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Cable Tech

DOCSIS 4.0 network upgrades could reach $300 per home passed – analyst

DOCSIS 4.0 network gear is still in development, but industry vets and analysts are already starting to speculate on what the incremental costs per home will be as (some) cable operators pursue upgrades of their widely deployed hybrid fiber/coax (HFC) networks.

If current estimates end up in the ballpark, D4.0 network upgrades won't break the bank, although they will dwarf the costs required for DOCSIS 3.1 upgrades. D4.0 upgrade costs are still expected to fall well short of the capital outlay for a jump to fiber-to-the-premises (FTTP).

Although final costs are still to be determined, estimates from Broadband Success Partners indicate that operators can expect an incremental $150 to $300 per homes passed for DOCSIS 4.0 upgrades. That covers both options for D4.0: Full Duplex DOCSIS (FDX), an approach largely championed by Comcast; and Extended Spectrum DOCSIS (ESD), an approach that most other operators interested in D4.0 are pursuing.

When factoring in "mid-split" or "high-split" upgrades that expand the amount of spectrum allocated to the HFC network upstream, that's an additional $100 per household passed (HHP).

"All said, the cost/HHP for a full DOCSIS 4.0 transition is ~$250-$400/HHP when combining the mid/high-split with the additional costs for D4.0 itself," Cowen estimated in a research note based on its discussions with Broadband Success Partners, a firm known for performing due diligence for private equity firms and other clients exploring telecom and cable M&A.

Those estimated costs for D4.0 would be significantly higher than the $10 per home of incremental network costs associated with DOCSIS 3.1 upgrades. Granted, the path to D3.1 was far less complicated, as it did not require operators to touch the plant in the way they will for DOCSIS 4.0. Like D3.1, DOCSIS 4.0 will require a new modem, which will add another $150 to $300 per home passed. However, D4.0 modem rollouts are expected to be relegated to "success-based capex," at least in the early going, Cowen noted.

Although DOCSIS 4.0 will cost much more to deploy than D3.1, the expected costs for D4.0 remain below those for fiber-to-the-premises (FTTP) upgrades, which Cowen pegs at roughly $1,000 per home passed, plus a connect cost in the range of $500 to $700.

Choose your own [network] adventure

But, as Cowen rightly points out, the final costs for D4.0 are still a big unknown. The product is still in development and it's not yet clear what kind of cost advantages cable operators will be able to enjoy, given that MSO adoption of DOCSIS 4.0 will be far from uniform.

While some operators intend to go with D4.0 (with FDX or ESD), others, such as Altice USA and Virgin Media O2, are skipping D4.0 to pursue broad FTTP upgrades or overlays. Still others, like Cox Communications, are going with a hybrid of D4.0 and FTTP.

But, whatever path is taken, Cowen is convinced that the cable industry is well positioned, from a technology standpoint, to compete with a surge in fiber network invasions and the emergence of multi-gigabit billboard speeds. Differentiation will have to come from somewhere else.

"All said, the future of the industry remains a 'choose-your-own-adventure' story with a number of Cable operators opting for differing strategies in their defense against FTTH," Cowen wrote. "That said, we remain convinced that Cable will be able to adequately defend their castles from FTTH for many years to come, with a clear upgrade path to multi-gig speeds as we continue to assert that the battle between Cable and FTTH will continue to be one of price and marketing rather than technological superiority."

Grappling with perception and tech reality

Although upgrade enhancements to DOCSIS 3.1 and capabilities of future DOCSIS 4.0 networks appear poised to support the apps and services on the near-term horizon, cable operators will still have to contend with the brighter glow and cachet of fiber.

Broadband Success Partners "noted the importance of perception, specifically noting that Cable will have to convince consumers (via promos, bundling, marketing efforts, etc.) that it has ample speeds and functionality for next-gen use cases including gaming, digital health, and streaming," Cowen explained.

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— Jeff Baumgartner, Senior Editor, Light Reading

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