With the cable industry at the start of a major network upgrade cycle, Light Reading is examining both the causes and effects of this network transformation. In last Friday's first installment of this four-part series, we looked at the financial and technological factors pushing cable toward new distributed and virtualized network architectures. In the second installment today, we offer an analysis of the incremental steps that cable companies are taking as they evolve toward software-driven broadband and video infrastructure, including the pros and cons of different strategies and who stands to benefit among cable technology vendors.
Catch up on the first installment here: Why Cable Is Upgrading Networks Now. Continue reading for part two below.
The drive toward network virtualization combines a need by cable operators to increase capacity and agility with the need to keep costs and power and real-estate requirements in check. This is a big shift because cable companies have traditionally relied on proprietary Cable Modem Termination System (CMTS) equipment to power their data services, and Edge QAM devices to power their RF-driven video services. Virtualization, however, emphasizes the use of cheaper, commercial off-the-shelf (COTS) hardware paired with software-based networking functions.
In the way of industry jargon, cable players are now throwing around the term "big iron" to describe typical, old-style cable equipment. In the long term, cable operators want to get rid of big iron and push their vendors toward software solutions instead. (See Nokia Debuts Virtualized Cable Access Platform.)
Despite the goal of doing away with older equipment, however, the current reality is that cable operators can't overhaul an entire delivery system while also responding to skyrocketing bandwidth demand. Not only do they have to take a phased approach to the transition, but they also need vendors to keep improving on their big iron equipment so that consumers don't suffer diminished quality of service while the migration to virtualization is underway.
Over the past five years or so, cable companies have prodded vendors to upgrade from traditional CMTS equipment to new Cable Converged Access Platform (CCAP) chassis. And momentum for these CCAP devices is growing. Rethink Research estimates that the CCAP market now has a value of around $2 billion annually.
A CCAP solution does two things to improve on legacy CMTS hardware. First, it greatly increases DOCSIS channel density so that operators can deliver more bandwidth for broadband services with less equipment. In initial CCAP deployments, operators were focused only on this density advantage, and three primary vendors emerged as key solution providers: Arris Group Inc. (Nasdaq: ARRS), Casa Systems Inc. and Cisco Systems Inc. (Nasdaq: CSCO).
Arris established an early lead in the market with its E600 CCAP platform, and the company touts such major customers as Altice , Comcast Corp. (Nasdaq: CMCSA, CMCSK), Liberty Global Inc. (Nasdaq: LBTY) and Telstra Corp. Ltd. (ASX: TLS; NZK: TLS). Casa also got off to a fast start, and though it hasn't entirely matched Arris' market share, it does count among its customers Liberty Global, Mediacom Communications Corp. and Charter Communications Inc. (in the legacy Time Warner Cable footprint). Casa also recently announced an extended customer deal with Jupiter Telecommunications Co. Ltd. (J:COM) in Japan.
Cisco, meanwhile, was late with its CCAP product launch, but has made up significant ground since. The company now says it has more than 100 CCAP customers worldwide, including recently announced Cablevision Argentina. Altice, VOO in Belgium and Midcontinent Communications (Midco) are among Cisco's other CCAP customers. According to Current Analysis, Cisco is doing well, although it hasn't caught up yet with rivals Arris and Casa.
There is more to CCAP than just increased channel density, however, as the primary vendors are quick to promote. As the end of 2016 approaches, more operators are also looking at taking advantage of the second benefit that a CCAP solution offers. A true CCAP, or integrated CCAP, combines data and video delivery, taking the functions of a CMTS and an Edge QAM device and putting them into a single piece of hardware.
So far, only Casa has publicly referenced any specific customer deployments of an integrated CCAP for both data and video processing. Casa started testing its integrated CCAP solution with Time Warner Cable all the way back in March of 2015. And the recent J:COM announcement by Casa also talks to an integrated CCAP rollout. (See TWC Delivers First QAM Video Over CCAP.)
But there's growing evidence that operator demand for a truly converged platform is growing. Arris and Cisco have both said they're having related conversations with customers, and Cox Communications Inc. CTO Kevin Hart said in May that his team was in the final stages of selecting a vendor for an integrated CCAP deployment. (See Don't Give Up on Converged Cable Access Yet and Cox Reveals Next Steps for D3.1, CCAP.)
An inconvenient truth
The CCAP movement is a boon for cable operators, but the unfortunate truth is that it also naturally runs counter to both network virtualization and distributed access architecture (DAA) trends. The more the industry invests in cramming more cable-specific technology into CMTS/CCAP devices, the less it invests in new software solutions that run on cheaper COTS hardware.
Plus, as far as the pairing of DOCSIS data services and QAM-based video goes, that convergence creates new problems for DAA strategies. Specifically, if cable operators convert the analog link from headend and hub sites down to the node into a digital one -- as is the case in a distributed architecture -- there's no immediate way to transport RF video (aka traditional linear broadcast content) from an Edge QAM device down that digital pipe. An operator either has to move video into an integrated CCAP machine (more proprietary hardware), or convert it coming out of the EQAM for digital delivery.
(Editor's Note: Nobody called me on it, but I noticed a mistake in this article as I started on the fourth installment of the series. Initially I said in the paragraph above that there was no way to transport RF video from an integrated CCAP down a digital pipe. That was incorrect. More in the comments section below.)
A future post in this series will look at ways to address the video dilemma. But for now, suffice it to say that video exacerbates the push-pull dynamic between convergence and distribution and complicates the debate between migrating to new CCAP devices and moving more quickly toward a software-driven solution.
For Arris, Casa and Cisco, there's incentive to keep cable operators tied to CCAP devices. These vendors are making money from selling CCAP hardware, and from a business perspective, they need to milk that revenue source for as long as they can.
Other vendors, however, have the reverse incentive to move cable operators away from traditional CCAP products. This is why Nokia Corp. (NYSE: NOK) acquired Gainspeed and introduced its virtualized CCAP product portfolio, and why Harmonic Inc. (Nasdaq: HLIT), which hasn't had much success with its standalone NSG Pro CCAP product, debuted its CableOS software-based CCAP solution last month. These companies want to help the cable industry move more quickly toward virtualization because it opens up new opportunities in a market that has until now been dominated by three incumbent vendors. (See Nokia Debuts Virtualized Cable Access Platform and How Harmonic Aims to Disrupt CCAP Market.)
Ultimately, cable operators will choose a number of different options for their network upgrades. Some will ramp up CCAP deployments in the near term, some will start experimenting with distributed architecture and virtualization solutions, and many will likely do both.
It's tempting to conclude that Nokia and Harmonic have an advantage going forward because they're out of the gate early with virtualization products. But not only do Arris, Casa and Cisco have a significant installed base of customers, they're also not sitting on their hands when it comes to developing next-generation software solutions. Casa, in fact, just introduced its own virtual CCAP product. (See Casa Joins Virtual CCAP Parade.)
All of the three leading vendors are outlining a path to virtualized cable networks, and they can argue that a slower incremental approach -- that includes their existing CCAP hardware -- makes more economic sense.
As always, the network upgrade strategies that prove most appealing to cable operators will come down to timing and execution. The desired end state is clear, but at this early stage, the road that cable companies decide to take to get there is far less certain.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading