Canadian software company Vecima Networks aims to “challenge Harmonic” for control of cable’s virtualized network tech future with its $20 million "stalking horse" bid for bankrupt Casa Systems’ cable technology business, wrote Dell’Oro Group analyst Jeff Heynen. 

“Though Harmonic currently dominates the vCMTS market, holding 98% of global revenue in 2023, a good portion of that revenue comes from Comcast, which was the early mover in deploying vCMTS platforms in the industry,” Heynen said in a Wednesday-afternoon blog posting rendered shortly after Casa Systems announced its bankruptcy. 

“Charter is also planning to deploy Harmonic’s cOS broadband platform but has also signaled its desire to have multiple vendors’ vCMTS platforms in its network, which leaves the door open for Vecima to secure a portion of that business in addition to the RPD business it has already solidified there,” Heynen added. 

The cable network tech market is ripe with opportunity, with operators looking to deploy multi-gigabit-speed upgrades to their broadband networks, built around the new DOCSIS 4.0 standard and next-generation schemes that virtualize core appliances including the cable-modem termination system (CMTS) into software running on garden-variety computer servers, part of a broader alignment commonly referred to as Distributed Access Architecture" (DAA).

While Harmonic has emerged as an early leader of this new market, incumbent tech vendors of the old physical CMTS world, a list that also includes CommScope, have struggled to find traction. 

Last year, as Heynen noted, Casa Systems generated just $41 million from the business Toronto-based Vecima seeks to acquire, most of that money coming from licensing its traditional C100G Converged Cable Access Platform (CCAP) product. That was down from $81 million in 2022 and $115 million in 2021. 

However, through its Axyom-branded vCMTS software, Casa does have "DAA traction" with cable-operator clients including Rogers Communications, Vodafone, Liberty Global and Claro Colombia.

"From a product perspective, Vecima gains Casa’s Axyom vCMTS software, which it can use alongside its own Entra vCMTS platform to scale overall vCMTS deployments as they continue to expand at cable operators around the world," Heynen wrote. 

“What Vecima offers to the Casa cable unit is a renewed focus on the cable and fixed broadband markets, which was arguably missing at Casa as the company tried to balance R&D investments in its cable, vBNG, mobile core, and fixed wireless access product lines,” the analyst added. “With the focus and continued support by Vecima of Casa’s existing customer base, Vecima can potentially turn those customers into longer-term DAA customers.”

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.

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. ■

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."