Cable MSOs Move in on Ethernet Sales
Cable multiple system operators (MSOs) have continued expanding as a major and dynamic portion of the U.S. Ethernet market, growing from currently more than a quarter of the market -- and a much greater share of the metro market, in which they are concentrated -- to soon approach a third of the market in the next couple of years, as "late bloomer" Comcast Corp. ramps up share rapidly after its 2011 market entrance.
As shown in this month's Heavy Reading Cable Industry Insider, Cable Operators & Ethernet: Serious Market Share, the MSOs entered this market with a specific model, and while they have cultivated and benefitted from that model, catering largely to local small to medium enterprise (SME) customers that overlapped their cable regions, they have increasingly diversified out from it. The MSOs' relatively simple, "pipe"-based approach to Ethernet is increasingly evolving with the larger market into one that is more application-based and vertically oriented, and that gives more weight to service management concerns.
As wholesale has come increasingly to lead Ethernet market growth, the MSOs have also seen disproportionate and rapid increases in their wholesale Ethernet businesses, which have typically expanded as a share of overall MSO Ethernet from the vicinity of 10 percent a couple of years ago to more than 20 percent now. This prominently includes Ethernet for cell backhaul and for more standard "Type Two" service over ENNIs, which is now probably growing even faster among MSOs than backhaul, after a long period when it was relatively uncommon.
While MSOs have particularly cultivated smaller midsize business customers for Ethernet, they are moving both up-market and down, intensifying their down-market focus by increasingly leveraging their HFC networks, Docsis 3 and channel-bonding capabilities – especially as more MSOs have introduced HFC Ethernet connectivity. And though they have so far gone only modestly up-market as a segment, MSOs are in varying degrees increasingly moving in the direction of serving large-scale corporate customers, including for long-haul. Both up- and down-market sales are growing faster from smaller bases than long-dominant (for MSOs) mid-market sales.
Market leaders Cox Communications Inc., Lightpath and Time Warner Cable are still well ahead in the segment, gaining the most from Ethernet. Time Warner probably grew the fastest in 2012, but Comcast -- after a late start but with its huge overall size advantage – is rapidly gaining ground.
— Steve Koppman, Analyst at Large, Heavy Reading Insider
Cable Operators & Ethernet: Serious Market Share, a 29-page report, is available as part of an annual single-user subscription (six issues) to Heavy Reading Cable Industry Insider, priced at $1,595. Individual reports are available for $900. To subscribe, please visit: www.heavyreading.com/cable.