Comcast Buying Arris Docsis 3.0 Gear

NEW ORLEANS -- The Cable Show -- Comcast Corp. (Nasdaq: CMCSA, CMCSK) has agreed to purchase updated cable modem termination system (CMTS) equipment from Arris Group Inc. (Nasdaq: ARRS) as part of the MSO's aggressive rollout strategy for Docsis 3.0, a new CableLabs spec that promises shared speeds in excess of 100 Mbit/s.

In a deal announced over the weekend as The Cable Show started to ramp up here in The Big Easy, Comcast has put in a purchase order for the C4, Arris's flagship CMTS, which obtained "bronze" Docsis 3.0 qualification late last year. (See Cisco, Arris & Casa Make the CableLabs Grade.) Bronze, the bottom of a three-tiered qualification program developed by CableLabs and designed to spur 3.0 deployments, covers features such as downstream channel bonding and IPv6. The next qualification level, "silver," adds in upstream channel bonding. (See CableLabs Accelerates Docsis 3.0 Testing .)

Specific terms were not disclosed, but "it's a real significant deal," an Arris spokesman says. However, the announced agreement did not account for any Arris-made Docsis 3.0 cable modems or embedded multimedia terminal adapters. (See Modems, CMTSs Break Docsis 3.0 Barrier .)

Comcast has plans this year to wire up as much as 20 percent of its footprint for Docsis 3.0, and to have all of its networks 3.0-capable by mid-2010. (See Comcast Enters the Wideband Era .) It is using CMTSs and cable modems from CableLabs for its first Wideband deployment in Minnesota's Twin Cities.

Arris and Cisco are already key suppliers to Comcast, so their involvement in the MSO's Docsis 3.0 rollout is not a big surprise.

"We expect Arris and Cisco [to] split the business with Comcast, yet we lack sufficient detail to accurately quantify the sales opportunity," Morgan Keegan & Company Inc. analyst Simon Leopold said in a research note issued this morning. The firm reiterated its "Outperform" rating on Arris shares, which bounced back in late April after the company presented a solid second quarter 2008 forecast. (See Arris Settles Down.) "Although we do not adjust estimates, we consider the announcement a positive that could begin to dissuade skeptics," Leopold added.

Although Arris and Comcast did not say where the C4 will be installed, the MSO has apparently rolled out Docsis 3.0 in more than one market. David Fellows, a Comcast executive fellow and former chief technology officer, moderated a panel on the topic of bandwidth Sunday afternoon, and hinted that the operator had rolled out Docsis 3.0 in a total of three locations so far. When asked to elaborate, he said the operator had started to test Wideband services with employees and other friendlies in two new markets, but could not identify them. A Comcast spokeswoman was looking into the matter.

If competition is a driver, one possible, next market for Comcast's Docsis 3.0 rollout is Chicago, where it is matched up with RCN Corp. 's "Analog Crush" initiative and the AT&T Inc. (NYSE: T) U-verse service. (See RCN's 'Analog Crush' .) Comcast might also have channels to spare for Docsis 3.0 in the Windy City, as it's also one of the first properties to benefit from Comcast's "all-digital" analog bandwidth reclamation project. (See Comcast Spreads the Love .)

— Jeff Baumgartner, Site Editor, Cable Digital News

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