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Altice USA to Pivot Away From HFC

Ambitious plan aims for fiber-to-the-premises upgrade in most of footprint by 2022 12/05/2016 8:00 AM Eastern
TakeAway

Altice USA has set “Generation Gigaspeed,” a plan to upgrade most of its footprint to FTTP service capable of 10-Gigabits-per-second speeds.

Altice USA is about to go on an all-fiber diet.

 

The operator, made up of the acquisitions of Suddenlink Communications and Cablevision Systems, said it intends to upgrade the bulk of its U.S. footprint over the next five years with a fiber-to-the-premises architecture and target speeds of up to 10 Gigabits per second.

 

The decision, which bucks the industry trend to push fiber deeper into the network and to split nodes at incremental stages, also means that Altice’s future road won’t be paved by DOCSIS 3.1, a new IP platform for hybrid fibercoax (HFC) networks also capable of delivering speeds up to 10 Gigabits per second.

 

The upgrade, referred to by Altice USA as “Generation Gigaspeed,” will get underway next year and deploy FTTP to its entire Optimum (former Cablevision) footprint and to most of its Suddenlink footprint. Though many U.S. cable operators are deploying FTTP in new build areas and in a somewhat targeted fashion, no domestic MSO has announced an all-fiber upgrade plan at the size and scope that Altice is proposing.

 

COMPETITIVE EDGE

 

In the New York tri-state area, Altice’s fiber rollout will give it a more powerful weapon to wield against Verizon Fios and its top-end tier that delivers symmetrical speeds of 500 Megabits per second.

 

Though there are concerns that the initiative could threaten Altice’s pledge to squeeze $900 million in synergies from the Cablevision acquisition, Altice USA said it’s confident that it can pull off the plan without having a material impact on its capital expenses.

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Altice USA said it will borrow from the fiber buildout playbook its parent company is using in France and Portugal, and that it will employ “proprietary” technologies developed by Altice Labs, and be able to reduce costs further with favorable pricing from its technology suppliers. It’s also dropping some projects that it didn’t find useful for Suddenlink and Optimum properties.

 

“All of that money is getting plowed back into this fiber project,” Altice USA chairman and CEO Dexter Goei said. “We think we’re being very efficient about using our savings and redeploying it into foolproofing our network for the long term.”

 

Altice USA is also targeting higher speeds, he said, as operator reaches an “inflection point” where a disproportionate number of gross broadband subscriber additions take increasingly speedier broadband tiers.

 

“We’re big believers in this trend continuing, and we really are moving toward a 10-Gig world,” Goei said. “And to sit around and do this in multiple steps doesn’t make any sense, [so Altice decided] to skip over DOCSIS 3.1 and get straight to the point.”

 

Though Altice USA isn’t going into all of the plan’s financial details, the operator is in a “unique spot” to pull it off, particularly in the former Cablevision footprint, SNL Kagan senior research analyst Jeff Heynen said.

 

In those systems, he said, Altice USA already averages 300 or fewer homes per node. Plus, its Lightpath division, which serves large business customers, has “tremendous” rights of way access, interconnection fiber points and a bunch of buildings already connected to fiber.

 

Altice USA’s preponderance of aerial plant in those areas also helps because it won’t need to do a lot of expensive, disruptive trenching, Heynen said.

 

That combination of factors, he said, will help to reduce Altice USA’s exposure to the biggest expenses it will face with the FTTP upgrade: labor and right-of-way access.

 

It’s a different story for Suddenlink’s more-rural footprint, though it is helped by serving areas with more housing growth and greenfields where it makes more financial sense to deploy FTTP out of the chute.

 

VIDEO IMPLICATIONS

 

Altice USA’s FTTP plan might also have a future impact on its video services roadmap. While the RF-over-Glass (RFoG) standard would enable the operator to deliver legacy QAM-based video services over FTTP networks, it’s not clear if Altice intends to use it.

 

Goei wouldn’t get into Altice USA’s video service road map, but allowed that the operator will likely move to a hybrid approach. “Fundamentally the idea is to go full- IP,” he said.

 

It’s also unknown if Altice’s reported investment in Layer3 TV, the Denver-based next-generation cable operator that runs video on IP, will factor into the MSO’s future video plans.

 

Altice Rolls Out Low-Cost Broadband

 

Altice USA’s week wasn’t all about deploying fiber and top-end speeds.

 

The operator also took the wraps off of Economy Internet, a low-cost broadband service for eligible families and seniors in terrtories served by its Optimum systems.

 

The new cap-free, 30 Megabits-per-second (downstream) service fetches $14.99 per month, adds in-home WiFi (via a free “smart router”), access to the operator’s Optimum WiFi network of more than 1.5 million hotspots, and up to three email accounts. The service is available to families who qualify for the National School Lunch Program (NSLP) and seniors who qualify for Supplemental Social Security (SSS).

 

The launch of the program comes less than six months after Altice closed its acquisition of Cablevision Systems in June, and synchs up with commitments by the MSO to introduce the low-income broadband option throughout the Cablevision service territory.

 

Altice USA is initially offering the low-cost broadband service in Norwalk, Conn.; Bronx, Brooklyn and Yonkers and the Brentwood portion of Long Island, N.Y., and Newark and Paterson, N.J.

 

The MSO said it would launch Economy Internet in more areas in the following months and will offer it across its entire Optimum footprint for the start of the 2017-2018 school year.

 

Altice USA unveiled Economy Internet an event last Wednesday (Nov. 30) at the BronxWorks Carolyn McLaughlin Community Center. Actor and New Yorker John Leguizamo, council member Vanessa L. Gibson, and Altice USA co-president and chief operating officer Hakim Boubazine attended.

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