Technology

Fighting Fiber With Fiber

Surging Competition, Broadband Needs Force MSOs to Bulk Up 7/20/2015 8:00 AM Eastern
TakeAway

As the need for bandwidth grows, cable operators are getting more comfortable with fiber-to-the-premises architecture.

For the cable industry, FTTP is no longer a four-letter word.

 

Thanks to increased competition and the emergence of over-the-top video and other bandwidth-gobbling services, fiber-to-the-premises architecture is now an accepted part of the cable industry’s lexicon, albeit still in a limited way.

 

For more than a decade, cable operators have been well-served by a hybrid fiber-coaxial (HFC) network matched with DOCSIS (Data Over Cable Service Interface Specification) technology, and that combination still dominates the broadband landscape. The top 10 U.S. MSOs accounted for 60% of the residential broadband market, and 86% of all broadband net additions in Q1 of 2015, per Leichtman Research Group.

 

But fiber-fueled competition is heating up, particularly among incumbent telcos and overbuilders, despite Verizon Communications’s recent sale of wireline assets to Frontier Communications and an apparent de-emphasis on FiOS.

 

Among the newcomers, Google Fiber is putting a scare into the cable sector as it pushes ahead with expansion into four metro areas — Atlanta; Charlotte, N.C.; Nashville, Tenn.; and Raleigh-Durham, N.C. — building on earlier commitments in Kansas City; Provo, Utah; and Austin, Texas. Google Fiber represents a tiny portion of the market, but has successfully put 1-Gig on the front burner while setting the bar on price at $70 per month for a standalone offering.

 

Of potential greater concern to MSOs, though, should be what’s afoot at AT&T. As it looks to get approval for its proposed merger with satellite-TV provider DirecTV, telco AT&T disclosed in a recent public-interest fi ling that it has committed to expand its fiber-based GigaPower platform to a total of 11.7 million homes — about 9 million more homes than in its previously announced commitments.

 

That bigger commitment is “less than meets the eye” because it factors in a broader set of customer locations that include businesses, vacant homes and apartments, Moffett Nathanson principal and senior analyst Craig Moffett said in a recent report. Nonetheless, Moffett also expressed surprise that “[c]able stocks haven’t reacted more strongly to the news.”

 

“[B]y the simple but closely watched metric of ‘fiber overlap,’ AT&T’s latest announcement is a meaningful change,” Moffett said, outlining assumptions that cable broadband will capture just 40% of share in markets where it faces off with FTTP, versus 55% when pitted against fiber-to-the-node competition and 60% where it’s up against plain-vanilla digital subscriber line (DSL) service.

 

Among some large MSOs, Comcast has a 32% overlap with AT&T’s U-verse platform, versus Time Warner Cable (26%), Charter Communications (32%), Bright House Networks (25%) and Cox Communications (25%). In the most extreme case, AT&T’s new commitment could translate into a 2.4% decline in cable’s share of the residential broadband market, Moffett said.

 

And all of this is happening as over-the-top video gains popularity and momentum, fed by the likes of Netflix, Amazon Prime Instant Video, Hulu, Sling TV and CBS All Access, as well as new standalone offerings from HBO and Showtime.

 

Meanwhile, consumers have been lulled into thinking they need Gigabit speeds ASAP, thanks in large part to Google Fiber, whose cachet and persuasive marketing have fed the perceived need for speed.

 

“There’s some sort of magic associated with fiber,” John Caezza, president of Arris’s Access Technologies division, said. “Everyone thinks it’s better than [HFC].”

 

There is still plenty of magic left in the HFC network, MSOs have maintained, but many are starting to use FTTP in a limited, targeted way while also pushing fiber closer to the home elsewhere to punch up their DOCSIS-delivered speeds.

 

Cox Communications, for example, has been among the most active major U.S. cable operators with “G1GABLAST,” an initiative that will see the MSO begin market- wide deployment of Gigabit services by the end of 2016.

 

While DOCSIS 3.1, cable’s emerging multi- Gigabit platform for HFC, will factor heavily into that plan, Cox is initially offering speeds of 1-Gigabit per second in select markets using fiber. Cox’s Gigabit deployments currently include targeted FTTP overlays in Omaha, Las Vegas and Phoenix, and FTTP in all of its new-build systems.

 

GOING ‘PRO’ WITH FIBER

 

Comcast, the nation’s largest cable operator, is also taking a precision-based approach to FTTP, but potentially at a much larger scale.

 

Offering 2 Gigabits per second both downstream and upstream, Comcast’s just-launched residential “Gigabit Pro” service is spendy — it carries a limited promotional price of $159 per month (with a three-year commitment), about half of the regular price of $299 per month (with a two-year commitment), plus up to $1,000 in installation and activation fees.

 

But Gigabit Pro will be made available to about 18 million homes by the end of the year, as homes within one-third of a mile of Comcast’s fiber network will be eligible to get the service.

 

It’s a success-based approach. Comcast will run fiber and install the necessary equipment, including the Optical Network Terminal, only to customers who sign up for Gigabit Pro.

 

Comcast is also spinning fiber into some of its coming consumer-facing products. The multi-service Gigabit Gateway that the MSO showed at INTX in May focused on DOCSIS 3.1 and advanced WiFi, but Comcast is developing a version of the device with a direct fiber input as well.

 

While the vast majority of Comcast’s residential customers don’t need 2 Gbps, the new service ensures that the MSO will have something available to those that do.

 

“Gigabit Pro is really for those customers who have got extreme needs,” Tony Werner, Comcast’s executive vice president and chief technology officer, said.

 

Early Gigabit Pro deployments will use the Metro Ethernet system that serves Comcast’s midsized business customers, but “very quickly … we are migrating to the same PON [passive optical network] technology that we’ll be using in some of the greenfield and in some of the other major complexes, like apartment buildings or new developments.”

 

Comcast hasn’t announced which flavor of PON (GPON or EPON) it will ride long-term, but Werner said the analysis is complete, the decision has been made and the MSO has already issued requests for proposals (RFPs) for Gigabit Pro to vendors.

 

Cable operators that opt for PON have some new tools at their disposal that will make their new FTTP systems fi t into their legacy operations. CableLabs has already developed DOCSIS Provisioning of EPON (DPoE), specifications that allow cable operators to use DOCSIS-style provisioning for EPON deployments. A version for GPON has also been developed.

 

Going forward, FTTP will likely be the order of the day for new builds at Comcast, since the bulk of the costs for it are construction and labor.

 

“Once the trench is open, the incremental economics are close enough that we will do fiber-to-the-prem, unless it’s a very small stub off of existing plant,” Werner said.

 

Cable’s FTTP projects “tend to be opportunistic; it’s greenfield work,” Phil McKinney, president and CEO of CableLabs, said, noting that cable’s research consortium is staffing up and boosting its work on next-generation fiber technologies.

 

“If you’re opening up a piece of ground and you’re going to run a conduit in, you’re laying fiber,” McKinney said.

 

DOCSIS 3.1: CABLE’S WORKHORSE

 

While cable is using FTTP like a sniper’s bullet to deliver gigabit speeds, DOCSIS 3.1 represents the shotgun blast that will be used to deliver big speeds in “brownfields” served now by HFC.

 

“I think it [HFC] has tremendous life, and we are going to be riding it all day long,” Werner said, noting that even FTTP is HFC in the sense that fiber is connected to the home, but in most cases, services in those homes are delivered over coax.

 

DOCSIS 3.1 “is definitely going to be our go-to animal,” he added. “Due to ubiquity, we can go out and virtually serve all of our plant very quickly.”

 

Comcast and other MSOs are also keen on DOCSIS 3.1 because there’s no service disruption and hardly any friction to the customer.

 

Comcast is testing DOCSIS 3.1 in the field in anticipation of future deployments. “There’s basically zero surprises on it at this moment,” Werner said, noting that a significant amount of Comcast’s cable-modem termination systems (CMTSs) can be upgraded via software to DOCSIS 3.1 for the downstream, and will require new cards for the upstream.

 

Broadcom’s DOCSIS 3.1 silicon for modems is “working well,” Werner said, while Intel’s new chip has “just tapped out,” which means it is nearing the final design cycle. STMicroelectronics is also expected to toss its hat into the DOCSIS 3.1 ring.

 

Adoption of DOCSIS 3.1 will be global and quick, according to a recent IHS study. Asked what share of their residential base would be passed by DOCSIS 3.1-enabled headends or hubs, MSOs responded collectively that it would reach about 35% by 2017.

 

CableLabs’s latest DOCSIS 3.1 interoperability event was slated to end on July 17, putting vendors one step closer to formal certification and qualification testing this summer. “As we find issues through the interop and through the early devices going through cert wave, we’re going to close that loop pretty tightly,” McKinney said, calling DOCSIS 3.1 “job one for me.”

 

Though MSOs will deliver Gigabit speeds through a mix of HFC and FTTP, McKinney wonders if the “cable” label is even suitable anymore.

 

“The cable industry has more fiber in the ground than each fiber provider in the world,” he said. “If you look at total fiber strand miles, there’s more fiber under management and under control of the [cable] operators than anybody else combined.”

 

Cable operators, on average, still serve about 400 homes from each cable node. “But the trend is absolutely moving down,” Caezza said, noting that some MSOs are skipping the next logical step of 200 homes per node by driving fiber to service groups of 100 to 125 homes per node.

 

That’s already happening to a degree at Comcast. In some Gigabit Pro markets, the MSO is already in that 100-homesper- node neighborhood, Rob Howald, Comcast’s vice president of network architecture, reportedly said at the recent Gigabit Cities Live! conference in Atlanta.

 

David Eckard, chief technology officer of Alcatel-Lucent’s Fixed Networks Division, said he sees a “storm coming” in which MSOs upgrade to a distributed architecture (CableLabs recently issued the specifications for several approaches) and consider operationally tricky “mid-splits” that expand the amount of upstream capacity.

 

“Everybody’s end game, whether you’re a telco or an MSO, is fiber,” Eckard said. “The question [for cable operators] is, how deep is that fiber going to be?”

 

A Vote for DOCSIS 3.0

 

Much of cable’s Gigabit fanfare centers on FTTP and the emerging DOCSIS 3.1 platform. But Suddenlink Communications will ride DOCSIS 3.0 as it enters the Gigasphere.

 

As part of the MSO’s Operation GigaSpeed initiative, Suddenlink is offering a highly asymmetrical service — up to 1 Gigabit per second downstream and 50 Megabits per second upstream — in a handful of markets: Bryan-College Station, Texas; Nixa, Mo.; and Greenville and Rocky Mount, N.C.

 

According to pricing data for Suddenlink’s system in Bryan, Texas, obtained by Multichannel News, the standalone 1-Gbps service fetches $109 per month, though it’s expected to sell for less when bundled with other services.

 

Suddenlink confirmed its use of DOCSIS 3.0 technology early on, noting that with “equipment upgrades and channel bonding, we are able to deliver more than 1 Gig to the modem.”

 

State-of-the-art DOCSIS 3.0 modem chips from suppliers such as Intel and Broadcom can bond up to 32 downstream 6 MHz-wide channels — enough to support downstream bursts of 1.2 Gbps in North American DOCSIS systems.

 

Suddenlink unveiled Operation GigaSpeed in August 2014, announcing that it intended to raise its top downstream high-speed Internet speed to 1 Gbps in 90% of its footprint by 2017. The initiative encompasses network upgrades, including all-digital migrations that free up valuable bandwidth for things like DOCSIS channel bonding, and the replacement of remaining deployed DOCSIS 2.0 modems with DOCSIS 3.0-based equipment.

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