Altice USA is placing a bet on fiber that’s so large that it will become grossly inaccurate to refer to the company as a “cable” provider in the years to come.
Altice USA, the service provider comprised of Altice N.V.’s acquisitions of Cablevision Systems and Suddenlink Communications, has embarked on an ambitious investment initiative that will skip DOCSIS 3.1 and instead focus on a fiber-to-the-premises (FTTP) upgrade that will encompass the bulk of its footprint over the next five years.
The five-year deployment schedule, referred to by Altice USA as “Generation Gigaspeed,” is slated to start in 2017 and bring FTTP to its entire Optimum (former Cablevision) footprint and to most of its Suddenlink footprint. The company plans to announce its initial rollout markets in the coming months.
It’s a big and bold move, as the combined footprint of Optimum and Suddenlink pass about 8.3 million fiber/cable homes. Altice USA’s plan also bucks the industry trend.
Though some U.S. cable operators are deploying FTTP in greenfields and in a relatively targeted fashion, few are looking to pivot away from hybrid fiber/coax (HFC) completely and go with an all-fiber upgrade, at least at the scale and scope that Altice USA is proposing.
Because across-the-board FTTP upgrades are generally considered by the vast majority of MSOs as too expensive to deploy for the payback given, most cable operators are instead looking to drive toward gigabit-class speeds on their widely deployed HFC networks through a more iterative process – by splitting nodes, deploying fiber closer (but not all the way) to the home, and rolling out DOCSIS 3.1, a CableLabs-specified platform that delivers multi-gigabit capabilities to HFC. Last August, Liberty Global CEO Mike Fries estimated that the MSO would be able to deploy DOCSIS 3.1 and deliver 1-gig speeds for about €20 (US $21.23) per home, a cost that excludes the consumer premises equipment/modem.
Citing the FTTP playbook Altice N.V. is already using in France (22 million fiber homes by the end of 2022) and Portugal (5.3 million fiber homes passed by the end of 2020) and its access to “proprietary” technologies developed by Altice Labs, the company’s U.S. division is confident that its FTTP rollout plan is sound from a technology and economic perspective.
Going with a DOCSIS 3.1 game plan “felt to us as one step forward but not a step forward enough relative to what we see as the future of continued connectivity and higher bandwidth usage,” Dexter Goei, Altice USA’s chairman and CEO, said in an interview, noting that the operator has reached an “inflection point” as it sees a disproportionate number of gross broadband subscriber additions taking higher and higher Internet speed 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 we decided] to skip over DOCSIS 3.1 and get straight to the point.”
The Economic Angle
Altice USA did not outline the specific economics that will underpin Generation Gigaspeed, but Goei said the company is comfortable that it can execute on it effectively from both a labor and equipment standpoint “without materially changing the capital outlay that we do today.”
“For us, it’s a real game-changer,” Goei said, noting that Altice USA will also apply the knowhow and the experience with FTTP in Europe to the new project and leverage the advancements made by Altice Labs, which is based in Portugal.
Altice, Goei added, has also been able to implement price points with equipment suppliers that generate material capital budget savings, and has also been able to generate savings by dropping projects that the company didn’t find useful for its Suddenlink and Optimum properties.
"All of that money is getting plowed back into this fiber project,” Goei said. “We think we're being very efficient about using our savings and redeploying it into foolproofing our network for the long term.”
He said Altice USA’s plan rides on some critical economic tailwinds because it will be extending its HFC network, which already has fiber built to the node, rather than having to build an end-to-end network such as Verizon did with FiOS and Google Fiber has been struggling to pull off.
Update: Jeff Heynen, analyst with SNL Kagan, weighed in on Altice's plan on Twitter Wednesday, noting that the operator will benefit from the concentrated nature of the Optimum footprint, while also believing that other MSOs might follow suit:
Altice won't be the only one. Easier to do FTTP in Cablevision footprint. https://t.co/hp8jEDigiI
— Jeff Heynen (@jeffheynen) November 30, 2016
Goei, who believes Altice USA’s preponderance of aerial plant will also help with the speed and cost of deploying FTTP, also expressed confidence that the newly proposed all-glass architecture will provide an economic boost in other ways, hopeful that the resulting network will require less maintenance and truck rolls and deliver services that improve customer satisfaction.
One major challenge Altice USA will seemingly face is how to deploy its FTTP network without causing service disruptions. “We’re very focused on making sure that the client transition is seamless,” Goei said.
Ahead of its coming FTTP upgrade, Altice has been leaning on DOCSIS-based technologies to deliver faster speeds on HFC. Suddenlink’s legacy, 1-Gig focused Project Gigaspeed rollout has reached nearly half of Suddenlink’s service area. More recently, Altice USA launched a 300 Mbps residential broadband service in its Optimum new York metro area footprint, where the MSO tangles with Verizon FiOS.
Altice USA Eyes ‘Full-IP’ Video Future
The FTTP rollout might also have an impact on Altice USA’s video service. RF-over-Glass (RFoG), now an SCTE standard, enables MSOs to deliver legacy QAM-based video services over FTTP networks, but it’s not clear if Altice intends to use it.
Goei wouldn’t outline Altice USA’s video service roadmap, but allowed that the operator will likely move to a hybrid approach. “Fundamentally the idea is to go full-IP,” he said.
In France, Altice has already introduced a next-gen set-top/gateway initially targeted for FTTP networks that supports 4K, bakes in eight tuners and is outfitted with a new UI, a 500 GB hard drive and integrated NFC, Bluetooth and 802.11ac WiFi, but has not announced if it would extend that part of its video game plan to the U.S.
It’s also unknown if Altice’s reported investment in Layer3 TV, the Denver-based next-gen cable operator that runs video on IP, will factor into the MSO’s future video plans.