When it comes to cable, the sky is falling, the sky is falling! That's the conclusion of a new report from investment house Merriman Curhan Ford & Co. that warns about "cable's looming bandwidth crisis."

The report starts with a gripping observation:

Cable multiple systems operators (MSOs) could soon have their backs against the wall as their customer base demands 100 HDTV channels, their RBOC and satellite competitors supply that many, but their own HFC plant can only deliver 12.

Say what? Delivering 12 HDTV channels only requires four to six MHz channels on a cable operator's HFC network using MPEG-2. With 700 MHz downstream, MSOs have 110 channels to play with, theoretically enough to deliver more than 300 HDTV channels. Sure, Verizon has tons of capacity with its FTTH rollout, but A&T is not even offering HDTV at all yet with its DSL-based IPTV service.

Now, it is true that most of cable's bandwidth is eaten up by analog broadcast channels, to the tune of 70 or more on many cable systems. And then there's broadcast digital, digital simulcast, and VOD, not to mention DOCSIS channels for IP services. Available spectrum for HDTV is limited, but in an emergency, MSOs could quickly pare down their analog offerings considerably to reclaim spectrum.

The report further contends:

Cable, we believe, will face the same issue with its legacy copper-based transport media, in this case coaxial cable, that the telcos are facing with their copper infrastructure.

That's a good one. The only reason telcos are upgrading their copper networks is because cable's "copper-based transport media" is eating their lunch. America's largest telco, AT&T, has no stated plans to replace its copper plant to the home. In a battle of copper versus copper, cable looks quite capable. Verizon is the exception, of course, given its aggressive fiber rollout. But that will cover less than 20 percent of U.S. homes in the coming years, albeit homes in very attractive markets.

In those Verizon fiber markets, cable operators may well need to look at network enhancements to stay ahead of the capacity curve. But as the Merriman report notes, MSOs have many options available to do so.

The MSOs have multiple technology choices in enhancing access bandwidth -- such as new compression technologies, pushing fiber deeper in the network and adding optical nodes, coaxial spectrum enhancement, switched broadcast technologies, and analog spectrum reclamation -- and are likely to opt for combinations of these alternatives.

Indeed, there are a number of stopgap solutions tht cable operators can use to stretch their plants' capacity. And, if they want to bring out the big guns, by using technologies like coaxial spectrum overlay, MSOs can double their HFC capacity for less than $200 per home passed. That's a fraction of the cost of telco FTTH.

Cable operators certainly face bandwidth concerns and challenges. But a crisis? Not so much. If there's a crisis, it's among the North American telcos that are now losing a million local phone customers -- a quarter of them to MSOs. Now that telcos are finally positioning themselves to fire back with fiber, cable just needs to be ready to return the volley.

- Michael Harris, Chief Analyst, Cable Digital News