Why Cable Is Upgrading Networks Now

If there's one takeaway from this year's SCTE Cable-Tec Expo show, it's that the cable industry is on the verge of a major network upgrade cycle. The themes are familiar to anyone in the telecom sector: Cable needs to move toward both distributed and virtualized architectures. But while cablecos are facing many of the same network hurdles as their telco brethren, cable operators are also up against their own industry-specific challenges.

In a four-part series starting today, Light Reading examines the current state of cable networks, where cable network technology is headed and how companies are placing their bets ahead of the upcoming network migration process.

Show me the money
The signs of a cable networking shift have been around for years, but it's only recently that significant evidence for near-term change has begun to accumulate. Cable operators are opening up publicly about their network goals, and network equipment and software vendors are growing increasingly optimistic with their financial projections. (See Don't Put a Cap on Capex Just Yet.)

The analyst firm Jefferies reports that several large cable providers have major upgrades to their hybrid fiber-coaxial (HFC) networks already underway. In a research note this week, Jefferies analyst George Notter said that Comcast Corp. (Nasdaq: CMCSA, CMCSK) is in the process of starting up a four- to five-year project that involves deploying an additional 1 million optical nodes around the country. That's on top of the company's 250,000 to 300,000 nodes already in place.

Likewise, Cox Communications Inc. , which is much smaller than Comcast but still remains a top-five US cable company, is reportedly working on a ten-year project to extend its HFC plant. Its goal is to increase its footprint of 25,000 optical nodes to 200,000 over the next decade.

Arris Group Inc. (Nasdaq: ARRS) and Cisco Systems Inc. (Nasdaq: CSCO), two of the biggest network equipment vendors in the cable industry, are also emphatic about the sense of urgency that cable operators are demonstrating around network migration. Arris CEO Bruce McClelland told Light Reading that while cable operators have seriously considered moving to more distributed architectures "at least three times in the last 20 years," it's only now that the desire to do so has converged with technological developments and a willingness by operators to spend the necessary capital.

Cisco Vice President of Cable Access Sean Welch agrees. He sees the distributed access architecture (DAA) movement as a "once-in-a-lifetime, generational change" that's starting now. "DAA is in full swing," Welch told Light Reading.

But why now? Why are cable companies willing to spend money on network transformation now when they weren't before?

For more fixed broadband market coverage and insights, check out our dedicated gigabit/broadband content channel here on Light Reading.

The first easy answer is the need for more bandwidth. Demand continues to rise for streaming video, and network operators see 4K Ultra HD video and virtual reality applications on the way. To meet new throughput requirements, cable operators know they need to push fiber even deeper into their networks.

The second and related answer is the availability of space and power. Cable companies are running out of room and ways to power all of the clunky equipment taking up space in their headend and hub sites. While they need to increase network capacity to raise bandwidth levels, they also know they can't do it just by adding racks and racks of new hardware.

Jeff Finkelstein, Cox's executive director of advanced access architectures, says cable has always known it would hit a real-estate and power crunch. At Light Reading's Virtualizing the Cable Architecture breakfast session at Cable-Tec Expo last week, Finkelstein noted that cable operators recognized years ago that even "if we managed to solve the bandwidth problem, we didn't solve the physical space problem," and that’s why the industry first started looking at the idea of distributed architectures.

Now that the crunch is here, cable companies recognize the need to put DAA into action on a broad scale.

DAA, however, adds a layer of complexity to cable networks because it requires managing a much larger footprint of distributed nodes. And that's where virtualization comes in. Virtualization makes management far easier by moving the control plane for multiple nodes into a single software-based function.

Virtualization also lowers operational expenses. As cable companies vastly increase the number of optical nodes in their networks, they won't want to have to rely on expensive labor to service all of those endpoints. Virtualization offers a much more cost-effective solution through the shifting of provisioning and maintenance into software.

Cisco's Welch calls opex savings the "low-hanging fruit" of virtualization. It's an easy business case to make.

Cable-specific challenges
For cable companies, the issue of moving to distributed and virtualized networks is in some ways more complicated than it is for telecom operators. Cable networks are built on proprietary systems, and even though there's a transition to more open, IP-based technologies taking place, cable providers have to manage the investments they've already made into their legacy plant.

One of the goals for the industry in moving to a distributed architecture is to minimize the amount of cable-specific infrastructure that operators have to manage. The more those proprietary technologies get pushed to the edge of the network, the more cable operators can rely on more cost-effective, standardized equipment and software at the heart of their infrastructure systems. (See Cable's Great Debate: How to Split Functions.)

As Welch noted to Light Reading, driving proprietary technology to the margins of a cable business has other value too. The cable industry notoriously attracts an older cohort of engineers because no recent graduates want to work with technology that is (ever so slowly) being phased out. Welch joked that a network transition is necessary in part just for "bringing in younger blood" to the industry.

The question then for industry observers is this: Is cable at a disadvantage because of the way the technology has developed over decades?

In some ways yes, but in other ways no. For example, even though cable operators are lagging behind telcos in the virtualization game, Andy Smith, Juniper Networks Inc. (NYSE: JNPR)'s distinguished engineer and chief architect for cable MSO networks, suggested at last week's Light Reading breakfast that cable companies haven't faced the same economic pressures as telecom companies have. A lack of "cut-throat competition" means the economics for virtualization weren't compelling in the cable industry until now.

At the same time, while cable's technology may be non-standard, the industry still has the massive advantage of local network infrastructure that its competitors simply can't match in most geographies. Ultimately, cable can use that infrastructure not only to continue offering fixed-line broadband and video services, but also to support wireless connections. (See Nokia: Why Web Scale Alone Can't Win.)

With a confluence of economic and technological factors, all signs point to now as the right time for the cable industry to invest in its networks. Cable companies can preserve the value of their legacy systems while also expanding capacity and increasing their flexibility to offer new network-based services.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

kq4ym 10/17/2016 | 12:57:32 PM
Re: Bandwidth It may be interesting to watch Comcast as it moves on it's "additional 1 million optical nodes around the country." With a quarter million now operating that's a bunch of buidling to do to handle the higher speeds needed in the next few years for VR and super hi def programming.
danielcawrey 10/10/2016 | 2:49:11 PM
Re: Bandwidth Cable has to upgrade its networks in order to deal with the deluge of IP-based video. This is precisely why Comcast has put a 1TB cap on broadband services. These pipes aren't unlimited.

Not yet, at least. 
Duh! 10/7/2016 | 12:57:01 PM
Bandwidth The MSOs have an incredibly valuable asset in distribution and drop coax.  It was originally designed around analog broadcast televisions, and the current channel plans are still an evolution of that. That history has become a constraint on system capabilities.  DOCSIS 3.1 superchannels and high split, and now full-duplex DOCSIS are about breaking those constraints.   

Digital bandwidth in these systems is limited by analog bandwidth and noise in  nodes and (especially) amplifiers, rather than by the characteristics of the coax.  DAA, N+0 and FDD will unlock a lot of previously unavailable capacity.  Replacing precision linear components with digital ones also reduces OPEX by improving reliability and simplifying maintenance.  That makes investment a lot more palatable.

I think it's fair to say that as HFC evolves toward something more like FTTN, coax plant will remain competitive with FTTH for a very long time. 
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