CommScope gears up for 'unified' DOCSIS 4.0 platform

CommScope signaled that it will put its weight behind "unified" DOCSIS 4.0 network products that support both options for the next-gen hybrid fiber/coax (HFC) architecture – Extended Spectrum DOCSIS (ESD) and Full Duplex (FDX).
FDX, an architecture favored by Comcast, envisions HFC built to 1.2GHz paired with an FDX band that allows upstream and downstream traffic to occupy the same block of spectrum. ESD is largely focused on HFC networks built to 1.8GHz while keeping upstream and downstream traffic operating in separate, dedicated spectrum.

CommScope is "close to having a [unified DOCSIS 4.0] product," Chairman and CEO Chuck Treadway said Thursday on the company's Q2 2024 earnings call. He suggested CommScope could have a D4.0 product to show at this year's SCTE TechExpo, which will get underway on September 24 in Atlanta.

He said CommScope is working with service providers and a silicon partner on its D4.0 product lineup. They weren't identified by name, but Broadcom is collaborating with Comcast on a family of unified D4.0 silicon for cable modems, amplifiers and nodes. CommScope, which recently sold its customer premises equipment (CPE) business to Vantiva, would likely be focused on D4.0 amps and nodes.

CommScope has already been tapped by Comcast to develop an FDX amplifier for the operator's DOCSIS 4.0 network upgrade initiative. Treadway noted that CommScope has finalized agreements with a large Tier-1 operator (presumed to be Comcast) on FDX products. He expects those products to start shipping in the second half of 2024, with a "significant ramp" coming in the first half of 2025.

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CommScope appears to be spreading its bets, as it has also been identified as an "early adopter" for MaxLinear's ESD-only D4.0 modem chipset, the Puma 8.

CommScope is also seeing interest for DOCSIS 3.1 "enhanced" or "extended" upgrades that enable operators to beef up downstream capacity with software upgrades and new modems that don't require a distributed access architecture (DAA) or a full upgrade to DOCSIS 4.0. Treadway said CommScope has a commitment from a "major" service provider for a D3.1E upgrade focused on achieving speeds of 4 Gbit/s down and 1 Gbit/s upstream.

The company is hopeful that operator activity for D4.0 and D3.1 upgrades along with installs of new virtual cable modem termination systems (CMTSs) will improve the outlook for its Access Networks Solutions (ANS) unit, which saw Q2 2024 revenues plummet 42.5% to $192.8 million.

That result capped off a historically low first half of the year for ANS due to slow demand as operators worked through existing product inventories.

Related:Cable ops are lab-testing 'enhanced' DOCSIS 3.1, CommScope says

HFC upgrade timing still hazy, BEAD projects being pushed out

Treadway said CommScope is bullish about the medium- and long-term prospects for ANS, but he stressed that the timing of HFC upgrade cycles and the overall improvement in demand remains uncertain.

"Although customers have indicated a fairly aggressive upgrade cycle over the next several years, many of these upgrades appear to be pushing out," Treadway said.

Still, CommScope expects ANS to turn in a stronger second half of the year.

CommScope did see overall improvements in Q2 versus Q1 across the broadband category. However, Treadway noted that customers are still assessing and evaluating their deployment plans for the Broadband Equity Access and Deployment (BEAD) program.

"Although we remain bullish on broadband, the level of uncertainty remains on the timing of a true demand recovery and the timing of BEAD," he said. Market indicators show that BEAD programs are being pushed to the second half of 2025, he added.

Financial snapshot

Overall sales at CommScope dropped 12.7%, to $1.38 billion.

A bright spot was CommScope's Connectivity and Cable Solutions (CCS) unit, which saw sales rise 4.5% to $728.4 million amid stronger demand for data center capacity being fueled by generative AI deployments.

Related:CommScope gets $2.1B for its outdoor wireless networks unit and DAS biz

Sales at CommScope's Networking, Indoor Cellular & Security Solutions (NICS) dropped 44.1%, to $132.4 million. That figure excluded CommScope's DAS product line, which saw sales decline 15.2% to $77 million.

CommScope is in the process of selling its DAS business to Amphenol as part of a larger $2.1 billion deal that also includes CommScope's Outdoor Wireless Networks (OWN) division.

That transaction, which will help CommScope trim down some of its debt, is expected to close in the first half of 2025.

Update: However, questions still loom regarding how CommScope will satisfy the $4.5 billion that's due in 2026, Raymond James analyst Simon Leopold said in a research note issued after CommScope's earnings call.

"Management is considering asset sales and refinancing options, but high leverage continues to burden the valuation, and shares likely remain volatile," the analyst added.

CommScope shares jumped 72 cents (+34.03%) to $2.85 each in Thursday afternoon trading.

OWN sales rose 12% to $256.3 million thanks to higher demand for basestation antennas and sales of the company's HELIAX product line.