DOCSIS infrastructure spending rebounds in Q3DOCSIS infrastructure spending rebounds in Q3

Following a rough first half of the year, cable tech suppliers have been predicting that operator spending would perk up in the second half of 2024. A new report from Dell'Oro Group confirms that such spending has started to rebound.

Dell'Oro said spending on DOCSIS infrastructure jumped 26% in the third quarter of 2024 versus the year-ago period. Within that category, there was a significant rise in spending for remote PHY devices and virtual cable modem termination systems (vCMTS) – components that help to shape new distributed access architecture (DAA) and future moves to DOCSIS 4.0.

"I think we were expecting a pick up on the cable side in Q3, but not to the extent that we saw in the quarter," Dell'Oro VP Jeff Heynen tells Light Reading. "We knew vendors had signaled that there would be a bounce back quarter, but it was well beyond what I was anticipating."

That's, of course, good news for suppliers. But the cable tech market is still navigating what was a tough first half of the year and faces questions about when spending will indeed rise at a sustainable level as operators continue to formulate their network upgrade plans and alter existing ones.

Harmonic, for example, has warned that some delays in spending are to be expected as operators mull future deployment and adoption of new "unified" DOCSIS 4.0 technologies. Vecima Networks, meanwhile, just executed on job cuts amid a reorg that resets how it's applying resources toward next-gen operator projects. Charter Communications has pushed out its multi-phased hybrid fiber/coax network upgrade plan to 2027; the operator had originally expected to complete those upgrades by the end of 2025.

Though Charter's plan has been pushed out, Heynen says the operator is still spending on remote PHY tech ahead of full DAA deployments and a shift to virtual CMTSs in a portion of its HFC footprint. Other operators, he said, are also investing in RPDs – with new modules and full node changeouts – to deliver signal quality improvements.

As for vCMTS spending, much of the growth seen in Q3 is attributable to Comcast, which has deployed DOCSIS 4.0 to parts of ten markets.

Harmonic keeps its lead

Among cable tech suppliers, Harmonic led the way in Q3, pulling in a 55% share of revenues in the quarter, according to Dell'Oro. Harmonic was followed by CommScope (20%), Vecima (17%) and Cisco (6%), which has largely backed out of the cable hardware business. Dell'Oro's review of this segment of the cable access market does not include outside plant elements such as taps and amplifiers.

Looking ahead, Heynen sees Q4 to be in-line with Q3. Suppliers should see flattish to small revenue growth – in the range of 1% to 2% – in 2025, Heynen said. The good news, he said, is this rate of growth should spread across multiple years and provide the market with a bit more consistency than it's seen in recent quarters.

Bigger picture, Dell'Oro said the total broadband access equipment market rose 5% in Q3, to $4.6 billion, versus the year-ago quarter.

Driven by adoption of XGS-PON technology, PON equipment spending climbed 6% year-over-year, thanks to an 11% rise in spending on PON optical network terminals (ONTs). Dell'Oro said ONT shipments in North America passed the 2 million mark for the first time since Q1 2023.