In a move that brings more consolidation to the cable access vendor market, Vecima Networks has notched a deal to acquire the bulk of Nokia's cable access product portfolio, including key DOCSIS distributed access architecture (DAA) technologies that Nokia acquired from a startup called Gainspeed nearly four years ago.

Financial terms were not disclosed, but the deal, announced Wednesday morning, also includes Nokia's EPON and DOCSIS Provisioning over EPON (DPoE) portfolios.

Vecima said all Nokia employees associated with those product lines are expected to join the Canada-based company, but didn't disclose how many would be coming on board (Vecima had about 385 employees heading into the deal with Nokia). Nokia and Vecima have also agreed to maintain a reseller arrangement post-deal.

Remote PHY or Remote MACPHY? How about both?
Sumit Kumar, Vecima's president and CEO, said the deal will accelerate the company's plans to build a portfolio of DOCSIS distributed access architecture (DAA) products that cover both remote PHY and remote MACPHY options while also adding EPON and DPoE products to its mix.

Vecima already has a product set for remote PHY under the "Entra" brand. So the acquisition of the Nokia product line fills the remote MACPHY gap, enabling Vecima to offer both options as cable operators continue to build out their next-gen DAA platforms.

Clay McCreery, Vecima's chief operating officer, noted that many tier 1 and tier 2 cable operators have been embracing remote PHY for their early DAA deployments, with the intention of migrating to remote MACPHY and more virtualized architectures further down the road.

DAA activity among cable operators has slowed down a bit during the pandemic as operators have prioritized adding capacity to their legacy DOCSIS platforms. However, trial activity around DAA has started to ramp up again, Kumar said, noting that Vecima has 19 "operator engagements" already underway with the vendor's Entra-branded DAA product line.

Although the deal gives Nokia a reseller relationship with Vecima, it also marks Nokia's general exit from the cable access network market and puts Nokia's cable-focused portfolio and people in the hands of a supplier that is more laser-focused on that sector.

Nokia was able to carve out some limited inroads with cable operators (a notable recent win involved a tie-in with Altice's Altibox in Europe) with its Gainspeed product line and with its EPON and DPoE technology. But the company itself never became a core cable player, Jeff Heynen, research director for the broadband access and home networking unit with Dell'Oro Group, said. Nokia likewise was able to build solid relationships with cable operators on the routing side, but that work didn't always translate directly to Nokia's cable access network activity, he added.

Raising its cable profile
As Nokia refocuses on other, more core parts of its business, it's an opportune time for Vecima to jump in and expand its cable access business, Heynan said. "I think the acquisition is great for Vecima because they are focused specifically on the cable industry … They have those entry points into the key operators."

While DAA represents new opportunities for Vecima and other cable access vendors, Vecima's acquisition of Nokia's DPoE technology, which brings DOCSIS-style provisioning capabilities to EPON networks run by MSOs, brings a "fairly steady" business to Vecima, Heynen says. He points out that post-deal, Vecima and Adtran will become the top two vendors with dedicated DPoE capabilities.

The deal also builds on Vecima's 2017 acquisition of Concurrent Computer Corp.'s content delivery and storage business, which includes IP video and VoD infrastructure technologies and services used by cable operators and other video service providers.

"This deal really elevates Vecima to the top tier of cable infrastructure vendors while putting Nokia in a much reduced role," Alan Breznick, cable/video practice leader for Light Reading, said. "It will be interesting to see whether Vecima can leverage the former Gainspeed assets more effectively than Nokia has over the past few years."

Cable vendor competition is shifting
The Vecima-Nokia deal also signals another shift in the cable access vendor market whereby a smaller player is taking over a product line and technologies of a much larger one. A recent prime example of that occurred early this year when ATX Networks effectively took over Cisco's cable amplifier business. Meanwhile, MaxLinear is in the process of taking over Intel's home gateway business, which includes silicon for DOCSIS modems and gateways.

Those transactions should produce vendors that are not only hungry but also much more focused on the cable industry as MSOs prepare to move ahead with distributed access networks with an eye on DOCSIS 4.0 further down the road.

"The cable access market needs this, quite honestly," Heynen said of the recent M&A activity involving the cable access network. "If anyone can make this part of the business successful, it's going to be a company that's dedicated to the cable segment."

That reality has apparently dawned on Nokia. "[T]he industry continues to go through significant shifts, and we believe the timing is right to transition our cable access business to Vecima Network," Sandra Motley, president of fixed networks at Nokia, said in a statement. "Vecima has the focus, resources and complementary product portfolio needed to support these changes and help operators move toward a Distributed Access Architecture."

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— Jeff Baumgartner, Senior Editor, Light Reading