In a sign of how heavily cable operators are spending on broadband upgrades right now, vendor revenues from Converged Cable Access Platform (CCAP) shipments hit record highs in the third quarter, raising capex levels across the board, according to a new report.
Infonetics Research Inc. reported earlier this week that vendor revenues for CCAP, a high-density system that combines the functions of the cable modem termination system (CMTS) and edge QAM in the cable headend, reached $360 million in the summer quarter as more MSOs upgraded from their older CMTS chassis to the next-gen CCAP chassis. That's up 7% from the second quarter and a much higher percentage from the year-ago period. (See CCAP Shipments Surge for Cable Vendors .)
While cable operators around the world are upgrading their networks for CCAP gear, the trend to spend is particularly strong in North America, Infonetics noted. With US MSOs seeking to match the fiber builds of the large telcos and the growing wave of gigabit rollouts by Google Fiber Inc. , AT&T Inc. (NYSE: T), CenturyLink Inc. (NYSE: CTL) and other broadband rivals, they're increasingly looking to CCAP for processing help as they boost high-data speeds and introduce IP video and cloud-based services.
These numbers will likely soar even higher next year as more cable operators convert to CCAP and Cisco Systems Inc. (Nasdaq: CSCO), the perennial CMTS king, introduces its long-awaited next-gen CCAP chassis, known as the cBR-8. That integrated chassis, which has been in trials with numerous major MSOs for months, is expected to electrify the market because it will put Cisco more or less back on an equal footing with its two main market rivals, Arris Group Inc. (Nasdaq: ARRS) and Casa Systems Inc. . (See Cisco Plots CCAP Comeback.)
Besides showering more capex on CCAP equipment in the third quarter, cable operators also kept up their spending on related broadband gear. Infonetics reported that overall vendor revenue for the entire cable access network category -- which covers CCAP, CMTS, edge QAM and coax media converter (CMC) gear -- rose to $445 million for the summer quarter, up 8% from $411 million in the spring.
As a result, global DOCSIS channel shipments came in strong again during the third quarter, nearly matching the record highs of the previous quarter. Suppliers shipped about 1.2 million DOCSIS channels to cable customers in the quarter, slightly down from the spring but nearly double the levels of summer 2013. It also marked the second straight quarter that channel shipments have cleared the 1 million mark.
"This reflects just how much the cable companies are investing to support higher-bandwidth services such as IP video and to compete with fiber," said Jeff Heynen, principal analyst for broadband access and pay-TV at Infonetics. The firm expects DOCSIS channel shipments, which barely cleared the 2 million level for all of 2013, to soar to about 4.5 million this year and 6 million in 2015.
As they have before, Arris, Cisco and Casa ranked as the top three players in the overall market. No other cable vendors came close.
— Alan Breznick, Cable/Video Practice Leader, Light Reading