Cable MSOs face significant business opportunities and challenges as traditional telcos evaluate strategies to cater to increasing broadband demands needed to support enterprises, municipalities, data centers and more.
MSOs were once seen as an alternative to traditional telecom operators, but according to Leichtman Research Group, cable is dominating broadband access in the United States, owning 64% of the market share. Already saturating the market, MSOs are showing no signs of slowing down, as Dell’Oro Group has reported that MSOs will spend $2 billion by 2023 on broadband access efforts to support 5G, the Internet of Things, 10G and other emerging applications.
Cable’s biggest asset is also its biggest upcoming headache. Coaxial cable, or “coax,” has been the lynchpin for cable’s domination in the U.S. residential market, providing a physical RF superhighway that continues to outperform legacy telecom copper wiring never designed for broadband delivery. Certainly, telecoms have been able to apply Moore’s Law silicon to squeeze better performance out of existing copper, getting anywhere from 250 Megabits per second to 300 Mbps over a few thousand feet with the latest digital subscriber line technology and up to Gigabit speeds over a few hundred feet via G.fast. But coax, in combination with continually evolving DOCSIS, has proven its ability to deliver Gigabit speeds over existing physical wiring.
Fiber Gives Telcos a Boost
Telecom’s answer to higher speeds is fiber, an effective and competitive tool for service providers to provide both broadband and video. Fiber provides traditional phone companies parity with cable in the residential market, but at the cost of physical installation.
“Cable operators can sweat a little more out of the existing coax plant and do it a lot easier and a lot faster than telcos can plow fiber into the ground,” Ryan McCowan, Adtran’s head of solutions management for the Americas, told me. “Large MSOs like Charter and Comcast saturate the market with Gigabit downstream due to the ease of delivering bandwidth using coax and DOCSIS.”
Coax starts to show its vulnerability and age in the areas of shared capacity and upstream bandwidth. Fiber is already being incorporated by MSOs in a hybrid architecture, with fiber being used to deliver more bandwidth out further, then switching over to coax as you get closer to the customer. This works well when there’s relatively static growth, but business customer wins and growing residential needs will drive node splits and that ends up adding capital costs.
“It’s getting more expensive to do node splits, node-plus-0 architectures,” McCowan said. “It’s still cheaper than building out fiber, but that’s if you have a static analysis. If you have very swift traffic growth, you end up doing multiple node splits over 18 months. Some operators look at the one-time cost of going all fiber end-to-end and not having to deal with future node splits and they like the way deploying fiber can help with capacity growth, especially when it comes to delivering business services.”
Business customers also want symmetrical services, while DOCSIS and cable have happily dominated the residential market with big upstream/small downstream bandwidth services. Cloud services ranging from simple data backup to virtualized call centers tied into elaborate CRM systems require reliable and steady upstream bandwidth much larger than the needs of a typical household. Fiber has a clear advantage in symmetrical bandwidth, a fact Verizon Communications and others emphasize in their marketing.
But emerging residential applications may start to strain DOCSIS as well. “Look at cloud-connected security cameras,” McCowan stated. “If you have large numbers of subscribers in a neighborhood that start stream one, two and three cameras at 4 Mbps, it can take asymmetric services to its needs. Symmetric bandwidth becomes a necessity.”
MSOs aren’t standing still, with business customers driving cable operators to install more fiber and better utilize existing fiber plant. “One trend we’re seeing is operators wanting to offer multiple services over existing fiber, using WDM [wave-division multiplexing] to create more broadband pathways,” Clearfield chief marketing officer Kevin Morgan said. “When it comes to fiber deployments, we’re being asked by many cable companies what can we do, what should we do.”
Cable Gets Fiber-Curious
Companies are continuing to maintain and invest in their coax infrastructure, Morgan said, but want to learn more about fiber as they need to deliver higher broadbands speeds to destinations closer to the customer. Implementing fiber in outside plant is of growing interest as cable companies push fiber deeper into their networks and closer to the customer.
One emerging opportunity for cable companies is 5G cellular deployments, with fiber complementing coax. Fiber provides high speeds and low latency to small-cell deployments, with coax able to deliver power to edge equipment. “When you start talking about two-millisecond latency requirements for 5G cells at the edge of the network, traditional fiber won’t support it, much less coax,” Morgan said. “You need dark fiber. Coax and hybrid networks will be fine for backhaul.”
MSOs may not need or want to support the extreme requirements of 5G deployments, but growth opportunities in the business sector and emerging symmetrical bandwidth needs for residential customers lead to the inescapable conclusion of more fiber investment. Cable companies have the solid foundation of coax and DOCSIS to build upon, but all structures need renovation at some point in time.
Doug Mohney is a principal at Cidera Analytics and has been working in and writing about IT and satellite technology for more than 20 years, including broadband, data centers, IoT and voice tech.