetracked the DAA discussion.

Research company Dell’Oro Group, which tracks the cable access technology business, said vendor revenue was down 8% to $219 million in the second quarter. But that trend line could soon change. 

Steady Virtual Shift

“We continue to see a steady shift among major cable operators towards virtual CCAP and DAA deployments,” Jeff Heynen, senior research director at Dell’Oro Group, said. “The combination of virtualization and DAA give operators the ability to scale more easily and have far more flexibility in how they design their networks and deliver services in the future.”

It’s hard to tell if the anecdotal appearance of increased DAA ordering will translate into Q3 and Q4 cable access equipment revenue growth. But Expo activity indicated the technology is clearly evolving fast. Vendors, including CommScope, are quickly stepping up the promotion of remote MACPHY products. 

Meanwhile, British Columbia-based tech company Vecima Networks and U.K.-based Technetix announced a partnership they say will create a more flexible, easy path for operators to deploy DAA. Essentially, Vecima remote PHY devices can now connect to Technetix’s DBx modules, which can act as either amplifiers or nodes. 

“Regional variations on form factor and technical features require a very flexible approach to avoid forklift upgrades,” Vecima CEO Sumit Kumar said. “Asking service providers to replace all of their non-DAA nodes with new DAA units isn’t always feasible. Open, mixed-technology networks are, and should be, the expected network architecture to promote the adoption of technology breakthroughs like ours, and make DAA a reality.”

Harmonic on Monday announced a new component to its CableOS virtualized cable access network software solution that promises to deliver gigabit-level upstream speeds for operators. 

The San Jose, Calif.-based technology vendor said Comcast is the first operator to trial Ripple+. Comcast announced last week that it delivered symmetrical 1.25 gigabit-per-second speeds to a local-area Florida home using Network Function Virtualization (NFV) and Distributed Access Architecture (DAA) with Remote PHY over DOCSIS-powered hybrid fiber-coaxial network.

Also read: Comcast Touts Trial Milestone: Symmetrical 1.25 Gbps Speeds Using DAA and NFV

“Upstream bandwidth demand continues to intensify as more people work from home and participate in distance learning," said Nimrod Ben-Natan, senior VP and general manager of cable access business at Harmonic. "Leveraging our latest CableOS cloud-native and distributed network edge platforms, the cable industry now has the tools to meet growing bandwidth demand and offer market-leading symmetric gigabit services today, without costly cable modem or set-top box replacement."

In the early weeks of the pandemic, people working, taking classes and using telehealth applications from home caused downstream traffic on cable networks to spike more than 20% and upstream use to rise more than 35%, according to data cited at today's opening of the Cable-Tec Expo.

Harmonic’s CableOS Ripple+ network edge platform delivers upstream and downstream bandwidth up to full spectrum to existing DOCSIS 3.1 modems and gateways.

Ripple+ enables operators to implement any hybrid fiber-coax spectrum split and note configuration, including 2x4 segmentation, spanning traditional node placement to fiber deep, with unified network edge hardware 

Harmonic also touts the ability of operators to evolve from traditional HFC architectures to fiber-deep to fiber-to-the-home (FTTH) PON deployments through simple module reconfigurations of the unified edge platform. 

"We're excited to continue our work to evolve 10G technologies as we begin our efforts to extend those benefits to customers, and we value the important work Harmonic has done to support those efforts," added Elad Nafshi, senior VP of next-generation access networks at Comcast Cable, in a statement. 

Network and video technology vendor Harmonic has seen its previously moribund stock spike 25% since after-hours trading Monday, with the company reporting better-than-expected financials for the second quarter.

The San Jose, Calif.-based company reported Q2 revenue of $74 million, down 12.8% year over year, but up almost $4 million over equity analyst expectations. 

The pandemic hurt portions of Harmonic’s business during the quarter, such as its video segment, which was down 33.7% to $47.5 million in revenue. 

Also read: Harmonic Touts Vodafone CableOS Deployment in Germany

But virtualization software for HFC and FTTP networks continues to be a growth sector for Harmonic, which recently announced the addition of tier 1 European clients, Vodafone and Millicom. 

With Harmonic’s CableOS product leading the way, the company’s cable access segment produced a 100% year-over-year revenue spike to $26.5 million. CableOS is now deployed with 29 cable operators worldwide, up 81% over Q2 2019. Cable modems served by CableOS reached 1.7 million in the second quarter up 116% year over year and 27% sequentially. 

“Looking ahead, we expect this momentum to continue,” Patrick Harshman, president and CEO of Harmonic, told analysts during Monday’s call. 

“While the COVID situation somewhat slowed our progress onboarding additional new customers during the quarter, we nonetheless added two new cable operators actively deploying CableOS and we secured several additional new design wins with deployment scheduled to commence in the second half of the year. Among these was our first significant CableOS purchase order in Asia Pacific,” Harshman added. 

Harmonic is also predicting video-related revenues to increase to between $87 million - $97 million in Q4 2020.

Much of that optimism stems from a new business opportunity related to 5G deployment, the FCC mandated reclamation of C-band satellite spectrum for 5G. 

Also read: SES and Harmonic Team on C-Band Transition

In July, Harmonic and SES announced a new partnership that will have the two sides work together on the SES plan filed with the FCC for the C-band transition.

The C-band transition will see current C-band spectrum operators move to the upper portion of the band, opening up 280 MHz for 5G development. Harmonic and SES will collaborate on supporting the required network transformations using Harmonic’s software solutions for satellite video delivery.

This includes deploying Harmonic’s XOS advanced media processing in the headend and XOC Edge transcoding solutions in remote sites for primary distribution of video feeds.

“We estimate this to be a new several hundred million dollar global opportunity that will play out over the next couple of years,” Harshman said. He added that Harmonic expects the SES partnership to generate revenue “in the fourth quarter of this year, contributing materially to the strong video revenue rebound in our second half guidance.”

Network and video technology vendor Harmonic has seen its previously moribund stock spike 25% since after-hours trading Monday, with the company reporting better-than-expected financials for the second quarter.

The San Jose, Calif.-based company reported Q2 revenue of $74 million, down 12.8% year over year, but up almost $4 million over equity analyst expectations.

The pandemic hurt portions of Harmonic’s business during the quarter, such as its video segment, which was down 33.7% to $47.5 million in revenue.

Also read: Harmonic Touts Vodafone CableOS Deployment in Germany

But virtualization software for HFC and FTTP networks continues to be a growth sector for Harmonic, which recently announced the addition of tier 1 European clients, Vodafone and Millicom.

With Harmonic’s CableOS product leading the way, the company’s cable access segment produced a 100% year-over-year revenue spike to $26.5 million. CableOS is now deployed with 29 cable operators worldwide, up 81% over Q2 2019. Cable modems served by CableOS reached 1.7 million in the second quarter up 116% year over year and 27% sequentially.

“Looking ahead, we expect this momentum to continue,” Patrick Harshman, president and CEO of Harmonic, told analysts during Monday’s call.

“While the COVID situation somewhat slowed our progress onboarding additional new customers during the quarter, we nonetheless added two new cable operators actively deploying CableOS and we secured several additional new design wins with deployment scheduled to commence in the second half of the year. Among these was our first significant CableOS purchase order in Asia Pacific,” Harshman added.

Harmonic is also predicting video-related revenues to increase to between $87 million - $97 million in Q4 2020.

Much of that optimism stems from a new business opportunity related to 5G deployment, the FCC mandated reclamation of C0band satellite spectrum for 5G.

Also read: SES and Harmonic Team on C-Band Transition

In July, Harmonic and SES announced a new partnership that will have the two sides work together on the SES plan filed with the FCC for the C-band transition.

The C-band transition will see current C-band spectrum operators move to the upper portion of the band, opening up 280 MHz for 5G development. Harmonic and SES will collaborate on supporting the required network transformations using Harmonic’s software solutions for satellite video delivery.

This includes deploying Harmonic’s XOS advanced media processing in the headend and XOC Edge transcoding solutions in remote sites for primary distribution of video feeds.

“We estimate this to be a new several hundred million dollar global opportunity that will play out over the next couple of years,” Harshman said. He added that Harmonic expects the SES partnership to generate revenue “in the fourth quarter of this year, contributing materially to the strong video revenue rebound in our second half guidance.”

Harmonic has announced another tier 1 customer deployment of its CableOS virtualized cable access network technology, with Vodafone currently using the solution to festoon its footprint of 25 million passings in Germany with DOCSIS 3.1-powered gigabit service.

Vodafone is foundationing its gigabit-speed deployment on a DOCSIS 3.1 network featuring CableOS virtual cable modem termination system software, remote PHY devices and CableOS Central cloud-connected management service.

Vodafone is San Jose, Calif.-based Harmonic’s second largest customer, supplying 12% of the vendor’s revenue, according to Harmonic's earnings disclosures. Comcast, which signed a $175 million enterprise software agreement for CableOS a year ago, is Harmonic’s biggest client at 17% of revenue.

"We chose Harmonic's CableOS solution to power our GigaCable Max service for its software-based architecture, scalability and efficiency, enabling us to deploy a world-class gigabit-capable network while solving critical space, power and cost challenges,” said Guido Weissbrich, director of network planning and network deployment at Vodafone Germany, in a statement.

"Vodafone Germany is breaking down broadband speed barriers and seeing great success with its Gigabit service," added Nimrod Ben-Natan, senior VP and general manager of cable access business at Harmonic. "We believe a key success factor is Vodafone's compelling strategic vision for differentiated gigabit networks that can reliably scale to meet growing consumption levels. Seeing our CableOS solution adopted by the largest cable operators in Europe and the U.S. reinforces Harmonic's conviction that CableOS is the cable broadband platform of the future."

Harmonic and SES have announced a new partnership that will have the two sides work together on the SES plan filed with the FCC for the C-band transition.

The C-band transition will see current C-band spectrum operators move to the upper portion of the band, opening up 280 MHz for 5G development. Harmonic and SES will collaborate on supporting the required network transformations using Harmonic’s software solutions for satellite video delivery.

This includes deploying Harmonic’s XOS advanced media processing in the headend and XOC Edge transcoding solutions in remote sites for primary distribution of video feeds.

“We are proud to support SES, its customers and the communications industry in enabling the transformation of C-band spectrum for 5G,” said Jeremy Rosenberg, senior vice president, business development, at Harmonic. “Our software-based solutions set the standard for flexibility by enabling these traditional satellite delivery networks to deliver solutions with industry-leading bandwidth efficiency.”

This story originally appeared in Next TV sibling publication TV Technology. 

Adjusting its product line to a pandemic lockdown environment in which operators are looking to quickly address peak upstream capacity expansion with moves such as node splits, Harmonic has introduced its new CableOS Reef.

The San Jose, Calif.-based technology vendor calls the Reef a dense Remote PHY Shelf (RPS) — a product that converges a cable operator's services, including internet protocol-based data, legacy video and out-of-band signals, into a centralized indoor platform. The operator’s services are converged over IP and transmitted from a single RF port.

Notably, the Reef allows operators to add capacity with node splits without incurring all the extra labor, wiring, plant-size expansion and power usage associated with splitters and combiners, Asaf Matatyaou, VP of solutions and product management for Harmonic’s cable access business, said.

Housing as many as nine modular line cards in two standard rack units, each with two independent Remote-PHY devices (RPDs) for a total of 18 RPDs, CableOS Reef delivers significantly increased density relative to existing solutions and lower power consumption per service group.

“It’s far more cost-effective from a power, space, wireline perspective,” Matatyaou said. “Traditionally, node segmentation requires combining and splitting, and
that sits on racks and racks of receivers and transmitters.”

Reef can be deployed with networks that run Harmonic’s CableOS virtualized cable modem termination system (CMTS) software. But it can also be used with non-CableOS networks that are built around remote PHY architecture.

Harmonic said during its first-quarter earnings report in late April that increased upstream usage amid pandemic-related shelter-in-place market dynamics has shifted operator priorities.

There has been a 35% increase in upstream traffic on U.S. cable networks, according
to NCTA: The Internet & Television
Association.

Harmonic is on the leading edge as operators migrate to virtualization and Distributed Access Architecture (DAA). Commercial deployments of CableOS reached 27 in the first quarter, up 17% over Q4. Modems served globally by CableOS increased sequentially by 30% to 1.3 million.

But the increased upstream peaks associated with rampant Zoom video conferencing has shifted client priorities toward immediate capacity expansion solutions.

And CableOS Reef “is going into trials as we speak,” Matatyaou said. 

Adjusting its product line to a pandemic lockdown environment in which operators are looking to quickly address peak upstream capacity expansion with moves such as node splits, Harmonic has introduced its new CableOS Reef.

The San Jose, Calif.-based technology vendor calls the Reef a dense Remote PHY Shelf (RPS)—a product that converges a cable operators services, including IP-based data, legacy video and out-of-band signals, into a centralized indoor platform. The operator’s services are converged over IP and transmitted from a single RF port.

Notably, according to Asaf Matatyaou, VP of solutions and product management for Harmonic’s cable access business, the Reef allows operators to add capacity with node splits without incurring all the extra labor, wiring, plant size expansion and power usage typically associated with splitting and combining.

Housing up to nine modular line cards in two standard rack units, each with two independent Remote-PHY devices (RPDs) for a total of 18 RPDs, CableOS Reef delivers significantly increased density relative to existing solutions and lower power consumption per service group.

“It’s far more cost effective from a power, space and wiring perspective,” Matatyaou told MCN. “Traditionally, node segmentation requires combining and splitting, and that sits on racks and racks of receivers and transmitters.”

Also read: Harmonic’s Q1 Revenue Slows 2.1% on Sluggish Video Sales, Decelerating CableOS Deployments

Reef can be deployed with networks that run Harmonic’s CableOS virtualized Cable Modem Termination System (CMTS) software. But it can also be used with non-CableOS networks that are built around remote PHY architecture.

Harmonic said during its first-quarter earnings report in late-April that increased upstream usage amid pandemic-related sheltering-in-place market dynamics is shifting operator priorities.

According to the NCTA, since March 1, there has been a 35% increase in upstream traffic on U.S. cable networks.

Harmonic is on the leading edge as operators migrate to virtualization and Distributed Access Architecture (DAA). Commercial deployments of CableOS reached 27 in the first quarter, up 17% over Q4. Modems served globally by CableOS increased sequentially by 30% to 1.3 million.

But the increased upstream peaks associated with rampant Zoom video conferencing has shifted client priorities toward immediate capacity expansion solutions.

And CableOS Reef, Matatyaou said, “Is going into trials as we speak.”

Harmonic said the steady march of its virtualized cable access network platform CableOS was slowed in the first quarter due to shifting operator priorities amid the ongoing pandemic.

Commercial deployments of CableOS reached 27 in the first quarter, up 17% over Q4. Modems served globally by CableOS increased sequentially by 30% to 1.3 million.

“These are good results for a quarter that is typically seasonally slow and were both shipments and deployments were somewhat impacted by COVID-19; specifically in March we saw several ongoing CableOS deployments initially paused, restarts and then proceed at a somewhat slower pace following the implementation of appropriate safety precautions,” said Harmonic CEO Patrick Harshman, speaking to investment analysts during Monday’s earnings call.

Revenue for Harmonic’s cable access segment was up 85% year over year to $24 million.

Business wasn’t as good in Harmonic’s video segment, which broadly serves traditional broadcasters, pay TV players, media companies and streaming customers. The vendor’s video revenue was down 19% in the quarter to $54.4 million, as video appliances and integration sales fell well below our original expectations.

Streaming was a bright spot.

“Harmonic is uniquely positioned to lead the premium video streaming SaaS market, and we're leaning into the opportunity more aggressively than ever. At quarter end, we had over 7,300 cloud based linear channels deployed globally, up 56% sequentially,” Harshman said.

Overall, Harmonic’s Q1 revenue declined 2.1% year over year to $78.4 million. 

Harmonic said the steady march of its virtualized cable access network platform CableOS was slowed in the first quarter due to shifting operator priorities amid the ongoing pandemic. 

Commercial deployments of CableOS reached 27 in the first quarter, up 17% over Q4. Modems served globally by CableOS increased sequentially by 30% to 1.3 million.

“These are good results for a quarter that is typically seasonally slow and were both shipments and deployments were somewhat impacted by COVID-19; specifically in March we saw several ongoing CableOS deployments initially paused, restarts and then proceed at a somewhat slower pace following the implementation of appropriate safety precautions,” said Harmonic CEO Patrick Harshman, speaking to investment analysts during Monday’s earnings call. 

Revenue for Harmonic’s cable access segment was up 85% year over year to $24 million.

Business wasn’t as good in Harmonic’s video segment, which broadly serves traditional broadcasters, pay TV players, media companies and streaming customers. The vendor’s video revenue was down 19% in the quarter to $54.4 million, as video appliances and integration sales fell well below our original expectations.

Streaming was a bright spot. 

“Harmonic is uniquely positioned to lead the premium video streaming SaaS market, and we're leaning into the opportunity more aggressively than ever. At quarter end, we had over 7,300 cloud based linear channels deployed globally, up 56% sequentially,” Harshman said. 

Overall, Harmonic’s Q1 revenue declined 2.1% year over year to $78.4 million. 

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 says its VOS360 live streaming platform is providing the backbone to Vidgo’s $40 a month pre-paid virtual pay TV service. 

The platform delivers a range of tools in a cloud native environment, including live and file transcoding, packaging and origin, dynamic and real-time CDN selection, targeted advertising, time-shifted viewing and network DVR. The San Jose-base tech company says its DevOps team is providing the vMVPD start-up with 24-hour support and monitoring.

"New entrants to the OTT environment don't necessarily have massive budgets, and they need to launch services fast," said Eric Armstrong, VP of North American media sales for Harmonic, in a statement. "With our VOS360 Live Streaming Platform, Vidgo can cost-effectively scale its new OTT service on the fly and stream content ranging from on-demand to premium live sports events to millions of subscribers with exceptional quality, scalability and reliability, differentiating itself in this highly competitive arena."

Added Video CEO Shane Cannon: We chose Harmonic's VOS360 Live Streaming Platform because it significantly reduces our operational costs and complexity, making it simple to stream live events with high reliability and exceptional quality of experience. Harmonic provided outstanding support and expertise throughout the project, taking the guesswork out of live streaming.”

Harmonic said its virtualized cable access solution, CableOS, has been deployed by Canadian operator Westman Communications.

The operator has deployed CableOS in a distributed access architecture (DAA), using Harmonic’s Remote PHY, serving 35 communities in Manitoba with DOCSIS 3.1-powered internet service.

As the cable broadband access business shifts to virtualization, Harmonic has a head start. As of the end of the third quarter, Harmonic had deployed CableOS with 19 cable operators globally, serving 935,000 customer modems, up 20% from the end of Q2.

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

“We want to deliver enhanced next-generation services to our customers over the best network in the most cost-effective way possible," said Graham Johnston, chief technology officer at Westman Communications, in a statement. "Harmonic's flexible software-based CMTS with simplified licensing and R-PHY support, along with their extensive DAA deployment expertise, enabled us to launch the CableOS solution in under two months, a considerable feat for such a significant technology transformation.”

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."

Harmonic said its long-gestating virtualized cable access business has finally arrived.

And the evidence was certainly there in the fourth quarter, with revenue spiking 14% year over year to $115.7 million. Specifically, the San Jose, California-based vendor’s cable access business generated $55.7 million in the quarter, $42.9 of which, the company said, was gross profit, as Harmonic shifts cable access away from large proprietary hardware devices to software virtualization.

“Our virtualized CableOS solution was the primary driver of this growth, demonstrating the operating leverage achievable as we scale our software based solutions,” Harmonic CEO Patrick Harshman told investment analysts Monday evening.

Related: Harmonic Adds $55 Million CableOS Deal with Unnamed Euro Operator

Comcast, with which Harmonic has a warrants agreement, controls the foundation of CableOS sales at this point. The cable operator signed a four-year, $175 million agreement to use CableOS as it converts to a virtualized network scheme involving Distributed Access Architecture.

“When we say we've signed $175 million software license agreement, you should understand that such a deal represents approximately the same gross profit that's $400 million of remote PHY sales,” Harshman said.

Beyond the solid margins, Harshman said the Comcast deal will generate more than just the base contract agreement.

Related: Harmonic Announces FTTH Capabilities for CableOS

“So to be clear, $175 million is the minimum cash we’ll see through this deal,” he said. “Additional sales of associated remote PHY equipment or any other technology or services to Comcast will be incremental to our top and bottom lines. And finally, this unique software license covers Comcast direct service footprint.

Beyond Comcast, the CEO said “we’re making good progress expanding our customer base.” As of the end of the third quarter, Harmonic had deployed CableOS with 19 cable operators globally, serving 935,000 customer modems, up 20% from the end of Q2.

And not included in the Q3 numbers are deployments with two international Tier 1 operators.

“With both customers, the progress is good and our confidence is high,” Harshman said. “With one of these customers, we expect deployment and revenue to begin to ramp in the fourth quarter. With the other, deployments and revenue is expected to begin in the first half of next year.”

According to Harmonic, CableOS renders operators 70% power savings, a 20-1 physical space reduction and a drop in the meantime to detect network problems from 30 minutes to 15 seconds.

All of this cited, the company also noted a recent Dell’Oro Group forecast predicted 50% compound growth to around $1.2 billion for the virtualized cable access market by 2023.

“With this market growth chart as a backdrop, let me be clear. This is a market category that Harmonic largely invented and that we're now uniquely positioned to lead,” Harshman said. 

Harmonic announced a version of its CableOS virtualized software solution that includes containerized DOCSIS CMTS and PON applications, enabling converged delivery of broadband-over-cable and fiber-to-the-home (FTTH) services.

The San Jose, California-based technology company made the announcement entering the Cable-Tec Expo event in New Orleans.

The debut of the new version comes as Harmonic’s broadband service provider clients are weighing myriad technology options, including virtualized Converged Cable Access Platform (CCAP) and Distributed Access Architecture (DAA), as well as fiber-deep strategies that enable standards like Full Duplex DOCSIS.

In fact, as some operators look at options like fiber-deep, the prospect of taking fiber all the way to the residence comes to mind.

“A lot of the operators out there are going fiber-deep. The next transition is go FTTH. What we’re trying to say is, here’s a platform for you to bet on all those infrastructure plans,” said Asaf Matatyaou, VP of solutions and product management for Harmonic’s cable edge business.

CableOS uses a cloud-native platform to support converged DOCSIS CMTS and FTTH Passive Optional Network (PON) Optical Line Termination (OLT) applications, and additional containerized access applications such as DOCSIS 4.0 in the future.

The new version includes both 10G EPON and 10G XGS-PON, as is a remote CableOS OLT module that has the same footprint as Harmonic’s Pebble Remote PHY device. Through a single CableOS instance running in a centralized data center, operators can simultaneously deliver Remote PHY DOCSIS and Remote OLT FTTH services, dramatically simplifying the operational complexity of managing and scaling multiple broadband access applications.

Harmonic last week announced that South Carolina operator Comporium will use CableOS in a new DAA configuration. Over the summer, the tech vendor announced a multi-year, $175 million deal with Comcast for the solution, as well as a separate $55 million arrangement with a European client widely believed to be Liberty Global. 

Harmonic is touting new North American business for its CableOS software product, announcing that South Carolina’s Comporium will use the virtualized CCAP to delivery DOCSIS 3.1 services via Distributed Access Architecture (DAA).

Comporium is also using Harmonic's ElectraXT high-density transcoder for IPTV service delivery.

CableOS is a software-based Cable Modem Termination System (CMTS) and Remote PHY system. Entering the cable industry’s big annual technology conference in New Orleans next week, CableTec Expo, Harmonic and its virtualized product are threatening to disrupt the hegemony enjoyed in cable access by CommScope, Cisco and Casa Systems.

Over the summer, Comcast committed $175 million to Harmonic to also deploy CableOS in a DAA scheme.

Related: Comcast Commits $175M to Harmonic’s CableOS

"Improving our subscribers' quality of experience is a key initiative, and traditional CMTS solutions fall short of providing the flexibility, scalability and efficiency we need to cost-effectively launch multi-gigabit DOCSIS 3.1 broadband services," said Mike Deller, VP of engineering and planning at Comporium. "Harmonic's CableOS solution saves us significant space, power and legacy hardware costs, enabling an easy migration from older CMTS platforms to new virtualized DOCSIS 3.1 networks that will give us a competitive edge in the market."

Added Yaniv Ben-Soussan, VP of sales, North America cable at Harmonic: ”Speed is a major determining factor in consumer satisfaction with broadband services today, and that's why Comporium is joining a host of other cable operators in North America and globally to deploy Gigabit internet services powered by our CableOS solution. The CableOS solution enables continuous improvements in upstream and downstream bandwidth capacity plus all of the flexibility and scalability that comes from having a virtualized cable access solution, positioning Comporium for tremendous business growth."

Bruce McClelland is out at CommScope, with the company eliminating his COO position.

The former Arris CEO was named chief operating officer in February, as CommScope structured its management team following its $7.4 billion acquisition of Arris.

But McClelland has been quickly spun out, his responsibilities dispersed to CommScope CEO Eddie Edwards and other members of the management team, as each of the acquired Arris business sectors continued to struggle in the second quarter. Arris on Thursday evening simultaneously announced McClelland’s departure and its second quarter earnings.

“This decision to flatten our leadership structure expands accountability, which we've been striving to do in virtually every part of our company as part of our transformation,” Edwards told investment analysts. “I am deeply committed to CommScope's continued growth and success and with the board's full support I'm taking a more active day-to-day operational role in leading our company through these challenging times.”

Challenging indeed.

The Arris Network and Cloud division saw sales slide 37% year over year to $344 million. Large cable operator clients are carefully plotting out revolutionary changes to their broadband networks, pushing out functionality closer to the node in the move toward Distributed Access Architecture, while converting the work of proprietary appliances to software virtualization running on commodity-level servers.

Recently, Arris, Cisco and Casa Systems—the leaders of the traditional cable access technology busienss—have sat on the side of the road, as a new insurgent in the business, Harmonic, has carved out huge deals with Comcast and Liberty Global for its virtualized Converged Cable Access Platform product, CableOS.

Meanwhile, in the customer premises equipment (CPE) sector brought over by Arris, sales were down 9% to $890 million, with Donald Trump’s trade war with China forcing CommScope to make tough manufacturing moves in Asia. Arris manufacturing is in the process of being moved out of China and into the Philippines, Vietnam and Indonesia.

Sales were also off 10% for Ruckus Networks, which specializes in such things as Wi-Fi, IoT and CBRS deployments. The unit generated $151 million in the second quarter.

Just four months after CommScope closed on Arris, some analysts questioned the move to fire the head coach.

"The Arris acquisition appears worse than we previously thought, with the [virtual CCAP] transition as the unexpected headwind," wrote Raymond James analyst Simon Leopold in a note to investors. "We can appreciate the possible frustration CommScope management might feel, but we do not understand how this action helps.”

For their part, CommScope managers stuck towhead had been McClelland’s key talking points in recent months. Notably, he had position Arris as having a key advantage over insurgents like Harmonic, having written code for cable access networks dating back decades.

“We believe that the fact that we have been writing this code for the past 20 years supporting it, featuring it and are now importing it to these two ends gives us a unique advantage in having something that is very hardened and something that is very featurish,” said Morgan Kurk, chief technology officer.

Added Edwards: “Despite the challenging year, we remain very excited about the combined CommScope and Arris portfolio. We are now just four months into the ownership of the Arris business.

“As we continue to integrate our teams and processes, our enthusiasm for what we can achieve together grows stronger. Together we have a more compelling and diversified global platform to promote service providers and enterprises. To that end, I want to highlight what we believe were some of the exciting growth opportunities ahead for CommScope.”

The expected disruption from the emergence of virtualized cable-access technology, along with migration by operators to Distributed Access Architecture, has finally arrived.

Last week, Harmonic said a $50 million deal with an unnamed “European MSO” client for its CableOS software product, which virtualizes the Converged Cable Access Platform (CCAP), is on track to begin volume deployments in the third quarter.

And in July, a “different international operator” signed a five-year contract with Harmonic to supply DAA gear worth $55 million, the the San Jose, California-based technology company said.

This followed Harmonic’s announcement earlier in July that its long-anticipated big CableOS deal with Comcast had finally come through, to the tune of $175 million.

CableOS — which replaces large proprietary appliances, including the cable-modem termination system (CMTS), with off-the-shelf x86 servers — is now commercially deployed by 16 cable operators, Harmonic said, serving 780,000 connected cable modems worldwide.

“It is increasingly clear that the cable access market is beginning to make a major pivot towards these virtualized CMTS distributed access architectures,” Harmonic CEO Patrick Harshman said. “And let me be clear, Harmonic is determined to take advantage of this opportunity not only by leading technologically, but to be the global market-share leader.”

Arris, Cisco Systems and Casa Systems have been the market-share leaders in a cable access business valued by Dell’Oro Group at $1.5 billion in 2018. But the research company, pre-eminent at gauging the cable-access market, has predicted for some time that Harmonic’s bold, prescient move into virtualization and DAA would put a dent in the current market dynamics.

Casa Systems was the first to feel the impact. The company’s stock stabilized, but not before enduring a roller-coaster drop of around 15% on the NASDAQ, initiated when Raymond James analyst Simon Leopold downgraded Casa stock to “underperform.”

James speculated that one of the international operators rendering big recent orders from Harmonic was Liberty Global, a major Casa client.

Happily for Casa, its stock shot up again later in the week, following its own second quarter earnings call. Revenue of $52.1 million was off from the $68.7 million reported for Q2 2018, but it represented a 47% uptick over the moribund first quarter of this year.

Importantly, Casa chairman and CEO Jerry Guo said his company is making progress with visualization and DAA.

“Our cable trials increased in the quarter by 53%, the vast majority of which was driven by existing and new consumer interest in our DAA, virtual CCAP core and new [broadband network module] products,” Guo said.

Casa Systems wild ride on the Nasdaq took a sharp upward turn after the technology company reported a sales rebound in the second quarter.

The telecom tech company reported Q2 revenue of $52.1 million, meeting guidance. The performance was off significantly from the year-ago revenue haul of $68.7 million, but represented a strong 47% increase over Casa’s moribund first-quarter sales. Casa and other cable access tech vendors reported stagnant orders in Q1, as operators stood frozen in place, mulling migration to distributed access architecture (DAA) and converged cable access platform (CCAP) virtualization. 

But orders are now coming in.

Casa’s stock price increased more than 15% Thursday after falling around the same percentage earlier in the week. That was after Raymond James analyst Simon Leopold downgraded the company, suspecting one of the large European companies now buying millions of dollars worth of DAA and virtualization gear and software from competitor Harmonic is actually major Casa client Liberty Global.

Casa CEO Jerry Guo told investors that he expects to see a continued sales uptick, “driven by capacity-related purchases by our cable customers and revenue recognition from wireless backlog.”

Guo said Casa is also establishing its own momentum with virtualization and DAA tech sales.

“In fact, our cable trials increased in the quarter by 53%, the vast majority of which was driven by existing and new consumer interest in our DAA, virtual CCAP core and new BDM products,” said Guo.

Comcast has committed to spending $175 million over the next four years to license Harmonic’s CableOS virtualized CCAP software product.

The disclosure was made in an 8-K filing to the Securities Exchange Commission Tuesday, and was first reported on by Light Reading. According to Dell’Oro, the cable access market was worth around $1.5 billion in 2018 and is growing at a “single-digit” clip. Arris and Cisco have long controlled the lion’s share of that revenue. But as the cable industry moves toward virtualized Converged Cable Access Platform (CCAP), and technology previously rooted in large proprietary appliances gets transformed into software that runs on off-the-shelf x86 servers, the vendor community serving this niche seems to be competing on much more equalized footing.

“Clear progress here for Harmonic,” tweeted Dell’Oro Group analyst Jeff Heynen. “No matter how you slice it, that’s $175 million from Comcast over the next four years that isn’t going to Arris and Cisco.”

Harmonic said in its filing that Comcast will pay it an initial software licensing fee of $50 million this year. 

Notably, Comcast signed a warrant agreement with Harmonic in 2016 that allows it to buy 7.8 million shares of the technology company at $4.76 a share.

Related: Harmonic Faces Lull in Bid to Be ‘No. 1’

That warrant deal, coupled with the fact that Comcast had been deep into trials of CableOS, led many to believe that the cable operator would move quickly on the Harmonic software product.

After Harmonic reported an 11.1% first-quarter revenue decline, however, CEO Patrick Harshman tried to reassure investment analysts that it was only a matter of time before Comcast's big CableOS order came through.

CableOS and similar software products are able to work in traditional, centralized network designs, as well as new-fangled Distributed Access Architecture (DAA). Mulling the latter simultaneously was perhaps too much innovation at one time in order for Comcast to move too quickly.

“There were a couple of major architectural change decisions made by our lead customers,” the Harshman said, explaining. “And going into the beginning of the year, frankly, there was a little bit of uncertainty about the exact timeframe 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.”

Harmonic is introducing a slate of new product features and functionality for its CableOS virtualized CCAP platform ahead of ANGA COM in Cologne, Germany this week.

Reps for the San Jose, Calif.-based technology vendor didn’t offer MCN a briefing before hopping on the plane to Germany. But they did send out a press release touting a new “low latency mode,” which they claim enables “significantly enhanced video game quality of experience.”

They also tub-thumped support for Intel’s new 1-RU server CPUs and 100G NIC, claiming double throughput performance through this hardware.

Harmonic also hyped virtual segmentation with network-wide QoS capabilities, allowing operators to increase bandwidth on existing coaxial cable to feed Remote PHY devices without deploying fiber to the new segmentation site

Other new features and functions: simultaneous support of centralized and distributed architectures on a single core server; interoperability with standard-compliant, third-party Remote PHY devices; and integration of the CableOS Pebble 1 Remote PHY device into third-party nodes.

Harmonic also said that its new CableOS software also supports hybrid Remote PHY operations for centralized, remote shelf and node deployments.

"Adding cutting-edge virtual segmentation technology and other advanced features to our CableOS offering, and riding the Intel curve to deliver more bandwidth performance with less power, Harmonic is again moving cable access technology a giant step forward,” > said Asaf Matatyaou, VP of solutions and product management for Harmonic’s cable access business, in a statement.

Related: Harmonic: Volume Deployment of CableOS is on the Way

During its first-quarter earnings call, Harmonic said that 670,000 cable customers are getting their network service through CableOS right now in markets mostly in the U.S. and Europe, a 24% uptick over the first quarter of 2018.

Harmonic also has quite a few trials underway, many with tier 1 operators including Comcast.

The tech company said CableOS was successfully deployed recently in a traditional HFC architecture with the core server in one location and compact 1RU CableOS Wave Remote PHY shelves deployed in remote locations.

Harmonic's CableOS Wave Remote PHY shelves use less than 130 Watts, bringing further power, space and cost savings to the operator.

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.

The DAA revolution is coming, Harmonic insists, it’s just being delayed a quarter or two due to some integration issues occurring with the company’s largest clients.

That was the message put forth during Harmonic’s first-quarter earnings call Monday. The technology vendor’s virtualized cable access technology, which it calls CableOS, is one of the most closely watched product lines in the cable industry right now, threatening to upend the hegemony enjoyed by CommScope-owned Arris, Cisco and Casa Systems.

Harmonic said that 670,000 cable customers are getting their network service through CableOS right now in markets mostly in the U.S. and Europe, a 24% uptick over the first quarter of 2018.

However, the company’s Q1 revenue from cable access products was only $12.9 million, down considerably from the $18.5 million generated in the first quarter of last year.

Harmonic’s stock cratered more than 5% following Monday’s call, with investment analysts concerned about the company’s ability to live up to full-year guidance of $100 million - $130 million in cable access revenue.

For his part, Harmonic CEO Patrick Harshman said he expects CableOS revenue to start ramping up quickly starting in the second quarter. Harmonic has loosely identified four Tier 1 clients in North America and Europe as being in various phases of testing CableOS, with one of those customers widely suspected to be Comcast.

“There was a couple of major architectural change decisions made by our lead customers,” Harshman said. “And going into the beginning of the year, frankly, there was a little bit of uncertainty about the exact timeframe 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.”

One investment analysts asked, might there be unforeseen competitive forces actually causing these delays? 

“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 over-confident. But it’s hard to imagine, frankly.”

Numerous operators, including Comcast, are aggressively moving to Distributed Access Architecture (DAA), pushing fiber deeper into the network and moving network functions out of the plant and closer to customers. This process walks hand in hand with virtualization of network functions like Cable Modem Termination System (CMTS). Meanwhile, a number of Tier 2 & 3 clients aren’t necessarily migrating their networks to DAA, Harmonic said, but are rather simply subbing in virtualized components as they swap out DOCSIS 3.0 network infrastructure for the newer DOCSIS 3.1 standard. 

Harmonic has reached an agreement with the NCTC to jointly offer the tech vendor’s CableOS virtualized cable access solution to the cooperative's more than 750 member cable operators.

Harmonic said deployments are already underway with National Cable TV Cooperative members including 1Tennessee, Buckeye Broadband, Comporium, Hilliary Communications and TVS Cable.

CableOS, a software-based iteration of Converged Cable Access Platform (CCAP), is in nearly 30 commercial and field trials currently, Harmonic said last month during its fourth quarter earnings call. Participating companies include four out of the top eight North American and European cable operators.

Related: Harmonic Posts 12% Revenue Growth in Q4 on CableOS Gains

"Harmonic's cost-effective approach to virtualizing the cable access architecture will small- and mid-sized members to have a viable choice for increasing their broadband capacity and deploying a competitive, high-speed Internet offering, while ensuring they provide reliable streaming video services,” said Rich Fickle, president and CEO of NCTC, in a statement.

“By allowing hundreds of small- and medium-sized cable operators the opportunity to connect with world-class technology companies, the NCTC enables its members to be stronger and more successful than they could be acting alone," added Nimrod Ben-Natan, senior VP and general manager, cable access business, at Harmonic. "Allowing operators to achieve new levels of scalability, reliability and efficiency, our CableOS solution is gaining significant momentum, and this new relationship with NCTC is proof of its winning business model."

San Jose, Calif. cable technology vendor Harmonic saw a 12% year-over-year revenue spike to $113.6 million in the fourth quarter on the strength of its CableOS virtual CCAP platform.

Revenue for the company’s cable access segment increased 79% to $24.1 million, with gross margins in the quarter reaching 43.6%.

CableOS, a software-based iteration of Converged Cable Access Platform (CCAP), is in 29 commercial and field trials currently, Harmonic said. Participating companies include four out of the top eight North American and European cable operators.

Harmonic said 535,000 cable modems are being served globally by CableOS network technology, an 11% increase over the third quarter. Related to the move toward virtualization, Harmonic said it shipped 1,000 notes designed for the emerging paradigm of Distributed Access Architecture during Q4.

“These initial CableOS deployments are primarily in a traditional centralized CMTS architecture with a typical application as DOCSIS 3.1 upgrade, and virtualized software economics, and future distributed network migration flexibility underpinned our competitive advantage. We expect continued momentum during 2019 for these more traditional applications,” said Harmonic CEO Patrick Harshman, during Monday’s earnings conference call.

Referring to DAA as a “cousin” of virtualization, Harshman said he doesn’t envision the copious ongoing trial activity surrounding DAA to translate into swift commercial sales until late this year.

“Based on challenging, but groundbreaking progress made over the past several months, we expect the volume of 2019 deployments of new Distributed Access Architecture or DAA networks with multiple tier 1 operators,” he said.

“During this quarter of Q1, we will still be on the on-ramp, continuing support of lead customers who are now in the process of implementing specific trial informed improvements to their deployment plans, not to the CableOS core, which has been solid for some time, but rather to ancillary networking and orchestration elements of our customers end-to-end DAA implementations,” Harshman added.

Harmonic also saw video segment revenue increase by 22% to $89.5 million, driven partly by a 58% sequential uptick in UHD shipments.

Despite a strong fourth quarter that met guidance, Harmonic signaled that Q1 will be below guidance, sending its stock price down double digits in after-hours trading. 

Harmonic announced that Northwest Ohio operator Buckeye Broadband has deployed CableOS, the tech vendor’s virtualized Converged Cable Access Platform (CCAP).

Buckeye adds to a list of more than a dozen cable operators around the world that have either deployed CableOS or are in the trials with it.

Read More: CableTec Expo 2018

Virtualized CCAPs like CableOS are gaining traction as MSOs look to become more agile in their service launches, put more capacity into their networks, and reduce the space, cooling and powering requirements that come with traditional, purpose-built CCAP chassis. In the case of CableOS, an important selling point is that it runs on off-the-shelf, Intel-based x86 servers.

Related: Harmonic Expands Deployments, Field Trials of its Virtual CCAP

“As we look to deliver next-generation data, voice and video services to customers, we need a future-proof infrastructure solution,” said R.J. Walker, VP of engineering, operations and IT services at Buckeye Broadband, in a statement. “Harmonic’s CableOS solution provides sustainable capacity growth over the long term and end-to-end support for centralized architectures now, while future-proofing our operations for distributed architectures, enabling us to deliver faster broadband offerings and address critical space, power and cost requirements.”

Added Nimrod Ben-Natan, senior VP and general manager of cable access business for Harmonic: “Software is transforming the future of cable access networks, providing increased scalability, flexibility and cost savings to operators. We’re excited to collaborate with Buckeye Broadband on this world-class broadband access network. With the CableOS solution at the heart of its infrastructure, Buckeye Broadband is ready to achieve unprecedented DOCSIS bandwidth and boost cost efficiencies.”

Having introduced itself all the way back in January 2016 at CES, at a time when the virtual MVPD market was at its infancy, Atlanta-based OTT start-up Vidgo has finally announced pricing and packaging for its live-streamed service.

The company has identified a niche in the Latino market, and is offering three vaguely sketched out product tiers for its vMVPD: the $19.99-a-month “Latino” bundle with “20 channels of the most popular Spanish entertainment and sports channels from Latin America”; the $29.99 Latino Mas package with “30 channels from the USA, Central and South America, and Spain”; and the $39.99 Core tier, which has few details.

Vidgo CEO Shane Cannon told Light Reading that his company will offer a slate of live and VOD programming consisting of both local broadcast and cable channels, with cloud DVR. The service will be playable, he said, on iOS and Android mobile devices, Roku, Apple TV and Amazon Fire TV.

Vidgo hasn’t announced a launch date, but tweeted back on Sept. 1, “Internal Beta underway in preparation for launch.”

Truly, this startup has walked a long road.

In April, Vidgo Cannon touched on the company’s target market while announcing a deal with Harmonic to use the vendor’s VOS media processing platform.

“We’ve identified a significant underserved market in the United States, with millions of consumers that are currently not part of the pay TV ecosystem,” Cannon said.

Vidgo’s Crunchbase profile lists the company being founded in 2017 and receiving $500,000 in private funding to date.

However, at CES 2016, company cofounder Robert Kostensky, a former DirecTV sales and and distribution executive, told reporters that he and another unnamed cofounder had been developing the start-up for the previous seven years, and that Vidgo was preparing to launch in 15 cities.

"We're just dotting the I's and crossing the T's," Kostenky said at the time. Kostenksy is now working for Atlanta-based consulting firm Last Mile Inc., according to his LinkedIn profile, having departed Vidgo in August 2017.

At the time, the only vMVPDs in the market were Dish Network’s Sling TV and Sony’s PlayStation Vue. The virtual pay TV market, however, now has nearly a dozen participants.

Cannon, meanwhile, is a former AT&T wireless executive who is listed on LinkedIn as having joined Vidgo in 2015 as chief marketing officer. He was named CEO in January. 

Though there are lingering questions about pricing, packaging and a precise launch date for an OTT TV service being developed by Vidgo, the company has revealed two key technology partners – Float Left and Harmonic – in tandem with this week’s NAB show in Las Vegas.  

Among them, Float Left and its Flicast platform will help Vidgo bring its coming virtual MVPD service to major platforms such as Roku, Amazon Fire TV, Chromecast, web browsers, and iOS and Android mobile phones.  

RELATED: Fragmentation Remains a Major Factor in OTT Video World 

Vidgo has also tapped Harmonic’s VOS media processing platform, including encoding and transcoding via the vendor’s VOS SW Cluster, to help underpin its OTT services. It will also use Harmonic’s PURE Compression Engine, a software-based media processing technology that will help Vidgo deliver high video quality across screens at the “lowest possible bitrates.”  

Though specifics about Vidgo’s offerings are yet to come, it does plan to offer a lineup of more than 40 linear channels and a “robust” VOD library under a no-contract model that’s also free of box fees. Vidgo, which had once planned to introduce services sometime in 2016, currently expects to launch a beta version of the service this summer across “all major platforms.”  

Still unclear is how Vidgo will be able to differentiate amid a competitive mix of virtual MVPDs that includes Sling TV, PlayStation Vue, YouTube TV, DirecTV Now, fuboTV, and Hulu.  

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.

After hinting last year that a commercial deployment of its new “virtual” CCAP was underway with a major operator in Europe, Harmonic announced that Com Hem has started to deploy the vendor’s new “CableOS” platform across its network.

Virtualized CCAPs are coming on the scene as cable operators look to pump up capacity on their networks while also reducing the space, cooling and powering requirements that come with traditional CCAP products. The approach also enables operators to employ quicker, agile-style development cycles.

Rather than relying on purpose-built CCAP chassis, new virtualized approaches place key functionality in software that run on commercial off-the-shelf servers.

In the case of Harmonic’s CableOS, a product that was introduced in the fall of 2016, the software runs on off-the-shelf x86 servers, explained Asaf Matatyaou, the VP of solutions and product management for Harmonic’s Cable Edge Business.

RELATED: Harmonic Virtualizes the CCAP

Word that Com Hem, a Sweden-based operator that serves about 1.5 million customers, is deploying CableOS comes on the heels of an announcement that the operator’s lab unit is testing symmetrical speeds of 1.2 Gbps in Stockholm using DOCSIS 3.1. That lab work also arrives as the cable industry pursues Full Duplex DOCSIS, an emerging annex to DOCSIS 3.1 that will support multi-gigabit symmetrical speeds. Com Hem's plan, meanwhile, is to do more fine-tuning prior to an  commercial deployment of its symmetrical gigabit service that's anticipated for 2019.

Com Hem is in the process of rolling Cable OS across its footprint. Its legacy CCAP environment is a modular approach that uses Cisco Systems’s uBR10012 chassis and Harmonic’s NSG Pro edge QAM. During the migration, COTS servers will replace the Cisco chassis and NSG Pros will be outfitted with upstream and downstream cards at the physical layer.

Though Harmonic has identified Com Hem as the first operator to have a commercial deployment of CableOS underway, there are others.

Matatyaou said Harmonic has field trials going and live deployments underway in multiple regions. Harmonic announced a warrant agreement with Comcast based on sales to the MSO and deployment milestones involving the CableOS product, but has not announced details on the progress being made with rollouts.

RELATED: Harmonic, Comcast Strike Warrant Agreement

Speaking on Harmonic’s Q3 earnings call in October, CEO Patrick Harshman said his company has secured “material” commitments for CableOS with more than ten “leading” operators, along with an expectation that Harmonic would pull down CableOS-related revenues of $100 million plus in 2018.

Harmonic Sees Promise in ‘Premium’ OTT, Virtual CCAP Strategies

In addition to reducing space and power requirements, Matatyaou said MSOs are also gravitating to virtual CCAPs to help in other situations, including parts of the network, usually in rural areas, with small service group counts where it might be cost-prohibitive to use chassis-based, power-hungry CCAPs.

It’s also coming in handy as operators consolidate hub sites, he said.

Harmonic said gains in business tied to “premium” over-the-top services and traction for its new virtual Converged Cable Access Platform (vCCAP) are helping to overcome weakness from its legacy cable edge business.

Q3 revenues of $92 million beat Wall Street’s expectation of $85.5 million, thanks in part to a 15% surge from Harmonic’s video segment that came way of growing demand for the company’s live OTT platform.

Harmonic also saw “material” commitments for CableOS, its virtual CCAP product introduced last year, with commercial deployments and field trials expanding to more than ten “leading” cable operators worldwide, company CEO Patrick Harshman, said Monday on the earnings call.  

Harshman said that included a new Tier 1 customer design win, but declined to name it, but noted later that it’s an “early order” and that Harmonic will “have to prove ourselves out and see that scale.”

RELATED: Harmonic, Comcast Strike Warrant Agreement

Harmonic sees CableOS-related revenues to exceed $100 million in 2018.

On the flip side, legacy cable edge revenues continued to decline. Revenues in that segment, which includes traditional edge QAMs, dropped 27%, to $7.5 million. Dollars in the cable edge businesses aren’t expected to pour in more rapidly until after CableOS shipments begin ramping.

“There was no question that investments in traditional pay TV solutions is declining,” Harshman said.

That, he added, is driving a migration to “OTT 2.0,” or premium quality live services for TVs and mobile devices. In addition to helping to underpin streamed skinny bundles from distributors, Harmonic is also targeting a new class of direct-to-consumer services being launched by media companies around the world.

Harmonic also removed an overhang from its business, announcing it had reached a settlement with Avid that ends patent infringement litigation. Harmonic has agreed to pay $6 million over 3.5 years, starting with $2.5 million to be paid in Q4 2017.

RELATED: Avid: Patent Fight with Harmonic Heading to Trial

Though Harmonic sees a strong growth path ahead, Simon Leopold, analyst with Raymond James, said in a research note that there’s worry that “management has set a high bar” for 2018 that leans heavily on new products.

“Our checks suggest the acceptance of some new platforms may not live up to management’s expectations,” he wrote. “We have no qualms with the strategy but expect the road to recovery is a long one. We believe Harmonic could fall short of its Cable Edge revenue target of $100 million in 2018.”

Leopold maintained his “Underperform” rating on Harmonic’s stock.

Harmonic shares tumbled Friday (July 14) after the company announced it had cut financial guidance for Q2 2017 amid an ongoing transition by customers to software subscription models and cloud-based video infrastructure.

Harmonic said it expects Q2 sales of $80 million to $82 million, down from $95 million to $103 million, and a non-GAAP loss per share of 21 cents to 19 cents.

"Market demand for video infrastructure delivered through software subscription and cloud services is accelerating," Patrick Harshman, Harmonic’s president and CEO, said in a statement.

He said that while an improvement in OTT software-as-a-service activity reduced revenue and profitability in the period, Harmonic also believes this will help to “establish a trajectory for more predictable future financial performance in our Video segment.”

With more acceleration coming way of Harmonic’s software business, the company has also started reorg efforts that aim to align the company’s operating expenses with transitioning demand to its video OTT SaaS and CableOS products, Harshman added.

CableOS is Harmonic’s virtual Converged Cable Access Platform that will run on off-the-shelf hardware. Last fall, Harmonic announced a warrant agreement with Comcast based on sales to the MSO and deployment milestones involving the CableOS product.

RELATED: Harmonic Starts Making Money on its Virtual CCAP

Raymond James analyst Simon Leopold maintained his Underperform rating on Harmonic shares following the announcement.

“Management attributed the miss to the continued transition towards software-based video encoding solutions, which could expand margin and profitability longer term, but will likely continue to impact the top line in the immediate term,” Leopold explained in a research note.

Harmonic is scheduled to release Q2 results following market close on Monday, July 31.

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.

Tom Lookabaugh, a technologist with deep ties into the cable industry, has been appointed to the board of video and access network vendor Harmonic Inc.

Lookabaugh, 55, currently is president of his own consultancy business. Among recent posts, he headed up R&D at CableLabs, was VP of commercial mobility at ViaSat, and was CTO of Entropic Communications, the chipmaker that is now part of MaxLinear, and was an assistant professor of Interdisciplinary Telecommunications and Computer Science at the University of Colorado.

Lookabaugh was also the CEO of PolyCipher LLC, a once high-profile joint venture formed by Comcast, Time Warner Cable and Cox Communications in mid-2004 that was tasked with developing a downloadable conditional access system (DCAS). CableLabs took control of the PolyCipher DCAS project in 2009. He is also late of DiviCom, a video silicon and processing vendor bought out by Harmonic in 2000 from DiviCom's parent company at the time, C-Cube Microsystems.

Lookabaugh comes on board amid Harmonic’s recent debut of CableOS, a virtualized version of the Converged Cable Access Platform.

RELATED:  Comcast, Harmonic Strike Warrants Agreement

"Tom's deep knowledge of the cable industry, extensive background in bringing cutting-edge technologies to market and experience as an operating executive make him an ideal addition to the Harmonic board, particularly as we execute on our new CableOS growth initiative,” Patrick Harshman, Harmonic’s president and CEO, said in a statement.

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.

Highlighting cable’s coming shift toward more virtualized, distributed access network architectures, Harmonic’s Cable Edge business dropped 12% year-over-year, and 47% on a sequential basis in Q3.

Harmonic shares were down 21.5%, to $4.20 each, in morning trading Thursday, the day after the company posted Q3 results that missed financial targets.

The dip in that part of Harmonic’s business arrived as MSO’s “pivoted faster than we anticipated” to the vendor’s soon-to-be-released virtual Converged Cable Access Platform, company CEO Patrick Harshman said Wednesday on the company’s Q3 earnings call. That platform, called CableOS, virtualizes the functions of the CMTS and edge QAM in software running on off-the-shelf servers.

“Consequently demand for our legacy Cable Edge products softened significantly during the quarter,” Harshman said. “On the Cable Edge side of our business, the year is turning out to be even more transformational. Entering the year we knew that the traditional edge QAM market was in decline. Instead of deciding to go home, we decided to go big.”

Harmonic introduced CableOS in September, and later announced a warrants agreement with Comcast that will factor in future sales of products, including the vendor’s new vCCAP.

RELATED: Cable-Tec Expo: Harmonic Virtualizes the CCAP

Harmonic is starting CableOS shipments in Q4, with accelerated deployments expected throughout 2017.  Harmonic’s competitors in the CCAP sector include Arris, Cisco Systems, Casa Systems, Huawei and Vecima, which have all introduced vCCAP products or have them on their roadmaps.

On the video end of the business, Harshman said the company is on track to achieve synergy targets tied to its acquisition of Thomson Video Networks. He said Harmonic has also locked in a video cloud win with an unnamed tier 1 North American service provider that includes over-the-top streaming, cloud DVR and dynamic ad insertion.

Harshman said Harmonic is also “finally seeing real signs of life” for 4K and high dynamic range channel deployments.

“Despite the late arrival of 4K, Harmonic continue to invest in enabling R&D and ecosystem integration work, and consequently we are well positioned to take advantage of the 4K wave,” he said.

Harmonic posted Q3 sales of $104.4 million, missing consensus of $107.4 million, and guidance for $105 million to $110 million, Raymond James Simon Leopold said in a research note distributed  Thursday.  Harmonic also posted non-GAAP loss of 1 cent per share, missing consensus of 3 cents per share and guidance of 1 to 3 cents.

The company expects Q4 sales of $106 million to $111 million, versus consensus of $115 million, noted Leopold, who maintained his “underperform” rating on the stock.

“Despite expectations for a loaded 4Q16 driven by the expected ramp of its new CableOS platform, the 4Q16 guidance implies that the uptake for the new cable edge platform may be more gradual than initially hoped,” Leopold wrote. 

With the rising demand for high-speed broadband services such as OTT streaming, video on demand, time-shift TV and cloud DVR, the future has never been brighter for cable operators. Adding these capabilities is essential to a cable operator’s business growth, but the associated requirements for real estate and power and cooling costs can be prohibitive. Moreover, a traditional cable delivery infrastructure rooted in hardware lacks the agility needed to launch new services quickly and cost-effectively, due to the time and expense required to add the necessary equipment and capacity.

To maintain a competitive edge, cable operators need a simpler, faster way to add capacity. The solution must be efficient and scalable, resolving operators’ space and power constraints in the headend and hub while simplifying future upgrades.

Recently, Harmonic introduced CableOS™, the industry’s first software-based Converged Cable Access Platform (CCAP). Featuring software-based Cable Modem Termination System (CMTS) running on an off-the-shelf, 1-RU Intel® server, the first end-to-end Remote PHY system, and leading RF port density, CableOS provides cable operators with three major benefits.

Substantial Cost Savings

A single CableOS Core server offers a quantum leap forward in its ability to support tens of gigs of capacity and multiple service groups in fewer rack units when compared with traditional hardware CMTS implementations.

While hardware-based CCAPs typically require nine racks of equipment to support 80 service groups, CableOS allows operators to support more than 250 service groups in just four racks — a 7X density difference! With CableOS, operators can reduce space and power costs by up to 75 percent in a centralized CCAP deployment, or by more than 90 percent in a Remote PHY deployment – resulting in significant CAPEX savings.

In addition to the space and power savings associated with moving RF components out of the headend and into the field, decoupling the CCAP core from the PHY in a Remote PHY architecture enables operators to leverage the benefits of digital fiber, such as signal transport over much longer distances and more wavelengths.

Greater Agility

As a software-based solution, CableOS leverages COTS Intel processor-based servers to provide operators will all of the advantages associated with IT economics and Moore’s Law. With CableOS, regular software upgrades accelerate the introduction of new features, such as high-layer DOCSIS 3.1 capabilities. Operators no longer need to purchase space-consuming, power-hungry and expensive hardware-based CMTS platforms, and can break away from the cycle of needing to upgrade hardware every few years to accommodate capacity growth requirements.

Unprecedented Scalability

CableOS delivers the ability to efficiently scale up capacity and service groups over time, as well as supporting a range of sites, from the smallest to the largest. Operators can instantly grow their infrastructure from supporting a few service groups to more than a hundred on a single CableOS server. Capacity is gained simply by adding additional 1-RU servers.

CableOS: The Latest Innovation in Cable AccessInfrastructure

For operators wanting sustainable capacity growth over the long term, CableOS is the solution, enabling the migration to multi-gigabit broadband capacity and the fast deployment of DOCSIS 3.1 data, video and voice services.

A short video on CableOS, as well as a solution brief is available at www.harmonicinc.com/solutions/software-based-ccap. Further information about Harmonic is available at www.harmonicinc.com.