Analysts peg DOCSIS 4.0 network upgrade costs at $180 per home passed

Going all-fiber may be winning the game of perception in the world of telecom, but DOCSIS 4.0 upgrades represent a prudent, cost-effective and highly competitive move for top US cable operators such as Comcast and Charter Communications, the analysts at Credit Suisse concluded in a new report.

In the report, which comes off as an endorsement of sorts for cable operator strategies focused on DOCSIS 4.0 upgrades of widely deployed hybrid fiber/coax (HFC) plant, the analysts also attempt to put a price point on D4.0 network upgrades. And they like what they see.

Figure 1:

Though elements of the D4.0 tech and product ecosystem are still in development, Credit Suisse estimates that D4.0 network upgrade costs will be only $180 per home passed. That's well below "bear case" speculation that those costs could reach a range of $400 to $600 per home passed. Notably, those examples do not include the costs of the DOCSIS 4.0 modem/gateway.

But those network upgrade costs, which also fall below those for an all-fiber upgrade of the access network, enable cable operators "to keep their capital intensity promises to the Street," the analysts explained in the report, which was distributed to Light Reading via email.

Update: Credit Suisse's estimate is on the low side of an earlier suggestion from Broadband Success Partners that operators can expect an incremental $150 to $300 per home passed for DOCSIS 4.0 upgrades (with the caveat that the technology is still in development). Broadband Success Partners pegged an additional $100 per household passed for a "mid-split" or "high-split" upgrade that expands the amount of spectrum allocated to the HFC network upstream, a move that can be done on today's DOCSIS 3.1 networks. Operators haven't made any public predictions on precise costs for D4.0 network upgrades beyond a vague notion that they're expected to be "reasonable," which leaves lots of room for speculation.

Credit Suisse also see the potential for Comcast and Charter, two major US operators pursuing the DOCSIS 4.0 path, to save nearly $1 billion per year in customer care operating expenses with D4.0 versus the status quo, citing an expected reduction in trouble tickets and truck rolls and faster time-to-repair.

"Every dynamic regarding upgrading cable's networks to DOCSIS4.0 was more favorable than we expected, in some cases dramatically so," the report notes. "In contrast to the durable nature of the cable broadband growth and pricing investor debates, in our view capex concerns are demonstrably overdone, and the ultimate benefits of DOCSIS 4.0 upgrades are not being broadly considered by investors."

D4.0's 'surprising flexibility'

Credit Suisse also gives D4.0 high marks for its "surprisingly flexibility," as operators can limit upgrade spending to areas where loftier levels of network performance are needed. Plus, D4.0, which requires an upgrade to a distributed access architecture (DAA), also opens the door to targeted fiber-to-the-premises (FTTP) deployments.

Figure 2: The analysts at Credit Suisse believe DOCSIS 4.0 upgrades present multiple benefits for cable ops as well as broadband customers.
Click here for a larger version of this image.
(Source: Credit Suisse cable industry report: 'Fiber, Meet DOCSIS4.0.' October 9, 2022.)

The analysts also view D4.0 as a platform that blows fixed wireless access (FWA) speeds out of the water while also keeping up with the performance of fiber competition. D4.0 upgrades, they point out, put cable operators in position to deliver about 9 Gbit/s down and 5 Gbit/s upstream on HFC – within shouting distance of current NG-PON2 and XGS-PON flavors of FTTP.

By way of example, Charter has delivered speeds of about 8.5 Gbit/s downstream and 6 Gbit/s upstream in its D4.0-based lab trials. Comcast, which intends to introduce symmetrical, multi-gig broadband services in 2023, has demonstrated similar speed performance in its D4.0 tests.

"[N]etwork performance and reliability benefits [of DOCSIS 4.0] should level the competitive playing field with fiber, reduce churn, and improve ARPU [average revenues per unit], but also substantially reduce opex and reduce maintenance and future upgrade capex," Credit Suisse notes in the report.

More broadly, "the evolution to DOCSIS 4.0 is a modestly priced upgrade that will leave cable operators with a more performant, more manageable, more reliable, and more efficient network that is fully competitive with fiber," they added.

Issues with cost transparency, multiple paths to DOCSIS 4.0

But Credit Suisse's view isn't all rosy.

For example, the analysts do take some issue with the current lack of transparency from the cable industry regarding anticipated D4.0 deployment costs.

"Clearing up the cable capex confusion has been challenging," the report notes. Credit Suisse said it arrived to its estimates through a detailed review of the DOCSIS ecosystem, recent white papers and interviews with industry suppliers and consultants, and talks with top engineering execs at major cable operators.

Credit Suisse is also fully aware of the "controversy" surrounding DOCSIS 4.0 – namely, the multiple technology paths that are being pursued by operators.

While Comcast is largely fixated on the Full Duplex DOCSIS (FDX) option, Charter and many other MSOs are leaning toward the Extended Spectrum DOCSIS (ESD)/Frequency Division Duplex (FDD) approach.

"Details are light on specific steps and costs from Cable management teams, and it does not help that Comcast and Charter are each taking a different path to DOCSIS 4.0," the analysts lamented. "The pathway to DOCSIS 4.0 is complex and variable, portions of the technology are still evolving, and ultimate capacity utilization strategies across each operator's footprint have not been concretely defined."

Still, Credit Suisse considers both FDX and ESD/FDD "to be reasonable paths."

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— Jeff Baumgartner, Senior Editor, Light Reading