A favored telecommunications analysts painted a bearish, if not bleak, picture for a loyal following of small and medium cable operators, as he considered new Internet rules and price regulations.

MoffettNathanson principal and senior analyst Craig Moffett, a longtime cable bull, gave the crowd at The Independent Show in Boston a mixed forecast for the next decade.

He reminded the crowd of the painful market forces that have begun to buffet cable operators – and programmers -- of all sizes at this moment in time. 

TV ratings are down, and programming costs are up. The biggest programmers are licensing more shows to OTT players. 

“They’re increasingly licensing content (to OTT) because it’s the only way to plug the hole in the income statement,” Moffett said.

He suggested that the trickle of OTT services could swell to a torrent that could do real harm to the traditional dual-revenue stream business model that has served programmers and cable operators so well for so many years.

And there is ample evidence that cord-cutting continues to accelerate, he said, triggering nods in unison around the crowd when he noted the pressure on the bottom line.

As if the current conditions weren’t bad enough, Moffett said the near future will be tougher to navigate. The one, big bright spot for cable operators from a revenue viewpoint – broadband service – may soon see the end of its heady growth as the market matures.

Penetration of broadband has been steady, but slower growth is ahead; almost everyone who can afford broadband or wants it, has it. Of the people who don’t have broadband, most are not ideal customers: Half of them make less than $25,000 annually, or are considered undereducated or don’t own computer, Moffett noted.

While he said he saw some bright spots with potential for growth, they were few. Potential growth lies in such areas as business services, and the growth of wireless demand holds promise for cable’s Wifi offerings. The most obvious option for revenue growth: Cable operators can leverage the pricing of broadband.

“It’s the one thing here that you have some flexibility to control, at least competively,” Moffett said.

But if they do, they risk the ire of the FCC, which is soliciting complaints. Title II “is absolutely about broadband price regulation,” he said, “and in that context lies the real challenge for the cable operators.”

Still, he said, Title II is not a certainty either, as the new rule could be quashed by a new congressional action or get tossed out by a federal  court or even left inactive by a new FCC chairman.

“This topic of regulation is unavoidable as you think about the next 10 years,” Moffett said.

Arris used this week’s The Independent Show in Boston to introduce a hosted version of its managed service provider WiFi platform that is suitable for major MSOs and tier 2-3 players.

Arris, which is demoing it at Booth #600, claims that the hosted approach minimizes time to market, capex, and the expertise required to roll out WiFi to small- and mid-sized businesses, multiple dwelling units, as well as public and education venues.

Arris, which struck up a WiFi deal with Ruckus Wireless in 2011, also claims that its Hosted SP WiFi platform can also be integrated with an MSO’s existing management and reporting systems.

"ARRIS's Wi-Fi solutions enable operators of all sizes to tap into this growing market with a carrier-class deployment," Dan Whalen, SVP and GM, global services, at Arris, said in a statement.  

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

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

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

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

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

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

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

ZCorum, a supplier of managed diagnostics tools and software for broadband providers, said its return path analysis tool now supports Arris’s DOCSIS 3.0-based Arris C4 cable modem termination system (CMTS).

ZCorum said the extended support for Upstream Analyzer follows an initial release that was optimized for Cisco Systems CMTSs.

“Providers with an Arris C4 and our Upstream Analyzer software can now clearly see ingress in the return-path spectrum without special equipment, and without the need to be at the headend,” Scott Helms, ZCorum’s VP of technology, said in a statement. “This makes it easier and faster for technicians in the field who are tasked with tracking down noise in the plant.”

ZCorum said its Upstream Analyzer uses technology from Nimble This and CableLabs to collect and display upstream spectrum data directly from the CMTS, as opposed to requiring cable operators to use proprietary equipment to take those measurements.

"Using the CMTS as a return-path spectrum analyzer has several advantages,” added Brady Volpe, president and founder of Nimble This, a developer of DOCSIS Proactive Network Maintenance (PNM) tools. "There's no additional equipment or cabling needed, so it's simple to deploy, it’s cost effective, and the data is 100% accurate.  Also, because the CMTS knows when cable modems are transmitting, you can easily isolate any noise that's under the DOCSIS carrier."

ZCorum said it’s showcasing Upstream Analyzer and other DOCSIS network management tools at The Independent Show, which kicked off Sunday in Boston. 

With all the government issues facing smaller operators these days, the masses assembling in Boston this week for the Independent Show could very well have their own version of a Boston Tea Party.

Members of the National Cable Television Cooperative and the American Cable Association have gathered to hash out thorny issues facing small, midsized and independent cable operators: retransmission consent deals that have left many in the dark, programming costs that are forcing some out of the video business, and the promise — or threat — of over-the-top TV options. There’s also the distant but persistent threat of cybersecurity. Multichannel News editorial director Mark Robichaux caught up with ACA president and CEO Matt Polka to hear about what’s on his mind, and his members’ (polite) policy demands.

MCN:Just this week you sent out a letter criticizing Media General’s TV signal black out of Mediacom cable customers — 14 markets, three Fox stations. The National Association of Broadcasters says retransmission consent is not broken. You and your members disagree. What will it take to fix it?

Matt Polka: Our good friends in the broadcasting business have their feet firmly planted in the regulations of the ’60s, ’70s, ’80s and ’90s, because it does one thing and one thing only, and that’s benefit them and no one else.

The world is moving on. I mean they’ve become dinosaurs holding onto and using these old rules in harmful, anti-consumer ways.

But the fact of the matter is this, ACA for years has been an effective advocate on the need for retransmission consent reform, which everybody but the broadcasters thinks needs to occur. Look at the facts: Since just 2013 there have been nearly 250 blackouts.

MCN:Who fixes this? Congress? The FCC?

MP: All of the above. The FCC can certainly make some changes, which they are starting to do and they have done over the last couple of years with their good-faith rules prohibiting coordinated negotiations. Congress has wide latitude in its own oversight to change the rules. I mean, they created the rules back in 1992 for a specific reason that does not exist today and hasn’t for some time.

MCN:When do you think Congress will act?

MP: At the beginning of the year, we all were expecting a larger rewrite in both the House and the Senate, and the net neutrality issues that came out of the FCC have had a significant impact on the communications agenda on the Hill. So both the Senate and House committees are looking at more limited, rifle-shot kinds of approaches. We expect to see some more from the committees here after the August recess.

The hope and the intent is to get started this year; start a process that continues into 2016 and into 2017 after the election is over.

MCN:Related to that are increased programming costs …

MP: We have demonstrated this year the harm of the bundle and how that also hurts consumers through price increases, but also limits our members’ ability to deploy more broadband in their communities. It’s a capital question and an operational question. If you’re spending more money on programming, that’s less that you have laying around to basically deploy broadband. So there is a definite effect.

MCN:You say programming costs prohibit smaller players from deploying more broadband — what happened after you filed that petition to the FCC?

MP: It’s still pending; the FCC has to put its report together and report to Congress. But we have shown very clearly there is definitely linkage between higher programming rates and diminished ability to provide the broadband that consumers want.

We have members that are saying to companies like Viacom and others, and I think we’ll see more of it as time goes on, “Your bundle is just not worth it by way of ratings, by way of what you’re asking, by way of your onerous carriage requirements. We are just not going to renew.”

MCN:Are ACA members prepared to compete with new OTT rivals?

MP: Yes. And, at the same time, they are also coming to Boston to really expand their knowledge base as well as to make sure they understand their options.

The first step is they recognize now that we are now broadband providers who also provide telephone and video. We are in a huge transition era right now where consumers as well as providers are sort of weaning themselves from the old linear traditional cable model to the expansive online, broadbandvideo model, where consumers no longer view video on cable by the channel but increasingly view video online by the program. So it is a really dynamic time, and we’re really on the cusp of the new world.