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.

Total cable access “concentrator” revenue declined 31% year over year in the third quarter to $287 million, driven by a continued slowdown in North American CCAP license purchases, according to research company Dell’Oro Group. 

The finding, nonetheless, represented an improvement over the second quarter, during which cable access equipment revenue dropped 40% to $237 million.

Overall broadband access equipment revenue decreased 12% in Q3, with a 371% spike in XGS-PON OLT revenue, as well continued growth in XG-PON1 OLT ports and CPE, offsetting the slump in North America converged cable access platform (CCAP) sales. 

“Operators’ continued push to increase their fiber investments is resulting in strong Y/Y gains in PON OLT ports,” said Jeff Heynen, Senior Research Director at Dell’Oro Group.

The U.S. cable access market continues to be roiled by technological disruption, with operators pausing orders as they plan migration to network virtualization and distributed access architecture (DAA).

Perhaps more impactful, leading operators Comcast and Charter Communications are reporting healthy growth in subscribers and revenue for broadband services, reducing the incentive to spend money on their networks. 

The cable industry is billing its big 10G initiative as the next big technology star. But given the current state of the cable access technology business, is it even ready for primetime?

Cable’s counter to the wireless business’s all-encompassing 5G hype bonanza, 10G actually incorporates many different technologies, all aiming to extend hybrid fiber coaxial (HFC) networks beyond speeds of 10 Gigabits per second and into lifespans stretching out another two or three decades.

But within that big 10 Gbps bucket is a lot of new, disruptive technology for cable operator engineers to digest, some of it competing with each other.

For starters, the shift to Distributed Access Architecture, in which headend and network functions are virtualized, has been described as the biggest technological change the cable industry has made since it migrated to HFC back in the early 1990s. Indeed, transitioning from a centralized Converged Cable Access Platform (CCAP) architecture to DAA is proving to be a highly complex process, affecting everything from core plant operation to the skill sets required from workers. “The migration from centralized access architecture to DAA has certainly proven to be more complex when compared to prior upgrade cycles,” said Sean Welch, vice president and general manager of Cisco’s Cable Access Business.

Related: Cisco Access Chief Welch: 'Don't Wait' to Transform Network Infrastructure

The shift to DAA is but one — admittedly huge — piece of the engineering puzzle. As chief technology officers and their teams reimagine their HFC networks for the futuristic era of autonomous cars, they’re also mulling pressure to move away from large proprietary hardware appliances, such as the cable modem termination system (CMTS), and move the work these devices do to off-the-shelf servers that will virtualize these processes.

As if that weren’t enough disruption, cable technologists are split as to which next iteration of DOCSIS (the standard that enables high-bandwidth data transfer over HFC) will best deliver 10G’s bandwidth promise. Led by Comcast, the industry had seemed to be lined up nice and neatly to adopt CableLabs’s Full Duplex DOCSIS standard (FDX). But due to a variety of issues, some operators are pushing FDX aside in favor of alternatives such as Extended Spectrum DOCSIS and Low Latency DOCSIS.

The level of complexity and disruption operators face is certainly “not trivial,” Todd Kessler, senior vice president of product at CommScope, conceded. Kessler’s company acquired Arris, cable’s biggest technology vendor, for $7.4 billion this year. At the SCTE/ISBE Cable-Tec Expo in New Orleans this week (Sept. 30-Oct. 3), Kessler said, CommScope will seek to position itself as a “strategic adviser” to its operator customers, “giving them all the facts they need to make good decisions.”

A No Good, Very Bad Year for Vendors

Certainly, for cable access vendors, some decisions would be nice.

Sales were down 38% sector-wide in the first quarter, according to research company Dell’Oro Group, which attributed much of the stalling to cable operators weighing DAA-related decision-making. And Dell’Oro on Sept. 25 published a report which found cable access equipment sales were down 40% in Q2. The demand just isn’t there right now, the firm said.

”I think we all have to keep in mind that many of the largest operators have been on a consistent, six-year cycle of purchasing and deploying capacity as they moved from DOCSIS 2.0 to 3.0 and 3.0 to 3.1,” Dell’Oro senior analyst Jeff Heynen said. “At some point, that cycle had to stop, even for a little bit, for the operators to deploy all that capacity.”

And stop the cycle has.

CommScope has let go most of Arris’s top-level management, including ex-CEO Bruce McClelland, with its network and cloud division reporting a 37% revenue slide to $344 million in the second quarter.

Cisco Systems, the second biggest cable-access supplier behind CommScope, doesn’t break out numbers for that sector. But it recently put a halt to the development of Full Duplex DOCSIS, and key executives, including former cable-access strategy chief John Holobinko, have left the company.

Revenue at Casa Systems did rebound 47% from a really tough Q1. But its $52 million in second-quarter sales were still off around 28% year-over-year.

Harmonic, which is disrupting the hegemony enjoyed by CommScope, Cisco and Casa with its virtual CCAP product, CableOS, saw revenue fall 14% in the second quarter. This was despite customer wins for CableOS that included a $175 million multiyear deal with Comcast, and another $55 million contract with an unnamed European operator widely believed to be Liberty Global. In the latest news, Harmonic said Comporium Communications in Rock Hill, South Carolina, had signed on to use CableOS in a new DAA configuration supporting DOCSIS 3.1 services.

Still, Kessler doesn’t see the overall cable access business perking up until next year. “We thought more operators would be past the evaluation phase by now,” he said.

Notes from rival cable access vendors jibe with this prediction.

“While we do expect MSOs to increasingly redirect investment into Distributed Access Architecture, we continue to believe that we haven’t yet reached an inflection point away from the industry-wide pause in cable spending,” Casa Systems CEO Jerry Guo said during a second-quarter earnings call in late July. Observing the industry from a more detached perch as CEO of Pineville, North Carolina’s Chamber of Commerce, Holobinko said he believes key issues regarding HFC aren’t being addressed by the new 10G tech.

“I agree there are too many technologies and all seem to be lacking the one thing that a mature industry needs — a solution to high operating costs,” the former Cisco technologist told Multichannel News. “The biggest challenge with cable access networks is, when compared to fiber and wireless networks, the day-to-day cost of operating and maintaining the cable plant is an order of magnitude higher than competitive access technologies.”

With this in mind, might cable operators start to seriously look at ditching HFC and going with fiber-to-the-home? There would certainly be operational efficiencies. The transition doesn’t come cheaply, though, as shown by Altice USA’s $5 billion FTTH initiative in its Optimum footprint.

While 2018’s Cable-Tec Expo in Atlanta was full of tour de force white-paper presentations and demonstrations of FDX, Extended Spectrum DOCSIS and Low Latency DOCSIS, vendors seem to be approaching this year’s New Orleans event with compromise solutions aimed at taking some of the pain points away.

For several years, the FDX standard from industry consortium CableLabs was widely viewed as the next iteration of DOCSIS, a standard that would someday delivery symmetrical 10 Gbps speeds over HFC networks.

But FDX presents certain inflexibilities. Notably, it requires an expensive “fiber deep” strategy, with no amplification permitted between the node and customer. Despite the support of Comcast, FDX has lost the customer volume needed for wide-scale vendor support, as evidenced by Cisco’s pullback over the summer.

CommScope will be demoing what it calls “Extended Soft Frequency Division Duplex,” which combines elements of both FDX and ESD. Rather than dictating symmetrical bandwidth, the technology allows operators to move bandwidth from downstream to upstream and vice versa, as desired.

Extended Soft FDD is more “amplifier friendly” than FDX, said Chris Busch, CommScope engineering fellow in the office of the CTO. “That’s a big boon to the operator,” he said, describing a technology being put into another new bucket of cable industry jargon, “DOCSIS 4.0.”

What is DOCSIS 4.0 to Busch? Like 10G, the term seems to be broad.

“I think it’s the next generation of DOCSIS performance,” he said.

Beyond easing pain points for emerging DOCSIS technologies, CommScope will also try to light the path for faster uptake of DAA.

Remote PHY refers to the technique of moving the physical layer of electronic circuitry (the “PHY”) out of Converged Cable Access Platform at the headend and putting that PHY circuit at the end of the network. Remote MAC-PHY means also moving the Media Access Control layer to the edge, as well.

Converting to this scheme represents a massive shakeup.

“Many operators are still in the evaluation phase, looking at ways to deploy Remote PHY or Remote MAC-PHY,” Kessler said. “Only a handful are in deployment. And that will likely stay consistent into next year.”

Rather than showing off some splashy new performance-driven DAA gear, CommScope’s product demos at Cable-Tec Expo seem to be focused on tools that drive down costs. DAA Aggregator, for example, lets operators connect up to eight HFC nodes to one Remote PHY device (RPD). This significantly increases the number of homes passed per RPD serving group — from a range of 20-40 to 150-300.

“It’s more capital-efficient,” Busch said. “It allows operators to gain the benefits of Distributed Access Architecture without as much investment.”

We’re Just Not There Yet

While the cable technology business’s recessionary trend certainly has a lot to do with the complexity associated with new standards and their adoption, Dell’Oro analyst Heynen believes that, despite all the hype, 5G isn’t — at least not yet — putting on the kind of pressure needed to make leading operators forget how much they just spent on upgrading to DOCSIS 3.1, while enabling 1 Gbps speeds that few consumers are using.

Is it too early to make 10G the star of the show?

“I don’t think spending improves significantly until [operators] feel there is a viable competitive threat to their 1-Gig DOCSIS 3.1 services, or an application or service [emerges] that challenges the capacity they have in their access networks now,” Heynen said. “That, plus slowing bandwidth consumption rates, are the reasons for the current trough in spending. I do see spending improving in the second half of the year, but certainly nowhere near the levels seen in 2018.”

The cable industry is billing its big 10G initiative as the next big technology star. But given the current state of the cable access technology business, is it even ready for primetime?

Cable’s counter to the wireless business’s all-encompassing 5G hype bonanza, 10G actually incorporates many different technologies, all aiming to extend hybrid fiber coaxial (HFC) networks beyond speeds of 10 Gigabits per second and into lifespans stretching out another two or three decades.

But within that big 10 Gbps bucket is a lot of new, disruptive technology for cable operator engineers to digest, some of it competing with each other.

For starters, the shift to Distributed Access Architecture, in which headend and network functions are virtualized, has been described as the biggest technological change the cable industry has made since it migrated to HFC back in the early 1990s. Indeed, transitioning from a centralized Converged Cable Access Platform (CCAP) architecture to DAA is proving to be a highly complex process, affecting everything from core plant operation to the skill sets required from workers. “The migration from centralized access architecture to DAA has certainly proven to be more complex when compared to prior upgrade cycles,” said Sean Welch, vice president and general manager of Cisco’s Cable Access Business.

Related: Cisco Access Chief Welch: 'Don't Wait' to Transform Network Infrastructure

The shift to DAA is but one — admittedly huge — piece of the engineering puzzle. As chief technology officers and their teams reimagine their HFC networks for the futuristic era of autonomous cars, they’re also mulling pressure to move away from large proprietary hardware appliances, such as the cable modem termination system (CMTS), and move the work these devices do to off-the-shelf servers that will virtualize these processes.

As if that weren’t enough disruption, cable technologists are split as to which next iteration of DOCSIS (the standard that enables high-bandwidth data transfer over HFC) will best deliver 10G’s bandwidth promise. Led by Comcast, the industry had seemed to be lined up nice and neatly to adopt CableLabs’s Full Duplex DOCSIS standard (FDX). But due to a variety of issues, some operators are pushing FDX aside in favor of alternatives such as Extended Spectrum DOCSIS and Low Latency DOCSIS.

The level of complexity and disruption operators face is certainly “not trivial,” Todd Kessler, senior vice president of product at CommScope, conceded. Kessler’s company acquired Arris, cable’s biggest technology vendor, for $7.4 billion this year. At the SCTE/ISBE Cable-Tec Expo in New Orleans this week (Sept. 30-Oct. 3), Kessler said, CommScope will seek to position itself as a “strategic adviser” to its operator customers, “giving them all the facts they need to make good decisions.”

A No Good, Very Bad Year for Vendors

Certainly, for cable access vendors, some decisions would be nice.

Sales were down 38% sector-wide in the first quarter, according to research company Dell’Oro Group, which attributed much of the stalling to cable operators weighing DAA-related decision-making. And Dell’Oro on Sept. 25 published a report which found cable access equipment sales were down 40% in Q2. The demand just isn’t there right now, the firm said.

”I think we all have to keep in mind that many of the largest operators have been on a consistent, six-year cycle of purchasing and deploying capacity as they moved from DOCSIS 2.0 to 3.0 and 3.0 to 3.1,” Dell’Oro senior analyst Jeff Heynen said. “At some point, that cycle had to stop, even for a little bit, for the operators to deploy all that capacity.”

And stop the cycle has.

CommScope has let go most of Arris’s top-level management, including ex-CEO Bruce McClelland, with its network and cloud division reporting a 37% revenue slide to $344 million in the second quarter.

Cisco Systems, the second biggest cable-access supplier behind CommScope, doesn’t break out numbers for that sector. But it recently put a halt to the development of Full Duplex DOCSIS, and key executives, including former cable-access strategy chief John Holobinko, have left the company.

Revenue at Casa Systems did rebound 47% from a really tough Q1. But its $52 million in second-quarter sales were still off around 28% year-over-year.

Harmonic, which is disrupting the hegemony enjoyed by CommScope, Cisco and Casa with its virtual CCAP product, CableOS, saw revenue fall 14% in the second quarter. This was despite customer wins for CableOS that included a $175 million multiyear deal with Comcast, and another $55 million contract with an unnamed European operator widely believed to be Liberty Global. In the latest news, Harmonic said Comporium Communications in Rock Hill, South Carolina, had signed on to use CableOS in a new DAA configuration supporting DOCSIS 3.1 services.

Still, Kessler doesn’t see the overall cable access business perking up until next year. “We thought more operators would be past the evaluation phase by now,” he said.

Notes from rival cable access vendors jibe with this prediction.

“While we do expect MSOs to increasingly redirect investment into Distributed Access Architecture, we continue to believe that we haven’t yet reached an inflection point away from the industry-wide pause in cable spending,” Casa Systems CEO Jerry Guo said during a second-quarter earnings call in late July. Observing the industry from a more detached perch as CEO of Pineville, North Carolina’s Chamber of Commerce, Holobinko said he believes key issues regarding HFC aren’t being addressed by the new 10G tech.

“I agree there are too many technologies and all seem to be lacking the one thing that a mature industry needs — a solution to high operating costs,” the former Cisco technologist told Multichannel News. “The biggest challenge with cable access networks is, when compared to fiber and wireless networks, the day-to-day cost of operating and maintaining the cable plant is an order of magnitude higher than competitive access technologies.”

With this in mind, might cable operators start to seriously look at ditching HFC and going with fiber-to-the-home? There would certainly be operational efficiencies. The transition doesn’t come cheaply, though, as shown by Altice USA’s $5 billion FTTH initiative in its Optimum footprint.

While 2018’s Cable-Tec Expo in Atlanta was full of tour de force white-paper presentations and demonstrations of FDX, Extended Spectrum DOCSIS and Low Latency DOCSIS, vendors seem to be approaching this year’s New Orleans event with compromise solutions aimed at taking some of the pain points away.

For several years, the FDX standard from industry consortium CableLabs was widely viewed as the next iteration of DOCSIS, a standard that would someday delivery symmetrical 10 Gbps speeds over HFC networks.

But FDX presents certain inflexibilities. Notably, it requires an expensive “fiber deep” strategy, with no amplification permitted between the node and customer. Despite the support of Comcast, FDX has lost the customer volume needed for wide-scale vendor support, as evidenced by Cisco’s pullback over the summer.

CommScope will be demoing what it calls “Extended Soft Frequency Division Duplex,” which combines elements of both FDX and ESD. Rather than dictating symmetrical bandwidth, the technology allows operators to move bandwidth from downstream to upstream and vice versa, as desired.

Extended Soft FDD is more “amplifier friendly” than FDX, said Chris Busch, CommScope engineering fellow in the office of the CTO. “That’s a big boon to the operator,” he said, describing a technology being put into another new bucket of cable industry jargon, “DOCSIS 4.0.”

What is DOCSIS 4.0 to Busch? Like 10G, the term seems to be broad.

“I think it’s the next generation of DOCSIS performance,” he said.

Beyond easing pain points for emerging DOCSIS technologies, CommScope will also try to light the path for faster uptake of DAA.

Remote PHY refers to the technique of moving the physical layer of electronic circuitry (the “PHY”) out of Converged Cable Access Platform at the headend and putting that PHY circuit at the end of the network. Remote MAC-PHY means also moving the Media Access Control layer to the edge, as well.

Converting to this scheme represents a massive shakeup.

“Many operators are still in the evaluation phase, looking at ways to deploy Remote PHY or Remote MAC-PHY,” Kessler said. “Only a handful are in deployment. And that will likely stay consistent into next year.”

Rather than showing off some splashy new performance-driven DAA gear, CommScope’s product demos at Cable-Tec Expo seem to be focused on tools that drive down costs. DAA Aggregator, for example, lets operators connect up to eight HFC nodes to one Remote PHY device (RPD). This significantly increases the number of homes passed per RPD serving group — from a range of 20-40 to 150-300.

“It’s more capital-efficient,” Busch said. “It allows operators to gain the benefits of Distributed Access Architecture without as much investment.”

We’re Just Not There Yet

While the cable technology business’s recessionary trend certainly has a lot to do with the complexity associated with new standards and their adoption, Dell’Oro analyst Heynen believes that, despite all the hype, 5G isn’t — at least not yet — putting on the kind of pressure needed to make leading operators forget how much they just spent on upgrading to DOCSIS 3.1, while enabling 1 Gbps speeds that few consumers are using.

Is it too early to make 10G the star of the show?

“I don’t think spending improves significantly until [operators] feel there is a viable competitive threat to their 1-Gig DOCSIS 3.1 services, or an application or service [emerges] that challenges the capacity they have in their access networks now,” Heynen said. “That, plus slowing bandwidth consumption rates, are the reasons for the current trough in spending. I do see spending improving in the second half of the year, but certainly nowhere near the levels seen in 2018.”

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.

As large and midsized cable operators transition to virtualized CCAP, one of the big questions has been, can CommScope’s recently acquired Arris unit maintain its leadership position against the hordes of virtualized insurgents like Harmonic and Nokia charging the gate?

“We’ve worked well with operators over the last 20 years and we feel that we’re a pretty trusted vendor at this point,” Tom Cloonan, chief technology officer of CommScope’s newly integrated Network and Cloud group, said. “It’s ours to lose if we can’t create a good virtualized system.”

In Cloonan’s view, CommScope already has a leg up with its new virtualized Converged Cable Access Platform (CCAP), vCore, which it showcased at ANGA COM in Cologne, Germany.

‘Using Stable, Hardened Code’

Just as it did back in 2013, when Arris transitioned from the C4 to its E6000 converged access router, it’s using a lot of what it calls “hardened” legacy source code for vCore.

“A lot of people were amazed at how well the E6000 worked when it first hit the field,” Cloonan said. “We worked off of 15-year-old code that had been modified and improved over the years for the C4. And we hope to reap that kind of success with a similar approach. We’re using stable, hardened code in a virtualized platform.”

Based on a micro services architecture, vCore performs CCAP functions in software using off-the-shelf x86 Intel-based servers. But as operators transition to Distributed Access Architecture (DAA) using remote PHY nodes, their legacy E6000 hardware can be used to handle media access control (MAC) processing in lieu of servers.

“We allow the product to change its personality,” Cloonan said. “You can download software and transition it from being a normal CCAP box into one that functions in the Remote PHY world.”

The ability to keep using the E6000 hardware is key, given that CommScope controls 55% of the $1.5 billion global CCAP market with its flagship product, according to the Dell’Oro Group.

CommScope is in trials right now with a number of operators for vCore. “The game plan is to roll out the product in the next 12 to 18 months,” Cloonan said. “We’re picking partners right now for deployment.”

CommScope moves into the virtual market as Comcast, working closely with Harmonic and its CableOS software product, is developing its own virtual CCAP technology — one it could possibly syndicate, just as it does with its X1 video platform, according to a recent Light Reading report.

“Comcast is on the verge of deploying significant CableOS channels in the second half of this year,” Jeff Heynen, senior analyst for the Dell’Oro Group, said. “There are still some hurdles to overcome with respect to management and interoperability. Comcast is in the very early stages of its R-PHY deployment and will likely use a combination of gear from Harmonic, Arris and Cisco, with Arris and Cisco providing R-PHY nodes tied to existing E6000 and CBR-8 CCAP cores.”

In Europe, Vodafone Germany, Com Hem, Stofa and TDS are in the midst of moving quickly to virtualization and DAA, seeking to capitalize on benefits including dramatically reduced power consumption and easier service and maintenance.

In the U.S., Cox Communications and Altice USA are also likely to make moves to DAA on “a soonish timeline,” Heynen said, adding that the “jury is still out” on Charter Communications and any respective DAA transition.

But right now, major domestic DAA activity remains focused on Comcast, which is trying to work out the economics of having a lot more nodes in the field do a lot more of the network processing.

“Comcast will deploy a significant number of virtualized platforms alongside the R-PHY nodes because, economically and environmentally, they have to get the overall price per service group down in order to hit very aggressive targets for their DAA deployment,’ Heynen said. “You can’t deploy 10 times your existing node base without doing something very radical to the current DOCSIS channel pricing regime.”

Also at ANGA COM, CommScope was busy demonstrating several other technologies that are even more forward-looking — low-latency DOCSIS and Frequency-Division Duplex (Soft FDD) DOCSIS.

Within the confines of industry tech consortium CableLabs, CommScope is on committees developing these respective technologies, and the vendor used ANGA COM to show how they might work.

With 5G promising to reduce the typical 25-35 millisecond latency down to as low as 1 millisecond — the kind of network performance that would benefit advanced gaming, virtual reality and autonomous vehicles — CommScope is hoping to deliver a similar level of performance with low-latency DOCSIS.

Among the low-latency solutions being discussed in committee, according to Cloonan, is a system of dividing network packets by application, identifying those that apply to low-latency applications and giving them priority.

‘Soft FDD’ Emerges As Alternative

CommScope also is working with CableLabs on Soft FDD, which Cloonan said could emerge as an alternative for cable operators for which a transition to the “node plus zero” environment required by the next-generation Full Duplex (FDX) DOCSIS standard simply isn’t feasible.

Ultimately, FDX promises symmetrical data speeds as high as 10 Gigabits per second, with the signals stacked on top of one another — a scheme that doesn’t respond well to application beyond the node.

Soft FDD would allow operators to “take FDX equipment and not use it in an FDX way,” Cloonan said, keeping the upstream and downstream signals separate, as they have been for the past 50 years.

Rather, through software, operators would be able to remotely determine how spectrum is split from upstream and downstream channels.

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.

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.”

Casa Systems cut its revenue guidance by $50 million for the rest of the year this week, explaining that its cable operator clients are putting off longterm investments on network expansion as they mull their big moves to virtualized architectures.

Speaking to investors during Casa’s second quarter earnings report, company president and CEO Jerry Guo said customers are making only short-term investments on network capacity expansion, eschewing high-capacity purchases of Converged Cable Access Platform hardware as they mull their strategy on next-generation Distribute Access Architecture (DAA).

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

“Over the last few weeks, it has become clear to us that we are witnessing a pattern shift in procurement in the cable market,” Guo told investors, according to a transcript provided by Seeking Alpha. “While our customers weigh the timing for their large-scale rollout of the next network architecture, they are choosing to only procure capacity in a short-term basis. And they're not making very long-term upgrades of the chassis-based products in some cases.

“We do see DAA delayed industry wide in terms of large scale deployment,” Guo added. “And given that a lot of operators are contemplating DAA, they are slowing down their spending in their current capacity expansion.”

Guo said believes larger scale DAA deployment will begin in 2019.

Of course, none of this is helping Casa’s bottom line in the short term. The company’s stock is down around 23% since its Tuesday earnings report, during which it cut full-year revenue guidance to as low as $330 million.

Casa reported second quarter revenue of $68.7 million, up 3.1% from the year-ago quarter, but down 23% from the first quarter of this year.

Seizing on the network functions virtualization trend, Cisco Systems this week introduced the Cloud-Native Broadband Router, billing it as a “containerized, full software rewrite” of Converged Cable Access Platform (CCAP) services.

Cisco, which rolled out the new offering ahead of next week’s AngaCom show in Cologne, Germany, said the approach will give cable operators a new way to support core broadband routing functions while also simplifying network operations, reducing power, cooling and space requirements, and, more generally, cutting down scaling issues associated with traditional purpose-built hardware.

Cisco is introducing the Cloud-Native Broadband Router as operators take a closer look at a new virtualized class of CCAP products that lean more heavily on software capabilities and work in tandem with new distributed architectures that push more electronics to the edge of the cable network.

RELATED: Cable Industry Preps Push to Next-Gen Access Networks, Virtualization

That shift will open up new opportunities for the major incumbent CCAP vendors such as Cisco, Arris and Casa Systems, and open doors to Harmonic, Nokia and other suppliers that are trying to elbow their way in.

RELATED: Nokia Touts Versatility with Virtualized Distributed Platform for Cable Operators

For its new approach, Cisco said it has built a set of microservices using standard tools such as Kubernetes for container orchestration and Docker for creating, deploying and operating containerized apps.

Jeff Heynen, consulting director at SNL Kagan, said Cisco's software-focused move is in the emerging virtual CCAP arena, noting that the idea being brought forth will help to ease cable operator transitions to distributed access architectures.

Cisco’s approach will also help operators with a major challenge with DAA – managing their optical nodes in the cloud in lieu of having to send a truck to the physical location.

He noted that Cisco’s expertise in the routing world enables it to tack on and apply microservices and containerization, and get a step ahead where some products on the market are today.

“But, ultimately, this is where they are all going to head to," he said.

Though the virtual CCAP market is targeting a model whereby off-the-shelf hardware can be powered by software, it’s also clear that Cisco will continue to move ahead with its cBR-8 chassis and evolve toward a cloud-native version.

That’s a smart move, Heynen said, because operators continue to buy and deploy integrated cBR-8 CCAPs and line cards. This, he said, provides a roadmap to a full, cloud-based platform, “which, in the future, everyone is going to adopt.”

That move toward visualization and distributed access networks will likewise support the move to Full Duplex DOCSIS, which is targeting symmetrical multi-gigabit speeds, as well as small cell networks and 5G networks that are on on the near horizon.

“Everything is moving towards distributed architecture,” Heynen said.

The approach also makes sense from a scalability standpoint, he added, because cable operators around the world are at different stages with respect to deployment and interest in DAA. Some are moving on that now, while others might not be ready for years. Some might target it at a handful of nodes, while others will be doing it for thousands of nodes.

“Taking the next step by disaggregating software from hardware and deploying software-based CCAP services is an opportunity for operators to embrace DevOps and to improve speed to market for new services,” Sean Welch, vice president and general manager for Cisco’s Cable Access Business Unit, said in a statement. 

Cable MSOs sit in one of the more disrupted spots in the communications industry. By disrupted, we mean the easily changeable nature of customer loyalty, as consumers react to a less-than-perfect experience and the growing influence of other communications entities trying to acquire those customers. 

Consumers these days are increasingly willing to cut the cord and migrate to less-expensive streaming alternatives such as Roku, Google Chromecast and Apple TV. Leichtman Research Group data shows the clear reason why. An annual survey of TV households shows the average cable bill rose about 39% from 2011 to 2015, which is almost eight times the rate of inflation. The most recent cable bill average is now over $103 per month, with zero chance of that price remaining flat going into the next year.

Threats on Multiple Fronts

Bill sticker shock notwithstanding, cable providers must now face the new challenge of the eventual introduction of 5G networks delivering Gigabit performance, new fixed wireless access options and yet another unique ability to create a bundled offering that displaces the cable provider completely. Can you blame a customer with a high bill for looking at other options, especially from companies that can bundle services together just as well?

Cable MSOs have thus been forced to reshape their businesses, with much of that coming in the form of a complete digital transformation of infrastructure, and processes that help meet the expectations of consumers and business customers. Today’s cable networks have brought broadband access to households that now have become accustomed to HD and 4K video services and internet speeds of 100 Megabits per second-plus. Over the next few years, we can expect further digital transformation in the form of hybrid networks that provide higher capacity, less risk of delay or latency, lower power consumption and hopefully the ability to satisfy the end users’ demand for service at a price point that doesn’t increase the rate of cord-cutting.

With demand for internet bandwidth continuing to grow at more than 20% per year thanks to video streaming, enterprise cloud computing, big data, social media and mobile data delivery, meeting these demands must be cost-efficient, energy-efficient and reliable.

As we watch top-tier cable providers invest in fiber-to-the-home deployments, cable’s traditional fiber-coaxial networks will still provide the anchor points for service evolution and transformation, and will still have the capability to roll out new services, as ongoing investment has already been able to deliver more bandwidth.

Ongoing investments in the Converged Cable Access Platform (CCAP) and DOCSIS 3.1 have benefited the customer, with bandwidth performance metrics showing upwards of 10 Gbps downstream and 1 Gbps upstream. The embrace of CCAP has the transformative effect of increasing business agility, forging a smaller footprint, and creating lower power consumption and more IP video capability, giving the user more capabilities and enhanced security — all of which should help reduce total cost of ownership as a whole.

As SDN/NFV (software-defined networking/network functions virtualization) becomes a greater influence on the cable provider, one cannot discount the existing expectations and needs for what will be a hybrid network environment in the short to medium term. Cable providers will thus have physical and virtual functionality evolving in parallel. This, along with investments in remote PHY, which supports both FTTx (fiber to the x) and SDN/NFV initiatives, all contribute to the digital transformation around an IP network between the core and the node. The move to a virtualized, software-based architecture can help deliver network optimization, increase agility and create new opportunities for MSOs. However, any cable operator planning to reap the benefits from NFV and SDN must shift its focus from technology to business, and ensure all business support systems are up to the task. As a wise man once said, if you can’t bill for it, it’s a charity.

Virtualization Hits Home

Network-level virtualization will also transfer to the home, as we already see services move from a physical set-top box environment to an eventual virtual one. The $400-plus set-top box with a hard drive is set to be replaced by a cloud-based DVR that sources not just content, but applications such as program guides and DVR as cloud-based functions.

Cable MSOs will no longer be limited by the functionality of a dedicated set-top box and will make gains from much faster time to market for new products and services offered both from within and outside the cable provider. How about that customer call requiring a $100-plus truck roll to correct an issue that may or may not exist? It can likely be mitigated by a remote software update. What about replacing that $400 set-top box every three years or so? Virtual CPE means a $50 dumb box in the home can extract value from the cloud and be easily updated and configured on the fly and extends the life of home-based equipment. Analytics can also now be embedded in the cloud for easier data management and decision-making.

Can we calculate a long-term price for all of this digital transformation? For the cable provider, it means more innovation, faster delivery of new digital services and a much “stickier” service environment to demonstrate to the customer that all this innovation is actually worth paying for. That translates to retention.

And let’s face it: If cable bills aren’t going down any time soon, creating a product and service advantage will be a paramount requirement for the industry in the coming years.

Paul Hughes is director of strategy at Netcracker Technology.

Cable operator spending on two key network-facing initiatives – distributed access architectures (DAA) and new “virtual” converged cable access platform (vCCAP) implementations – is poised to ramp up over the next five years, according to a new forecast from Kagan, a media research group within S&P Global Market Intelligence.

RELATED: Ramping Up for Remote PHY

Amid MSO plans to move ahead with multi-year transitions to next-gen technologies, Kagan sees spending on remote PHY and remote MACPHY optical nodes – elements that move important electronics and functions of traditionally centralized CCAPs toward the edge of the network – jumping from $60.9 million this year to $544.7 million in 2019 and $969.2 million in 2022.

RELATED: CableLabs Moves Ahead with Remote MACPHY

Kagan is also forecasting that virtual CCAP/CMTS revenue will climb from $20.5 million in 2018 to $536.3 million in 2022, anticipating that operators in North America and Western Europe will lead the way initially in virtualizing a “small percentage of their systems.”

The moves toward DAA and software-driven vCCAPs are entering play as MSOs strive to add capacity to their networks while also reducing the headend/hub space, cooling and powering requirements that come with traditional, centralized, chassis-based CCAP products.

And while the amount of spend that will go toward the access network won’t rise a huge amount even as more of that money goes toward DAA and virtual CCAP deployments (with a good portion of going to market-leading, incumbent CCAP suppliers), those initiatives are likewise expected to open up opportunities for others that are trying to elbow their way in.

“It’s clear that there will be opportunities for those new suppliers,” Jeff Heynen, consulting director at SNL Kagan, said.

Of recent note, Sweden’s ComHem is starting to deploy a centralized virtual CCAP approach in partnership with Harmonic and its “CableOS” platform, and WideOpenWest is pushing ahead on a DAA project with Nokia.

RELATED: Harmonic IDs a Real Deployment for Its Virtual CCAP

Heynen said getting a handle on space constraints will likely be the biggest initial driver for vCCAP deployments, noting that some MSOs are “feeling the pinch” in their headend and hub sites as they continue to need to tack on capacity.

However, he stressed in his study that even MSOs that are early to the game with virtual CCAP deployments will be operating co-existing virtual and non-virtual CCAPs for a number of years.

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. 

Harmonic has joined a growing group of vendors to ink warrant agreements with Comcast that gives the MSO an opportunity to buy shares in those suppliers based on product sales and deployment milestones. 

Per this Harmonic filing with the SEC, the warrant agreement, announced Tuesday (Sept. 27),  gives Comcast the opportunity to acquire up to 7,816,162 shares of Harmonic common stock for a per share exercise price of $4.76, a figure based on the weighted average trading price of Harmonic’s common stock for the 10 trading days prior to the issue date. Based on those numbers, that’s a value of roughly $37.2 million.

Harmonic shares closed Tuesday up 6 cents (1.30%), to $4.66 each.

“This agreement is a significant validation of our new product investment strategy,” Patrick Harshman, Harmonic’s president and CEO, said in a statement. “We are well positioned to further strengthen our partnership with Comcast, drive new growth and create value for our stockholders.”

Harmonic will offer more detail on the warrants agreement today on a conference call scheduled for 9 a.m. ET.

Harmonic did note in the agreement press release that the warrants agreement is based on specific sales to Comcast and other “deployment milestones” involving the vendor’s just-announced “CableOS” platform and other Harmonic products.

CableOS is a virtualized form of the Converged Cable Access Platform that aims to help cable operators scale up capacity while keeping power and space-requirements in check alongside a strategy to push more electronics toward the edge of the network. Nokia and Casa Systems also introduced virtual CCAP products this week.

During a Tuesday panel session at the SCTE/ISBE Cable-Tec Expo show in Philadelphia, top engineering execs at Liberty Global, Charter Communications and Shaw Communications shined some light on the economic and capacity drivers that are causing them to consider a shift toward software-based access network platforms and distributed architectures that run on cheaper commercial off-the-shelf (COTS) hardware and away from centralized, purpose-built hardware.

RELATED: Cable-Tec Expo: CTOs Share Hard Truths With Vendors

Comcast has recently signed similar warrants deals with Arris (focused on products in the supplier's Network and Cloud segment), and with Universal Electronics, a key supplier for Comcast’s voice remote for the X1 platform.

PHILADELPHIA – A panel of some of the industry’s top engineering executives shed some important light on why distributed architectures and the shift toward the software-driven, virtualization of network functions have rapidly become major priorities for MSOs around the globe.

Boiled down: Old models, driven by purpose-built hardware, simply won’t work anymore.

There’s a huge “disconnect” between the data that people are consuming and what cable operators must spend in order to keep up with that demand, Balan Nair, executive vice president and chief technology officer of Liberty Global said in a wide-ranging panel session that was moderated by Bob Stanzione, executive chairman and board chairman of Arris.

As network capacity planning goes, Liberty Global is already allocating enough capacity to deliver an average of about 1 Mbps per sub. With annual capacity growth in the range of 30% to 40% per year, it won’t be long before that hits 2 Mbps per sub.

STATUS ‘NOT SUSTAINABLE’

That would equate to about 25 8MHz-wide channels at Liberty Global, or “like half of our whole plant,” Nair said, noting that this trend causes MSOs to keep “feeding this beast” with capital just to expand capacity to stay ahead.

“That’s a problem for all of us,” he said. “That’s not sustainable.”

And it doesn’t add up with a business that grows revenue at 4% to 5% per year. “Eventually, it breaks,” Nair said. “The math will never work.”

The historic practice of buying specialized devices from traditional suppliers that cost a lot to build and buy won’t work anymore. “That model has to change,” Nair said.

The shift is toward cheap, commodity hardware running on very specialized software.

“So, we’re going to ask our vendors to think about the software and to run it on some cheap hardware because, at the current rate, it's not sustainable,” he said.

Vendors appear to have gotten that message loud and clear. Just this week, Nokia, Casa Systems and Harmonic all announced virtualized versions of Converged Cable Access Platforms that can work in tandem with distributed architectures that move away from traditional monolithic access devices.

Fellow panelist Jim Blackley, EVP, engineering and IT at Charter Communications, called Nair’s characterization of the situation “spot on and accurate.”

He added that, when it comes to capital, “you can’t spend it everywhere. … You can't spend it in the home and spend it in the network and spend it on content and all of the other things we need to deal with."

He said it’s important to think about virtualizing the functions of the consumer premises equipment (CPE) and move the compute, storage, encryption, and packaging into cloud-based centralized systems.

Charter is moving in that direction with ActiveVideo (a vendor it owns as part of a joint venture with Arris). Virtualizing the CPE means "you can put out devices that will last longer,” Blackley said. “The reality of our business is, the day you [deploy] something, it's legacy."

He said Charter was a “huge fan” of network virtualization and separating out the MAC and PHY elements.

Zoran Static, EVP and CTO of Shaw Communications, said he’s also keying on these trends and listening to partners on “how the future is going to land.”

But when it comes to a move toward virtualization, “the starting point becomes remote PHY,” he said. “The old model is not sustainable. It’s not a choice really, anymore.”

Nair called the shift to software-driven models as one of his top worries. “It requires a skillset change in all of our businesses,” he said. “The change is not just the skillsets in our employee base, but the skillsets of our vendor base as well."

Vendors, meanwhile, prefer to innovate on their own platforms. Interests of the two sides might not match up and could become a source of tension.

Nair thinks it’s best to solve that problem, “or else you're going to see more and more operators building their own stuff, and that won't be very good for the industry."

The early part of the talk centered on the move toward Gigabit-level broadband – something that has become a table stakes option for consumers who need it, or at least think they need it.

But Nair doesn’t see 1-Gig going “mainstream” until 2018 or 2019. By that, it won’t become a “bullseye” product for Liberty Global that is backed heavily by marketing and promotion. Today, that’s relegated to the operator’s 250 Mbps product, he said.

“We’re looking at increasing it,” Nair said, noting that MSOs have the luxury to press two levers with broadband – price and speed – while competitors with less robust networks can only fiddle with price. “Speed wins.”

Blackley said Charter is already getting positioned for the 1-Gig future. Its all-digital migration is freeing up capacity and Charter is also plunging fiber deeper into the network.

He added: “It’s not just about speeds; it's about latency, and it's not just about in-home; it's out of home.”

Blackley hesitated to say when consumers will actually need 1-Gig speeds, but won’t be surprised to see it happen eventually. "Like your garage, if you build it, it will get filled,” he said.

‘IRRATIONAL’ GOOGLE MOVES

Stakic, meanwhile, warned against “irrational behaviors” occurring in the United States, largely “triggered by Google,” that might cause MSOs to rush prematurely to 1-Gig.  He questioned if adoption rates will be high enough to justify the returns, noting that there aren’t many apps now that require three-digit megabit speeds at this point, let along 1-Gig.

Nair said the challenge of getting gigabit to the home pales versus getting gigabit support inside the home with WiFi. “The cost of WiFi now is actually more expensive on a per subscriber basis than DOCSIS,” he said.

The panel dove deeper into wireless and mobility now that Comcast and Charter Communications are both looking to put their MVNO agreements with Verizon in play.

Blackley said having an MVNO deal won’t prevent Charter from having to bulk up its own network with denser WiFi and backhauling capabilities.

“Wireless is just an extension of the wired network, and our consumers want their products where they are..and we have to have a network that will support that with economics that make sense." 

Casa Systems is using this week’s Cable-Tec Expo in Philadelphia to introduce a virtualized core for the Converged Cable Access Platform as well as for 4G/5G cellular and WiFi capabilities.

Casa, which has previously centered efforts on more centralized forms of the CCAP, will demo a vCCAP that uses the vendor’s Axyom software architecture, which provides a common security framework for the independent scaling of control and data plane functions, the company said.

RELATED: Cable-Tec Expo: Nokia Puts Gainspeed Buy to Work

The supplier said its latest product line features virtual MAC layer data processing, control and management functions, and that its family of distributed access nodes for PHY layer processing in cable networks are supported by both the new vCCAP product and its chassis-based CCAPs, such as the C100G and C40G.

Casa Systems joins a group of access network suppliers focused on cable that have launched or are developing virtual CCAPs, including Arris and Nokia, among others.

Casa (booth 665) hasn’t announced any deployment deals for the virtualized approach, but some of its announced partners include Interop Technologies, Jupiter Telecommunications, DNA Ltd, Mediacom Communications, Wave Broadband and Time Warner Cable (now part of Charter Communications).

In addition to the vCCAP demos, Casa will also be showing off its Video over DAA (Distributed Access Architecture), DOCSIS 3.1 gear and Axyom LTE based Wi-Fi calling, and Secure Wi-Fi MDU products. 

Roughly two months after salting away its acquisition of Gainspeed, Nokia has unveiled a virtualized version of the Converged Cable Access Platform (CCAP) that spans support for HFC- and PON-delivered services and applies a vision for the industry’s all-IP future.

Nokia timed the announcement with this week's SCTE/ISBE Cable-Tec Expo in Philadelphia. 

Get complete coverage of Cable-Tec Expo 2016

Nokia’s vCCAP, which factors in a shift toward energy- and bandwidth-efficient distributed access architectures that push transport electronics toward the edge of the network, is comprised of a mix of products that incudes elements acquired via Gainspeed and developed previously by Nokia. They include the Gainspeed-branded, software-driven Access Controller, Video Engine, and access nodes that support DOCSIS 3.1 and DOCSIS 3.1 (the SC-2D), and another access node that supports 10G EPON (the SF-4X). Nokia said the new solution will be commercially available later this year, with the SF-4X slated for launch in early 2017.

Currently in a number of customer lab and field trials across North America and Europe, the new unified cable access solution will be available commercially later this year with the SF-4X following in early 2017.

“We’ve been aggressively working together and integrating Gainspeed into the Nokia family, both the people and the products,” Jeff White, head of cable strategy and business development at Nokia, who joined the company from Gainspeed following the acquisition,” said, noting that the system is capable of managing and orchestrating not just CCAPs but other types of media and devices on the network and accelerate the deployment of new services.

While remote PHY architectures are becoming popular among some vendor products, Nokia’s approach is to distribute both the MAC and PHY elements. The platform’s Video Engine will help MSOs adapt their video services to the new Ethernet-powered network while keeping their legacy components intact.

White said Nokia’s angle will help MSOs reduce power and space requirements at headends that are outfitted with centralized, “big iron” CCAP chassis as capacity demands continue to rise. It can also prolong the need for MSOs to pull fiber to the premises, or at least put them in position to do so further down the road.

“As capacity grows at a fast clip, doubling every two years, they [cable operators] are literally running out of space in the headends,” White said.

Nokia will be using the new vCCAP product line to compete with cable access rivals such as Arris, Cisco Systems, Casa Systems, Harmonic and Huawei.

“The virtual CCAP is a legitimate phenomenon,” Jeff Heynen, consulting director and analyst at SNL Kagan, said in an interview for a feature story on this topic that will be featured online and in Cable-Tec Expo dailies that will be distributed this week by Multichannel News (link to preview edition). “I think this is an opportunity with vendors without share to get some traction.” 

White said Nokia is pursuing a wide range of deployment scenarios, including those specific to multiple-dwelling units (MDUs), as operators consider alternative architectures as they split nodes and go “fiber-deep,” and even putting its new platform side-by-side with legacy platforms. Yet another option, he said, is the notion of removing an existing CCAP and converting headends and hubs to virtual and distributed systems.

Nokia has not announced any specific trials or deployments with MSOs, but said it is in multiple customer lab and field trials with “major” operators in North America and Europe.

When the Nokia-Gainspeed deal was announced, Comcast, Liberty Global and WideOpenWest all praised the acquisition, with WOW noting that it was testing Gainspeed’s platform and “preparing for deployment.”

Gainspeed, based in California, was founded in 2012 by Shlomo Rakib, a DOCSIS pioneer and co-founder of Terayon  Communication Systems (sold to Motorola in 2007). Nokiaannounced its agreement to acquire Gainspeed on June 9.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Here are the statements from MSOs praising the deal:

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

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

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

— Balan Nair, Chief Technology Officer, Liberty Global 

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

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

Representing the next step in the evolution of DOCSIS-powered cable broadband networks, CableLabs recently released a new family of specs that cover a range of “distributed” architectures for the Converged Cable Access Platform (CCAP), a high-density system that combines the functions of the cable modem termination system and the edge QAM and will play a key role in the industry’s all-IP transition.

The new distributed architectures, which expand on today’s more centralized deployments,  will provide “significant scale advantages and flexible deployment options supporting…both DOCSIS 3.0 and DOCSIS 3.1 networks,” Karthik Sundaresan, a principal architect at CableLabs, explained in this blog post about the new specifications, which aim to facilitate multi-vendor interoperability.

The distributed approach, Sundaresan wrote, fits with the software-defined networking (SDN) and networks functions virtualization (NFV) initiatives operators are pursuing, and will run parallel to a wide range of wireless infrastructure architectures.

He noted that distributed DOCSIS deployments are already underway in some markets that use  C-DOCSIS, a modified approach that was originally developed for China’s cable market that has since been formally integrated with CableLabs’s broader DOCSIS initiatives.

CableLabs, Sundaresan explained, is specifying several different Distributed CCAP Architectures (including Remote PHY and Remote MAC-PHY) and will release the set of technical reports and specifications throughout this summer.

The specs will apply to DOCSIS and CCAP vendors such as Arris, Cisco Systems, Casa Systems, Harmonic and Huawei, as well as Gainspeed, a startup that is developing a “virtual” CCAP.

CableLabs issued the Remote PHY family of specifications last month (the technology is covered via six specs and one technical report describing the overall architecture). Labeled as “MHAv2,’ they represent an evolution of the original Modular Headend Architecture specifications.

Remote PHY  paves the way for an integrated CCAP to be separated into two components -- the CCAP Core and the Remote PHY Device (RPD) – along with an interface that weaves them together using “pseudowires.”  

A common location for an RPD, which contains elements such as the downstream QAM and OFDM modulators, upstream QAM and OFDM demodulators, is the optical node, located at the junction of the fiber and coax plants, Sundaresan wrote.

Sundaresan said vendors have begun architecting ASIC designs, device platforms and software to implement the RPD and CCAP-Core devices. The specs for the OSS that will manage the devices are under development and will be released this summer.

Gainspeed, a startup that’s developing a “virtual” implementation of a Converged Cable Access Platform (CCAP), has hired industry vet Jim Marino to the post of vice president of worldwide sales.

Marino most recently served as SVP of global sales and service for Concurrent Computer Corp.’s Video Solutions Business. Before that he was VP of global sales for CommScope’s Advanced Broadband Division, and is also late of Harmonic, ADC, Optinel Systems and Scientific Atlanta (now part of Cisco Systems).

Gainspeed said Marino will drive the Sunnyvale, Calif.-based company’s go-to-market efforts and will work closely with Mark Stalica, the vendor’s VP of sales.

Gainspeed, a company founded by Shlomo Rakib, a DOCSIS pioneer and co-founder of Terayon has not revealed its product roadmap, but the company is focused on a virtualized CCAP that will distribute the MAC and PHY out on the network, and compete in the market with vendors such as Arris, Cisco, Casa Systems, and Harmonic.

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

Juniper Networks, one of Gainspeed’s major investors, CommScope, Netgear and JDSU struck up an interoperability partnership almost a year ago.