Cable operators are continuously transitioning to enhance their networks to deliver symmetrical speeds over a mix of existing HFC plant and, increasingly, fiber amidst solid competition from fiber providers and fixed wireless access (FWA) providers.
According to Dell’Oro Group, cable access concentrator revenue was up 15 percent year-over-year at $270 million in the second quarter. Remote PHY devices, Remote OLTs, and Virtual CMTS platforms recorded significant revenue gains for the quarter as cable operators continue expanding their DAA and fiber initiatives.
During the recent Broadband for Breakfast event Setting the Record Straight on PON Equipment Trends, Jeff Heynen, VP at Dell’Oro Group, said the cable industry is transitioning its network like the fiber providers.
Today, cable operators are increasing their deployment of Remote PHY and virtual CMTS platforms.
“It’s interesting to look at cable being in a similar position as the fiber providers in the sense that the upgrade of their infrastructure is happening in the form of new Remote PHY devices as well as virtual CMTS licenses to support services groups in Remote PHY units,” he said. “The benefits for cable operators deploying Remote PHY and virtual CMTS architecture are improved signal quality, improved modulation ratios, and if they are adding high splits and mid splits, they will do them in conjunction with Remote PHY deployments because of the additional bandwidth and signal quality improvements.”
Competitive headwinds
While cable is aggressive with its network upgrades, it is hard to overlook that it faces growing competition from fiber and fixed wireless access (FWA) providers. Subscriber numbers have continued to decline in recent quarters.
During the second quarter, the cable industry saw mixed broadband results. While Charter led the way with 77,000 new subscribers, Comcast lost 19,000 broadband subscribers, and Altice USA lost 36,000.
Meanwhile, regional cable operators—Cable One and Breezeline—lost 5,100 and 7,000 subscribers during the period.
By comparison, wireline telcos added about 450,000 net fiber adds during the second quarter but had about 510,000 non-fiber net losses. Fixed wireless/5G home Internet services from T-Mobile and Verizon said about 890,000 subscribers during the period.
“The challenge in the North American broadband market is net subscriber additions are extremely slow right now,” Heynen said. “Some of that has to do with fiber competition and fixed wireless providers, which is continuing to have an impact.”
Heynen added that Tier 1 cable MSOs have driven many remote PHY and virtual CMTS deployments. “It’s a bit more difficult for smaller providers to get their hands on this equipment at the moment,” he said. “Supply chains will ease up, but this dilemma is similar in the cable space.”
Cable’s ups its fiber drive
As the cable industry faces competitive pressures, particularly in North America, it continues expanding its fiber broadband deployments.
The industry is building out fiber to homes in a mix of Brownfield overbuild and Greenfield scenarios. “It’s almost unheard of to deploy coax in a greenfield environment,” Heynen said, adding that edge-out programs will see more fiber deployments.
New edge-out fiber expansion programs that Charter undertook in its Rural Digital Opportunity Fund (RDOF) rural deployments are an excellent example of how cable is expanding its fiber broadband reach. The cable MSO won over $700 million in broadband funding since securing awards in the 2018 RDOF auction. This funding will go toward buildouts to 300,000 locations.
Charter will likely win other public funding for broadband expansions via the ARPA funding program. Likewise, states will start making awards from the $42.5 billion Broadband Equity Access and Deployment (BEAD) program in 2024.
“In these edge-out programs, Charter with its RDOF build-out is using remote OLT and cabinets to build off the existing DOCSIS they have,” Heynen said. “As they move into underserved and unserved areas, they use fiber with a remote OLT with the same footprint as an optical node.”
Heynen added, "We continue to see this as an essential platform for cable operators as they transition to fiber at an incremental pace.”
However, Tier 1 cable MSOs won’t be the only ones making these transitions. Heynen said he expects smaller cable operators to follow a similar path as the larger providers.
“These purchases by Tier 2 and Tier 3 MSOs of this equipment in North America are just beginning, and we have just scratched the surface of this particular form factor being used in those types of deployments,” he said. “Moving forward, I expect this is how many cable operators will expand their fiber footprint in their serving areas.”
Sean Buckley
Sean is responsible for establishing and executing the editorial strategies of Lightwave and Broadband Technology Report across their websites, email newsletters, events, and other information products.