There could be a different kind of Year 2000
headache brewing that has nothing to do with computer software.
Instead, it's financial. The heady construction plans
of the nation's large and small cable operators to wrap up plant rebuilds and
upgrades by 2000 could trigger revenue woes for the equipment-supplier community when that
But don't count on it, most vendors and MSOs said,
mostly chortling when they were asked if cable's broadband-equipment needs will
plummet in two years.
We've been afraid of the sky falling ever since
day one, said Fred Rogers, president of Quality RF Services Inc., which makes hybrid
chips that boost bandwidth in already-installed amplifiers. I'm not losing
sleep over it.
The same went for another supplier executive, who asked to
I've been selling amplifiers for 30 years, and
every 10 years, we hear that there's only one big round of upgrades left, and then
we're done, agreed the senior sales executive.
That executive pointed to a different kind of upgrade
node subdivision as the next logical wave. His theory: As soon as MSOs
finish up with 750-megahertz, hybrid fiber-coaxial upgrades that make two-way services
available to nodes serving 500 homes, those advanced services, such as high-speed data and
interactive video, will take hold. This will trigger a squeeze in the already-slim slice
of upstream spectrum located between 5 MHz and 40 MHz.
As a result, operators will need to break those 500-home
nodes down even further, perhaps to 50 homes per node.
Upgrades will never end, he said.
Even the MSO community, for all of its bravado in assuring
the financial community that its major capital-expense pains will be over by 2000,
didn't foresee hard times for vendors.
There just aren't enough construction workers in
the country to complete what the aggregate of the MSOs need to get done, said Jim
Chiddix, senior vice president of engineering and technology for Time Warner Cable.
Chiddix said Time Warner will be 70 percent complete with its 750-MHz, two-way upgrades by
the end of this year.
Chiddix added that he expects 2000 to be a peak
year for network activity. Then, it tapers off, he said, ceding, I
sometimes wonder what happens to the folks who make amplifiers and that type of
Still, at a recent roundtable in New York, Chiddix
described Time Warner's aggressive, five-year rebuild cycle, which started in 1995,
as probably the last one of my career.
C-COR Electronics Inc., General Instrument Corp. and
Scientific-Atlanta Inc. are three of the largest manufacturers of plant actives, like
trunk amplifiers and line extenders. None wanted to participate in this article, but all
said privately that they weren't concerned about a 2000 sales falloff.
But at least one industry observer financial analyst
Michael Harris, with Phoenix-based Kinetic Strategies Inc. was concerned.
My question to these companies has been: Tell me why
you're not toast in four years, Harris said.
The cable industry, from an equipment standpoint, is
standing at the precipice of the Old World, looking at the New World, Harris
He described the new equipment world as one based on openly
standardized equipment that can be brought into economic scale by large
The Old World is GI and S-A trying to hold onto their
pants, Harris said.
Dan Liberatore, vice president of engineering for Adelphia
Communications Corp., said there's every chance that MSOs will go through
one more bandwidth upgrade, from 750 MHz to 860 MHz.
But it'll be a drop-in situation, and certainly
not one where we do replacements, Liberatore added.
And there's another shift from years past, noted Ken
Wright, vice president of engineering for InterMedia Partners: digital-video compression.
Going forward, we have some tricks in the toolbox
that we didn't have before, Wright said.
In the past, Wright and others said, operators had no
choice but to change out plant electronics when additional bandwidth was necessary. MSOs
went from 220 MHz, to 300 MHz, to 450 MHz, then to 550 MHz, before today's benchmark
of 750 MHz.
I have some systems that are being upgraded for the
third time since I've been around, said Pete Smith, vice president of
engineering for Rifkin & Associates Inc. In the past, as an industry, we've
definitely underestimated what our real bandwidth needs are.
Smith described bandwidth upgrades as a tricky
tradeoff, because while MSOs don't want to run out of space two years after an
upgrade, they also don't want install more capacity than is really needed.
Every time we add bandwidth, we tend to use it, he said.
Wright said that with digital compression and multiplexing
techniques, MSOs might not need to physically change out plant electronics in the future.
Now, we can shift things from analog to digital when
we need more space, Wright added.
Still, Wright didn't foresee any major financial pain
awaiting the vendor community. I don't think that the [amplifier] market
totally dries up and goes away, he said. All of the stuff that we've been
buying will come out of warranty, some of it will be replaced and we will still have