Equipment suppliers voice cable-TV industry tactics

Jun 1st, 1995

Equipment suppliers voice cable-TV industry tactics

Based on close coordination with cable network operators, optical equipment and component suppliers are forging cost-effective installations.

Mitch Shapiro

Contributing Editor

During the past few years, business strategies and network architectures in the cable-TV industry have undergone revolutionary changes.

As this has occurred, suppliers of optical equipment have worked closely with network operators to develop architectures that can support the latter`s business plans and with component suppliers to create products that can allow these architectures to be deployed cost-effectively.

What follows is a snapshot of the leading optical equipment suppliers to the cable-TV industry, presented in alphabetical order. It examines their overall strategy, optical product lines, corporate alliances, future plans, and their views on the key issues confronting their industry.

American Lightwave Systems American Lightwave Systems, a subsidiary of ADC Telecommunications Inc., supplies AM analog and digital opto-electronic systems to the cable-TV industry.

According to John Holobinko, vice president of marketing and strategic planning, ALS revenues have experienced a 70% per year composite growth rate and are poised to increase 150% in 1995.

The company`s DV-6000 digital product has been embraced by both cable operators and telephone companies, says Holobinko. "All major cable-TV interconnects have been done with DV-6000," he says, including large projects by Continental in New England, TCI in Miami and Viacom in the Bay Area.

The DV-6000 system is also being deployed by telephone companies that are getting into the video business, including Southern New England Telephone in Connecticut, and Ameritech, the first regional Bell operating company to gain Federal Communications Commission approval for large-scale broadband deployment.

These deals--especially the telephone company commitments--suggest that ALS has had success convincing network operators that DV-6000 is preferable to synchronous optical networks for video interconnects.

In addition to being expensive and bulky, says Holobinko, Sonet video solutions currently suffer from a lack of codecs that can support signal formats used in the cable-TV industry, including radio frequency scrambling, vestigial side band and quadrature amplitude modulation, and the formats used to deliver digital audio services and the Sega Channel. He claims the DV-6000 can also deliver better video quality today than Sonet.

ALS and its parent ADC, which has extensive experience in the telephone industry, have also been leaders in bringing to market an integrated platform designed from the ground up, for delivery of video and voice. The system, says Holobinko, features an operating support system that is compatible with standard telephone-industry operation support systems.

He says development of the Homeworx product line began roughly two years ago, with shipments of the video portion of the system starting in July 1994.

In addition to a number of large cable multiple service operator customers, ALS has sold the video Homeworx system to Southern New England Telephone and Ameritech.

Holobinko says the Homeworx telephony system, which can be added to the video platform in a modular fashion, will begin shipping during the first quarter of 1996. ADC recently announced a $160 million deal with an Australian company for delivery of the Homeworx telephony system.

ALS is also active in the distance learning and broadcast markets, and is planning a major expansion into the videoconferencing market.

The company has a joint venture in China, the initial focus of which will be on video. It will include technology transfer and, ultimately, manufacturing facilities in China. Holobinko says it took two years to develop this venture.

Antec Corp.

Much of Antec`s growth during the 1990s has come from its fiber optics alliance with AT&T, which allowed it to become the early leader in sales of opto-electronics and fiber cable to the cable industry.

With the launch of its first Laser Link product in 1989, Antec helped seed the cable-TV market for amplitude-modulation optical products. That market has come a long way since then, in terms of performance and pricing.

For example, the first-generation Laser Link products carried a price tag of $30,000 for a transmitter and receiver pair. And because these early transmitters could deliver only 1 to 4 milliwatts of power with limited linearity, transmitters could generally feed only one receiver.

Today, Antec`s Laser Link products have better linearity and can offer output power to 15 milliwatts, which means a single laser can feed multiple receivers--and price tags for even the highest-powered units are typically only $11,000.

A big factor in Antec`s growth has been sales to Tele-Communications Inc., the nation`s largest cable operator, which during the past several years has been aggressively upgrading its networks with fiber-rich architectures (see "Multiple system operators deploy fiber-ring networks," page 6).

Sales to TCI during 1992 accounted for roughly 40% of Antec`s sales. That figure has since dropped to 34% in 1993 and 27% in 1994; and Antec`s non-TCI business has expanded by 43%.

In March 1994, Antec announced Gateway optical receivers to support its cable integrated services network architecture. The modular Gateway product--developed in cooperation with Augat Communication Products, AT&T and Harmonic Lightwaves--delivers video, voice, data and compressed signals. It features redundancy and return laser options for interactive services, as well as network management capabilities.

Antec unveiled two Laser Link transmitter products in late 1994. At the high end, it introduced the Laser Link II Plus HP module, a high-powered, 11-to-15 milliwatt version of its existing transmitter product, which featured 7 to 11 milliwatts of output power.

At the other extreme was Laser Link Low Power, designed to satisfy the growing demand for low-cost transmitters that can deliver dedicated "narrowcast" signals to a single optical node. Low-power Laser Links provide 3 to 5 milliwatts of output power and typically cost approximately $6,500.

While U.S. operators have expressed interest in deploying low-cost "narrowcast" transmitters during the next several years, Antec sees today`s strongest demand for such products coming from overseas markets, where operators are building new networks to deliver video, voice and data services.

Andy Paff, executive vice president, strategic planning and technology, says Antec is "looking hard at 1550-nm technology," including erbium-doped fiber amplifiers. The company currently markets Harmonic Lightwaves` high-powered YAG product on an original-equipment manufacturer basis, mostly for supertrunk applications.

Through its historic role as a distributor, Antec has enjoyed long-term supply relationships with telephone companies. These ties have been further strengthened by Antec`s close relationship with AT&T, which has been a major telephone supplier.

Also expected to strengthen Antec`s positioning in both the cable and telephone markets is its recent acquisitions of Keptel Corp., a telephone supplier specializing in interconnect and transmission devices for fiber networks, and PowerGuard, a leading manufacturer of power supplies for cable and telephone networks.

Antec has also bolstered its research and development capability, with the recent acquisitions of Electronic System Products and Engineering Technologies Group. The former, with more than 100 engineers, specializes in digital and analog research and development. The latter is a Denver-based consulting concern that has expertise in network design.

Antec has also taken a 20% stake in Research Triangle Cable, a joint venture with Sumitomo Electric Lightwave, which manufactures loose-tube fiber cable. This will allow Antec to offer loose-tube fiber, as well as the central-core AT&T fiber it already markets.

C-Cor Electronics Inc.

C-Cor, a long-time supplier of radio-frequency amplifiers to the cable industry, sells an amplitude-modulation fiber system and a proprietary digital system product that was developed by its California-based Comlux unit, which C-Cor acquired several years ago.

Thanks in large part to an active domestic and international construction market, C-Cor`s revenue nearly doubled, to $57.2 million, for the six months ended December 1994.

Noting that synchronous optical network technology "is where the industry is headed," David Jordan, director of marketing, says C-Cor is working to make its digital system compatible with Sonet-based networks.

The product will be able to import and export Sonet, with a single uncompressed video channel delivered in a 155 megabit-per-second Sonet frame, he explains. "Longer-term," he says, the company is "looking at compression" that would allow a video channel to be delivered at the DS-3 rate (44.736 Mbits/sec).

Jordan suggests C-Cor`s current approach provides a quality advantage vs. compressed video. And while it may use more fiber, it may also provide cost savings for terminal equipment.

C-Cor sold amplitude-modulation opto-electronics manufactured by American Lightwave Systems, a subsidiary of ADC Telecommunications Inc., until 1994. In May of that year, it announced plans to manufacture its own amplitude-modulation opto-electronics using lasers supplied by Ortel. Since then, it has been filling out its product line and manufacturing capability, including a new plant in Reedsville, PA.

Harmonic Lightwaves

Harmonic Lightwaves introduced its first opto-electronic system, developed specifically for the cable-TV market, in 1991.

That system was built around a high-powered 1310-nm YAGLink transmitter that achieved high-quality distortion through use of predistortion linearization and parametric feedback circuits. It was also designed for easy plug-and-play installation and configuration.

The company`s product line also includes a single-output receiver, Fabry-Perot and distributed feedback return transmitters, a network management system and, since early 1994, a 1310-nm distributed feedback laser product.

According to product manager Yaron Simler, the company will introduce 1550-nm equipment, including erbium-doped fiber amplitudes, by year-end.

Like its YAGs, Harmonic`s distributed feedback lasers are pre-distorted, says Simler. This has several advantages, he says, including higher production yields and a higher modulation index. The former results in lower costs; the latter tends to increase transmitter lifespans.

Simler says the company`s sales doubled from 1992 to 1993, and more than doubled from 1993 to 1994. Based on Harmonic`s current backlog, he expects a similar increase in 1995. He also estimates that distributed feedback lasers will account for 35% to 40% of Harmonic`s sales during 1994 to 1995. Roughly 95% of these are used for distribution, and 5% are deployed in long-haul, split-band configurations.

The mix of applications for the YAGLink product is, not surprisingly, quite different--85% for supertrunks, 15% in the distribution network.

Simler expects to see stiff competition for Harmonic`s single-output receiver, especially since the growing interest in narrowcasting is pushing some operators toward multiple-output receivers. He says the company is considering introducing its own multiple-output receiver platform, or striking an original-equipment manufacturer deal with another company, as it has with Scientific Atlanta for its YAGLink.

Harmonic is also developing transponders for its network management system that can fit inside third-party receiver and amplifier stations, says Simler. The first units for receivers were to be available in March.

Jerrold/General Instrument

Jerrold/General Instrument is the largest supplier of equipment to the cable-TV industry.

Although its leadership role is most pronounced in the cable-TV set-top converter market, it also has a strong presence in the radio frequency and optical distribution equipment markets.

This market position has been aided by an exclusive deal struck with Ortel back in 1988. Under the terms of that agreement, General Instrument enjoyed exclusive access to Ortel lasers and receivers that were for sale in the domestic cable-TV opto-electronics market.

Ortel`s leadership role in the development of high-performance analog lasers gave General Instrument a strategic advantage in the burgeoning cable-TV fiber optics market, particularly as operators sought higher output power and the ability to deliver 750 megahert¥on a single laser.

According to Rich Brown, General Instrument`s Cableoptics headend product manager, the company`s ability to deliver a 750-MH¥optical product in a timely fashion helped bolster its market share during 1994.

Although Ortel began selling its standard products to other opto-electronics suppliers during the second half of 1994, the two companies continue to have a partnership in developing new products, with General Instrument having exclusivity in jointly developed products.

As cable operators begin interconnecting multiple systems within a metropolitan area, General Instrument is evaluating new technologies for optical rings and supertrunks.

In the past, the company had relied strictly on multi-fiber 1310-nm distributed feedback laser solutions for supertrunk applications. The main reason, says Brown, was the limited size of the supertrunk market and the fact that alternatives "weren`t there yet" in terms of maturity and cost.

The recent growth of metropolitan rings and point-to-point supertrunking has prompted General Instrument to consider new approaches in this market segment. In 1995, the company will expand its supertrunk offerings with 1550-nm products--including erbium-doped fiber amplifiers, according to Brown.

Although he expects dual-fiber, 1310-nm distributed-feedback solutions to remain the most cost-effective for many point-to-point supertrunk applications, Brown expects that 1550-nm solutions will make economic sense for many ring and point-to-multipoint applications, and for point-to-point links that involve very long distances.

In the distribution portion of the plant, Brown sees movement toward narrowcasting among some multiple system operators, which demands lower-cost transmitters and less splitting of optical signals.

To accommodate these customers, General Instrument is working with Ortel on a low-cost transmitter, which will feature 3- to 5-dBm output power.

General Instrument is working on several areas to bring low-power transmitter costs to parity with higher powered transmitters, Brown says. Improved packaging is one alternative under study. As part of this approach, General Instrument late last year unveiled a new chassis that more than doubles the transmitter density of its predecessor. This, he says, will translate into overall lower costs for transmitter powering and control.

During the past 12 to 18 months, continues Brown, the percentage of operators activating their return optical path has increased by a factor of two to three.

Although most deployments thus far have employed Fabry-Perot lasers to transmit upstream signals consisting mostly of low-speed data, Brown cites uncertainty in the industry about what type of return-path transmitters will be best suited for future applications such as telephony, high-speed data and interactive video services.

Like its competitors, General Instrument is currently working with customers to characterize these return path requirements. The company is also working with Ortel and other vendors to develop transmitters to cost-effectively meet these requirements.

General Instrument has begun shipping a new broadband telecommunications amplifier that can support the increased functionality and redundancy demanded by new interactive services. An optical node version of the new broadband telecommunications amplifier is in the works.

With regard to redundancy, Brown says General Instrument has found radio-frequency switching to be a more mature and reliable technology than optical switching. He adds, however, that General Instrument "continues to canvass" the market and may find that optical switching "may make sense for 1550-[nm]" applications.

Ortel Corp.

Ortel Corp. was a pioneer in the development of linear opto-electronics for analog transmission of amplitude-modulation video signals.

Since the late 1980s, the company has been supplying the domestic cable-TV industry through an exclusive original-equipment manufacturer arrangement with General Instrument. In March of last year, when the terms of this contractual agreement expired, Ortel began shipping product to other OEMs.

Approximately 26%, 37% and 44% of Ortel`s revenues in fiscal years 1992 through 1994 came from sales to General Instrument. In 1994, two-thirds of its total revenue came from worldwide sales of its broadband products for use by cable-TV operators.

Larry Stark, vice president of new business development, says current trends in hybrid fiber/coaxial-cable architectures are driving analog laser development in a number of directions.

The push for higher power lasers has peaked at approximately 12 to 13 milliwatts, says Stark; and there is growing interest among multiple system operators in 3- to 4-milliwatt lasers that are suitable for dedicated narrowcast links.

Another important area of development, he says, is the return-path laser, which in the future will be carrying more than the low-speed data signals for status monitoring and impulse pay-per-view that are typical today.

"Solutions [for tomorrow`s return path transmitter requirements]," says Stark, "aren`t out there yet." While some in the industry contend that distributed feedback lasers are "too expensive," he says, others believe that Fabry-Perot lasers "aren`t good enough" for tomorrow`s two-way applications.

He cites four key design parameters in a return laser: Is it a Fabry-Perot or a distributed feedback? Does it have an isolator? Does it require thermo-electric cooling? Does it operate at 1310 or 1550 nanometers?

Looking more generally at the analog distributed-feedback laser market, Stark predicts that the cost premium associated with linear distributed-feedback lasers vs. digital linear distributed-feedback lasers will "disappear within two years."

Philips Broadband Networks Inc.

Philips Broadband Networks markets amplitude-modulation optical transmitters and receivers for distribution and supertrunk applications.

Philips` current supertrunk product is an amplitude-modulation 1310-nm multiple-fiber solution that can support two 10-decibel hops. Like most of its competitors, it is also looking at 1550-nm products, including erbium-doped fiber amplifiers and external modulation. The company has also made a commitment to develop a 1550-nm product, according to Jamie King, product manager for amplitude-modulation fiber.

In the near term, the predominant wavelength for cable industry opto-electronics will remain at 1310 nm, he predicts. However, 1550 nm will have a significant impact in the supertrunk market, he says. "As far as distribution goes, 1550 nm is not likely to be a significant factor for the next several years."

King also suggests that 1310-nm optical amplifiers could become a viable product within three or four years. He says a lot of work--including some within Philips--is going on in this area for digital telecommunications applications. A research and development breakthrough related to 1310-analog amplifiers, he says, "could change the complexion of the cable-TV industry."

Although King says Philips is doing some work on wavelength-division multiplexing for cable-TV applications, he believes most U.S. operators are installing enough fiber to support downstream and upstream traffic, without using multiple wavelengths.

In the future, however, as systems deploy additional nodes to reduce the size of fiber serving areas, "WDM may be needed," he says. He also sees the United Kingdom--where most construction is underground and where some operators have not installed enough fibers to support both video and voice--as a potential early market for wavelength-division multiplexing.

Philips` current distribution product line uses Fabry-Perot lasers for strand-mounted return transmissions, although it also offers a rack-mounted distributed feedback return laser for use in optical transition nodes and supertrunk applications.

Like its competitors, Philips is working with laser suppliers and customers to characterize the requirements of the upstream optical path. Among the possibilities being considered are distributed feedback lasers that are not cooled or equipped with isolators.

Pirelli Cable Corp.

Pirelli Cable has been among the largest suppliers of erbium-doped fiber amplifiers to interexchange carriers and has been supplying cable operators with fiber cable since 1993.

In 1995, it began targeting the cable industry`s growing interest in 1550-nm transmission with several new products--linearized externally modulated transmitters packaged with EDFAs that provide either 13 or 17 dBm output; and standalone EDFAs that have the same output levels.

The transmitters use a Mach Zender lithium niobate modulator that is manufactured by Pirelli. Noting that the pump laser operates at 980 nm, product manager Pawan Jaggi says Pirelli was "the first to believe in 980-nm pumping."

He sees supertrunk and distribution applications for the transmitters and EDFAs, and says Pirelli is ready to take orders. Thanks to the company`s large volume in the telephone industry--it recently signed a three-year, multimillion dollar contract with BellSouth--Jaggi is confident Pirelli`s EDFAs will be available to cable operators at "the best price in the market."

Although the digital 1550-nm EDFAs sold to the telephone industry include wavelength-division multiplexing, the initial cable-TV product, which will carry analog video channels, will not include multiple wavelengths. But "if the market wants it," says marketing manager Basil Garabet, Pirelli "will look into" a WDM analog product.

Scientific Atlanta

Scientific Atlanta is the second largest supplier of equipment to the cable-TV industry.

Scientific Atlanta enjoyed record sales for the second half of 1994, a 46% increase over the same period for 1993. This included strong gains in cable-TV equipment sales.

According to Greg Hardy, director of transmission marketing for Scientific Atlanta`s Broadband Communications Group, the company`s global opto-electronics sales have nearly doubled annually for several years and are expected to continue to do so.

He says that, while the dollar volume of radio frequency distribution products is still roughly twice that of opto-electronics, "this ratio will continue to move more toward fiber."

Scientific Atlanta announced in late 1994 an alliance with Siemens Public Communications Network Group and Sun Microsystems Inc. to deliver turn-key end-to-end multimedia network solutions.

Siemens will serve as systems integrator and Scientific Atlanta will contribute several elements, including opto-electronics and a cable-telephony distribution system. In North America, Siemens will be represented by Siemens Stromberg-Carlson.

Since mid-1994, Scientific Atlanta has been selling Harmonic Lightwaves` fiber-optic equipment under its own brand name. These products include Harmonic`s externally modulated YAG transmitters, its receiver platforms and its network management system.

The YAG transmitters are used mostly for supertrunk applications, as is another Scientific Atlanta product that uses dual wavelength distributed feedback lasers that employ multiple fibers. Because channels are delivered in separate tiers in the latter system, which allows for mixing and matching of channels, Hardy says it is particularly well suited for operators who want to deliver different channel lineups from particular distribution hubs.

In March 1995, Scientific Atlanta announced a long-term sales, marketing and product development agreement with Synchronous Communications. Under the agreement, the company will sell products, including 1550-nm externally modulated transmitters and erbium-doped fiber amplifiers developed by a Synchronous affiliate, Optical Transmissions Labs. Scientific Atlanta will have exclusive worldwide distribution rights, with certain limited exceptions, and will market the products under its own brand name. New products resulting from joint development activities are expected to become part of the agreement.

Hardy observes an increase in cable operator concerns about reliability. For a lot of customers, he says, the focus is on reducing the number of active components in cascade to three or four, and cutting the size of failure groups to 500 homes or less. Whereas the cost today to move from 1,000-home to 500-home nodes, says Hardy, does not involve "a big delta," the cost-effectiveness of an all-passive network is less clear.

Redundancy is also gaining increased operator attention, he says, noting that Scientific Atlanta offers customers an optical switch option to support a hot-standby transmitter and a radio-frequency switching option at the receiver site.

Another trend Hardy sees in the cable-TV market is increased demand for systems equipped with return-path optics, which he says now account for roughly three-quarters of Scientific Atlanta shipments.

"The majority of return lasers," he says, "are Fabry-Perots," since return path traffic is mostly data. "A few operators," however, "are looking at return video" for applications such as local origination programming and electronic news gathering. For these, Scientific Atlanta is supplying return path distributed feedback lasers.

The growing interest in narrowcasting is also having an impact on product development. "Until 12 months ago," says Hardy, operators were "pushing laser manufacturers for more power," which could support more optical splitting and longer transmission paths.

Today, the market pressure is shifting toward lower-power, lower-cost transmitters that can support cost-effective distribution of dedicated bandwidth to individual nodes, he says. The industry is "moving toward 1:1" transmitter-to-receiver ratios, adds Hardy, but the economics are "not there yet."

Scientific Atlanta has won hybrid fiber/coaxial-cable distribution supply contracts for several telephone-company broadband hybrid fiber/coaxial-cable deployments. These include large scale deployments by US West and Ameritech, and a smaller trial planned by BellSouth in the Atlanta area. Scientific Atlanta is also supplying distribution gear for Time Warner`s Full Service Network project in Orlando, FL.

Synchronous Communications

Synchronous Communications, which President Vince Borelli says has been making 1550-nm erbium-doped fiber amplifiers and externally modulated transmitters for the past three years, has been the cable industry`s standard-bearer for 1550-nm technology.

And although interest in using 1550-nm technology in the distribution network has been limited among cable multiple system operators-Cablevision Systems being the notable exception--Borelli has sold 1550-nm supertrunk products to virtually all the top-10 MSOs.

Among the research-and-design areas being pursued by Synchronous is dense wavelength-division multiplexing. Last year, the company conducted tests of dense WDM at 1530 and 1560 nm, says Borelli. Using WDM, Synchronous fit a 2.4-gigbit-per-second data stream, 80 channels of amplitude-modulation video and two lower data rate channels within four different wavelengths between 1530 to 1560 nm.

When asked to compare these tests with dense WDM work completed by IBM, Borelli says Synchronous, like IBM, could have handled as many as 20 different digital signals in its WDM test. But because the Synchronous test included 80 channels of analog video, which present unique technical challenges, only four separate transmission windows were used, he explains.

Borelli sees dense WDM as a key component of future architectures. Rather than use large numbers of dedicated fibers for narrowcasting to particular nodes, he explains, dense WDM could allow an operator to deliver dedicated video, voice and data services on a single fiber.

Texscan Corp.

Texscan, a subsidiary of TSX Corp., supplies optical and radio-frequency distribution gear, as well as ad-insertion equipment. In addition to its own line of distributed feedback-based transmitters, receivers and RF amplifiers, which are also sold by Antec on an original equipment manufacturer basis, Texscan has partnered with other companies that have expertise in optical product development but lack experience in RF electronics.

For example, the company has marketed on an OEM basis 1550-nm external modulation systems and EDFAs developed by Synchronous Communications. More recently, it began working with ATX Telecom Systems (formerly Amoco Laser Co.) on a similar OEM product line. In turn, Texscan will supply ATX with 1310-nm transmitters, receivers and RF equipment, which the latter will sell under its own label in the telecommunications market, where it already has a presence.

According to George Fletcher, senior vice president of marketing, Texscan recently introduced a low-cost transceiver. The unit, which combines a 550-to-750 MH¥downstream digital-grade laser with a 5-to-40 MH¥optical receiver, has already begun shipping to TeleWest in the United Kingdom.

Overseas business, particularly in South America and Europe, has been among the hottest growth areas for Texscan. Foreign sales accounted for 23% of total revenue in fiscal 1994, and a whopping 63% of the first-quarter, fiscal-1995 order input.

Tele-Communications Inc., which accounts for 15% to 20% of Texscan`s business, last year took a 49% stake in TSX, which helped the company reduce its debt-load. Although some have speculated this would result in a sharp increase in Texscan sales to TCI, Fletcher says "most of [the past year`s] growth has come from outside TCI."

Mitch Shapiro is a freelance writer based in Encinitas, CA.

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