Casa Systems says cable network upgrade activity is heating up

With pandemic-fueled capacity boosts for legacy network gear in the rearview mirror, Casa Systems says activity around new cable network projects is starting to rise to the surface.

Much of that activity for hybrid fiber/coax (HFC) networks is turning toward a new remote distributed access architecture that implements remote MACPHY, "high-split" upstream upgrades and the use of virtualized converged cable access platforms (vCCAPs), Jerry Guo, Casa's CEO, tells Light Reading.

He stressed that not all of that activity showed up in the company's second quarter 2021 results, but that he does expect to see DAA deployments continue to expand, with remote MACPHY versions of DAA start to ramp up next year. "We see positive signs for 2022," Guo said of Casa's cable business. Casa, he said, is seeing a "few operators" respond to pressure on the HFC upstream with high-split upgrades that expand the upstream spectrum band to 5MHz-204MHz (up from a 5MHz-42MHz on traditional North American DOCSIS networks).

But it's clearly not an across-the-board phenomenon among cable operators. For example, Charter Communications, one of Casa's customers, noted on its Q2 call today that it doesn't expect to see material investments in high-split upgrades in 2021. For Q2, Casa said it pulled in 11 new purchase orders for DAA and its vCCAP in various regions around the world.

Guo is not overly concerned with Virgin Media O2's plan to forgo DOCSIS 4.0 and instead pursue an ambitious fiber-to-the-premises (FTTP) upgrade in the UK that's slated for completion in 2028. That won't impact Casa's decision to invest in DOCSIS 4.0, a technology that won't truly take hold for years, he said.

"My view is that the operators are going to start deploying the DOCSIS 3.1 version of remote MACPHY. That's going to last them a while," he said. "After that, do they do 4.0 or fiber-to-the-home? Some are probably going to choose fiber-to-the-home." But seeing operators start to push ahead with DAA and remote MACPHY now and heading into 2022, rather than waiting around for D4.0 products to develop and mature, is key.

"DOCSIS 4.0 isn't going to happen next year, or the year after," Guo said. "I think waiting for DOCSIS 4.0 is not a good thing for us. The positive sign is that they are going to start deploying something [with DAA and remote MACPHY] next year."

Dealing with the supply chain

While next-gen cable network activity is perking up at Casa, so is a supply chain issue that has left its mark on suppliers and service operators around the globe.

"We are seeing component lead times extend considerably," Casa CFO Scott Bruckner said. "That's fairly recent. We had a pretty good first half where we could keep up with component shortages and had good inventory. It's only in the last few weeks that we've seen chipset availability extend even further."

That is resulting in delivery schedules getting pushed out toward the end of 2021 and even into 2022. Meanwhile, Casa is seeing customers start to put in long lead-time orders, with the understanding that some orders might not be fulfilled until Q3 or Q4 of 2022.

Bruckner stressed that the supply chain issue has not led to canceled orders from operators. "They are putting in sizable orders and saying, we'll take whatever you've got, whatever you can get your hands on," he said. The good news is this issue is centered on Casa's hardware for the cable, telecom and wireless industries, with no impact on its growing software piece of the business.

Financial snapshot

Casa posted Q2 2021 sales of $92.7 million, beating a consensus estimate of $90.5 million, according to Raymond James. Wireless, now Casa's largest business, saw revenues rise more than 100% to about $35 million ($33.2 million for wireless products, and $1.68 million for wireless services). The company said it now has 41 wireless customers, up from 32 in the prior quarter.

Casa also reaffirmed full-year 2021 sales guidance in the range of $425 million to $445 million.

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— Jeff Baumgartner, Senior Editor, Light Reading