Cable Operators

Ahead Of The Broadband Curve

2/01/2010 2:00 AM Eastern

Cable operators now offer next-generation DOCSIS 3.0 services — with maximum download speeds ranging from 50 to 105 Megabits per second — to more than 52 million U.S. consumers and businesses, according to a survey of the top 11 cable operators by Multichannel News.

That represents more than 43% of the 120 million homes passed by cable networks in the country.

Does the average Joe Broadband really need such blindingly fast speeds today? By and large, no: The low take rates for such ultra-high-speed services indicate many subscribers aren’t willing to pay the premium to get the fastest Internet available today, according to analysts and industry executives.

Time Warner Cable, for example, last week said just 2,000 subscribers have signed up for DOCSIS 3.0 service in New York City in the fourth quarter, the first period it was available.

Still, DOCSIS 3.0 technology will provide the industry with an ample runway well into the next decade. Operators also find no small value in being able to tout that they’re the fastest provider in a given market, and many are looking to deliver new commercial services via cable modem.

“The cable industry is building out an infrastructure that can handle more bandwidth than customers need,” In-Stat analyst Mike Paxton said. “They’re much better situated than other broadband providers.”

Comcast has pursued one of the most aggressive deployment schedules, blitzing DOCSIS 3.0 across more than three-fourths of its footprint in the last year, while Cablevision Systems offers 101-Mbps service in its entire New York service area.

On the other hand, Time Warner Cable is offering ultra-fast broadband only in New York City, and other operators, including Insight Communications, haven’t turned on DOCSIS 3.0 at all yet.

The different philosophies reflect the fact that MSOs are using DOCSIS 3.0 both on defense — for example, to vie with Verizon Communications’ FiOS Internet — as well as offense, said Bruce Leichtman, president of Leichtman Research.

“Traditionally cable came out with the superior product. It was faster, but more expensive,” he said. “By going with DOCSIS 3.0 it allows them to maintain that positioning. That’s the key thing.”

Cox Communications has rolled out DOCSIS 3.0-based services to around 4 million homes passed, according to a Multichannel News estimate, in markets including Las Vegas, Northern Virginia and Arizona. The operator is on track to have DOCSIS 3.0 deployed to more than two-thirds of its footprint by the end of 2010, said Seth Hogan, vice president of data product management.

Cox’s 50-Mbps Ultimate Internet tier, priced at around $140 per month, is intentionally targeted to “a niche of customers who have very high bandwidth needs,” Hogan said. But beyond that, DOCSIS 3.0 will give Cox greater network efficiencies by balancing traffic from users on lower-speed tiers across more frequencies.

And, the technology provides a huge pipe for delivering video over Internet protocol. “As more video content starts to migrate online, from traditional partners or other sites, DOCSIS 3.0 is a fundamental building block that gives us tremendous flexibility,” Hogan said.

Mediacom Communications, for its part, has expanded its DOCSIS 3.0 rollout to nine additional markets, reaching just over 25% of its subscriber base with a 50-Mbps downstream service, on the heels of the operator’s 105-Mbps service launch in two small communities.

“It’s a great competitive edge and an opportunity for Mediacom to have the best connection in a given market,” said group vice president of strategic marketing and product development Dan Templin.

In total, the Ultra 50 service is available to approximately 25% of Mediacom’s existing high-speed Internet subs, meaning about 191,000 out its 765,000 broadband customers would be able to upgrade to Ultra.

In 2010, Mediacom expects to bring DOCSIS 3.0 to another 25% of its footprint to be able to offer 50-Mbps service to roughly half its customers, Templin said. In addition, the MSO in March plans to introduce its a 50-Mbps service for business customers, the company’s first commercial offering.

“With some pretty smart investment in our network we have the capacity to be a market leader with the DOCSIS 3.0 technology,” Templin said. “We’re showing that Middle America doesn’t have to be trailing larger urban markets.”

Phoenix-based Cable One has not deployed the next-generation cable modem technology yet, but plans to upgrade all its markets over the next two years as it also moves ahead on converting to all-digital video, said Aldo Casartelli, vice president of Internet services and customer experience.

“It signals a competitive difference, rather than a meaningful difference for customers,” he said, adding, “Most of our customers buy speeds that are in range of [DOCSIS] 2.0. It’s positioning and marketing.”

For RCN, a big benefit of DOCSIS 3.0 is letting the operator deliver highly competitive business-services offerings, according to Rick Swiderski, vice president of residential and small business engineering and product development. RCN deployed DOCSIS 3.0 service in seven hubs across portions of Boston, New York City and Lehigh Valley, Pa., in November 2009, covering roughly 16% of its total footprint.

“It has proved to be a true wideband service, capable of competing with high-end and much higher-cost technologies, such as T-1s and DS-3s,” Swiderski said.


BOOSTING THE SPEED LIMIT
Where the biggest cable operators stand on DOCSIS 3.0 rollouts:

  Homes passed % of footprint Markets deployed
Comcast More than 38 million More than 75% Boston; Baltimore; Chicago; San Francisco Bay Area/San Jose; Denver; Delaware; Philadelphia; Pittsburgh; New Jersey; Minneapolis/St. Paul; Atlanta; Seattle; Portland, Ore.; Washington, D.C.; Hartford, Conn.; Harrisburg, Pa.; Chattanooga, Tenn.; Ft. Wayne, Ind.; Eugene, Ore.; Spokane, Ore.; Richmond, Va.
Time Warner Cable 3 million 11% New York City
Cox Communications 4 million* 40%* Las Vegas; Louisiana; Northern Virginia; New England (Rhode Island); Arizona; Orange County, Calif. (Palos Verdes)
Cablevision Systems 4.8 million 100% New York metro area, including northern New Jersey and parts of Connecticut
Charter Communications 1 million 10% St. Louis; Reno, Nev.; Worcester, Mass.; communities in Southern California
Bright House Networks More than 1 million 40%* Tampa Bay, Fla.
Mediacom Communications More than 200,000 25% Waterloo, Cedar Rapids and Iowa City, Iowa; Dagsboro, Del.; Charleston and Moline, Ill.; Mound, Minn.; Gulf Breeze and Milton, Fla.; Columbia and Springfield, Mo.
 Note: Estimated homes passed unavailable for Suddenlink Communications
and RCN; Insight Communications and Cable One had not deployed DOCSIS
3.0 as of Jan. 31.
* Multichannel News estimate
SOURCE: Multichannel News research

March