Why the ‘Cable’ Market is Primed for Opportunity
Author: Drew Kempen, Consulting Systems Engineer
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| Drew Kempen, CSE |
Seemingly overnight, there is a major buzz around the cable
market. What is causing this buzz in a
technology area that was apparently in serious peril not too long ago? To understand this, one must understand cable
history, the overall market and technology.
Cable had seen arguably its largest growth period in the
late 90’s to mid-2000s. The introduction of two-way internet capable systems in
1996, along with the demand and transition to HD content in the 2000s sparked
this growth. A massive undertaking of
pushing fiber deep, building next gen architectures (anything less than N+6),
and expanding bandwidth drove the network adaptation.
Subscribers, all of the sudden, were being thrust into the
digital age. Analog began its slow death—but
still played a part as a service. HD
content slowly became the primary customer choice and major
differentiator. Cable could offer much
better speeds than the previous dial-up and DSL models. The future looked bright.
To account for growth in HSD/Data demand, cable introduced
DOCSIS 3.0. This allowed for more than one channel per service group to be
bonded together— offering a larger pipe and keeping service group sizes
larger. Most cable operators then sat
back, made the necessary changes, went into operational mode, and watched
customers roll in.
But as with any technology industry, ‘promising futures’
arrive and are surpassed very quickly…
Fast forward to 2007 and the financial crisis. The market crash hit technology and cable
operators particularly hard. Virtually
everything regarding investment into the system was put on hold. The ‘necessity’ to grow HD content from 200
channels to 300 channels began to seem…ridiculous. The seemingly infinite amount of new channels
popping up daily during the HD era disappeared overnight. Cable went into a defensive mode. Maintain and recoup. Innovation stopped, plant investment halted,
and growth became stagnant.
This in turn affected the equipment and partner side. Vendors scaled back on the big bet
investments and R&D. Contractors
slowly disappeared. As in any economic
downturn, only the strong survived. This
trend also applied to cable operators as consolidations of many of the mid to
smaller tier companies occurred.
Then in 2008, everything changed once again, and would never
be the same. Netflix began streaming in
November of 2008. While there were
sceptics because of the limited content at the time, Netflix became an instant
success. Particularly for people on a
budget. By this time, internet
connectivity had finally overtaken video as the most important communication
service required in the home. Many
people in the down economy had to pay for internet, but didn’t want to fork
over the extra $50-100 per month for video.
Netflix provided a revolutionary and cost saving idea, and gave subscribers
an experience better than anything they ever had in the past.
It is very important to understand that up to this time,
from the introduction of cable internet, one DOCSIS QAM channel per service
group had sufficiently accounted for data traffic. Within 2-3 years, Netflix
alone accounted for 50% or more of all internet traffic. The revolution had begun. Steadily, we began to see the demand for
DOCSIS QAM per service group rise from 1-2 by 2010, 2-4 by 2013, 4-8 by 2015,
etc. Now the industry is looking at 32
channels and beyond over the next few years alone, and with smaller and smaller
service group sizes.
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| Chart: DOCSIS QAM Growth Trends & Projections for constant service group size. |
In addition to Netflix and streaming services, FTTx began to
heavily roll out in the 2010s. The
‘speed war’ had begun. 30 MB, 50 MB, 100
MB, 300 MB, 1 GB tiers! Not only was
keeping up with real customer demands a concern, but now a marketing war based
on subscriber perception had begun.
The problem many cable operators faced, was that cable
technology at the time, would not be able to keep up with those speed requirements. It was also apparent as they viewed the
demand/impact hockey stick of QAM channel requirements, they were going to have
significant issues keeping up with consumer demand—unless they continued to
split nodes; over and over and over again.
This would cause rapid expansion in CMTS chassis requirements, optics,
fiber, nodes, etc. Not a viable option
for any long term strategy or business model.
Major MSOs began to question whether they should abandon
growing HFC at all and move directly to a FTTH architecture. There seemed to be no good answer. Moving to a FTTH architecture was a massive
cost, change in technology, new HE’s, changing set-tops, re-educating maintenance
crews, changing operating procedures, …new vendors, partners, contractors,
etc. In addition, the transitional
process would be a nightmare. On the
flip side, investing in HFC to keep up with demand and competition appeared
okay for a while; but seemed a lost cause in the long run.
Fortunately, the few remaining thought leaders in the
industry came together. The result of
this is DOCSIS 3.1, higher density chassis, remote Phy, 1.2 GHz gear, larger US
splits, etc. The foundations of this all
arising in the 2012-2014 time frames.
The possibilities that these technologies would provide, modeled cable
systems well beyond a 10-year time frame at a fraction of the cost of a full
FTTx overbuild. Adopting a hybrid New
Next Gen HFC architecture with targeted PON not only extends that even further,
but helps the longer term migration to fiber deeper becomes manageable and cost
effective.
These technologies help solve the bandwidth issue, speed
requirements, scaling issue at the HE, and provide spectrum for next gen
services such as managed IP, Cloud VOD, Cloud DVR, etc. At this point, it was all a matter of the
vendors and partners executing on that solution, equipment and software.
Opportunities in Cable are back, and in a big way. Major players in cable such as Comcast and Time
Warner continuing to investment in HFC technologies. These changes include Node splits, upgrades,
CMTS replacement and scaling, D3.1, Remote Phy, IP video, Targeted PON growth, new
build PON integration, etc.
Over the next 10 years, the majority of cable operators will
have:
- Upgraded most if not all of their node and active components
- Enhanced tap and passive networks
- Migrated to node only
- Growing CMTS capacity multiple times over
- Introduced DOCSIS 3.1 and Remote Phy
- Migrated services away from broadcast and traditional QAM to IP delivered services
- Migrated portions of their network to true virtualization
- Began process of migrating to full FTTX/PON
Vendors will be releasing new platforms and technologies at
a rapid pace over the next few years. The
scale of changes in the network will rival, if not exceed the changes that took
place in the late 90s to mid-2000s. To
achieve success during this transition, operators, vendors and partners need to
work together—leveraging the strengths of each entity.
CCI has the ‘across the network’ experience and expertise to
help cable operators build a strategic migration solution for both the physical
network and service strategy. From
strategy to design, installation, implementation, and Managed NOC & Call Center
services, CCI is the ideal partner to help cable operators with transitioning
their traditional video and HFC systems to the IP capable network of the
future.
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