Is SDV Poised for a Comeback?
The cable operator's chairman and CEO, Brian Roberts, rekindled that possibility on yesterday's fourth-quarter earnings call, noting that the MSO will be funding "several new initiatives through our newly-formed Comcast Labs that focuses on the areas of converged products, IP technology, and switched digital video."
He said overall investment in those areas will represent less than 5 percent of Comcast's capital spend. Based on the $5.1 billion in capex Comcast laid out in 2009 (the MSO expects capex to be lower in 2010), that means it won't spend any more than $255 million on all Labs-related activity this year, with SDV getting a still-undisclosed piece of that action.
Still, the remarks indicate that Comcast is taking SDV out of cold storage and starting up where it left off following earlier trials in markets such as Denver; Cherry Hill, N.J.; and Minneapolis/St. Paul. (See Comcast Reveals SDV Test Beds and Comcast Expands SDV Test Pool.)
Soon after those initial trials were revealed, Comcast de-emphasized its interest in SDV as a bandwidth-efficiency tool, instead putting its weight behind a massive analog-reclamation strategy that allows the MSO to recapture about 40 channels and re-use that spectrum to launch more than 100 high-definition TV channels and boost capacity for video-on-demand (VoD) titles. That initiative, dubbed "Project Cavalry," is well underway, and Comcast expects to have it rolled out in the vast majority of its footprint by year's end. (See Comcast to Wrap Wideband, All-Digital Rollout This Year.)
With completion of that project in sight, the door may next open up for SDV, a technology already being championed in a big way by Time Warner Cable Inc. (NYSE: TWC) and Cablevision Systems Corp. (NYSE: CVC). It's also a technology that has recently steered clear of further entanglements at the Federal Communications Commission (FCC) . (See FCC Reverses SDV Ruling.)
Comcast hasn't announced any new SDV deployment plans, so this may be just another round of lip service, but some recent internal moves suggest that it may be gearing up to do much more. A key indicator is the recent hiring of Doug Jones to the post of VP for access technologies. Before joining Comcast, he was the chief cable architect at BigBand Networks Inc. (Nasdaq: BBND), an SDV pioneer that now has its switching tech covering at least 28 million homes passed (BigBand's expected to reveal a fresh number later today when it reports fourth-quarter earnings).
Also among the tea leaves: Late last year Comcast hired Ted Grauch, the former SVP of the CE business unit for Nagravision SA , to the post of VP of premises video devices. According to industry sources, Grauch is specifically charged with managing the tech roadmap for all CPE video devices at the MSO, including low-end DTAs and advanced "hybrid" devices that can speak both RF and IP video.
And that all seems to tie in nicely with Comcast's apparent eagerness to deliver IP-based and cross-platform video services, and support more targeted advertising -- all things that SDV can help to enable. (See Comcast Forges 'Excalibur' for IPTV, BigBand Lays Cable IPTV Groundwork, and BigBand Pushes IP Video Convergence.)
Who could benefit?
If Comcast does re-spark its SDV efforts, Cisco Systems Inc. (Nasdaq: CSCO) and Motorola Inc. (NYSE: MOT) are sure to benefit, since they are the vendors supplying the core SDV platforms for the MSO's earlier trials. Arris Group Inc. (Nasdaq: ARRS) and Harmonic Inc. (Nasdaq: HLIT) stand to get some extra edge QAM business. And BigBand, an approved SDV supplier at Comcast, could factor in as well.
"SDV is definitely making a comeback" in 2010, Motorola senior director of global product marketing Buddy Snow told Cable Digital News last month when asked about the bandwidth implications of future 3DTV services. He didn't mention any MSOs by name but said switching offers a perfect tool for 3DTV content because it will apply only to a tiny fraction of the customer base early on. Broadcasting those shows would be a terribly inefficient use of valuable bandwidth.
Renewed interest in SDV at Comcast "could represent the beginning of a second [deployment] wave" for the technology, says Alan Breznick, senior analyst at Heavy Reading. "If Motorola is ready [for SDV] that's got to be a big factor in Comcast's decision, too. They can't proceed without Motorola."
Breznick estimates that North American cable operators had SDV deployed to about 35 million homes at the end of 2009, 10 million more than in 2008. Looking ahead, he expects that number to shoot up to 50 million by the end of 2010, hit 70 million by the end of 2011, and reach 90 million by the end of 2012.
— Jeff Baumgartner, Site Editor, Cable Digital News