8 August 2003 Charlottesville, VA Lightwave -- US-based multiple system operator (MSO) spending on transmission, routing, and switching equipment should see sequential growth with a total aggregate spending of approximately $3.2 billion over the next five years, according to new research from CIR Inc.
According to the report, Cisco has become the most successful vendor to cross over to the cable industry from the telcom and enterprise markets and has become the dominant supplier of cable modem termination systems (CMTSs), as well as switching and routing equipment. The company has shaken off every serious competitor in the headend cable-data market and, with the exception of ADC, has left everyone else scrambling for inconsequential contracts and international opportunities. Meanwhile, say CIR analysts, within the MSO equipment industry, Riverstone is to Ethernet what Sorrento is to DWDM: A marketing success, with little revenue to show for it.
The MSOs have won broadband. While some observers still expect DSL, 802.11, or even satellite broadband to gain share, CIR expects cable to continue its residential broadband domination, with around 65% to 70% of the market. MSO currently have about 12 million subscribers, but they should triple that amount in the next three years or by the time the market matures and growth slows dramatically. Already the fastest growing MSO service-- residential broadband Internet--should grow from about 15% of cable revenue today to about 30% in 2007 and continue to be the application that determines MSO networking decisions instead of video on demand (VoD).
MSOs have surpassed the long-distance companies as the biggest threat to the RBOCs selling Ethernet. CIR notes that while IXCs and CLECs typically fall on top of each other trying to grab the biggest customers in the largest markets, the MSOs stick to only those cities where they have existing franchises and can leverage existing infrastructure. Moreover, they are not afraid to slash pricing when chasing accounts. The MSOs have also managed to capture a large share of educational, government, and other not-for-profit markets.
CIR's report, "Transmission, Routing, and Switching in the Cable Network," examines the financial footing and business strategies of the top cable operating companies. The report also illustrates how vendors are succeeding or failing in their efforts to generate revenues. Also included are forecasts of domestic spending on transmission, routing, and switching hardware (SONET, WDM, ATM, Ethernet, IP, and CMTSs) broken out by geographies, total shipments, and port types. For more information, visit www.cir-inc.com.