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COVID-19 slams cable next-gen network upgrades

Bandwidth-wise, there has never been a year like it.

While large swaths of the population have found themselves suddenly working from home, learning from home and teaching parents and grandparents how to download (and use!) videoconferencing software, cable operators have been working diligently to meet these unprecedented bandwidth demands in real time.

Prior to the COVID-19 pandemic, cable operators believed that if a large segment of their subscribers utilized massive amounts of upstream bandwidth at the same time, operators would possibly have limited viability to meet demand. Early 2020 presented just that situation. Of course, no one could have predicted that the underlying cause would be the biggest global pandemic to strike in 100 years, but here we are. If one positive accolade can be handed out this year, it's that cable operators have unquestionably passed the ultimate test on their access networks.

Omdia's cable broadband access equipment forecast updated for industry trends

For its inaugural mid-year update, Omdia's cable broadband access equipment forecast has been adjusted to account for the technological shift in access equipment demand prompted by COVID-19.

Throughout 2020, many cable operators defaulted to tried-and-true solutions, using centralized CMTS/CCAP gear to perform quick network upgrades and deployments to meet urgent bandwidth capacity demands. The roster of solutions includes line card upgrades, spectrum increases and node segmentations/splits. Consequently, next-gen revenues have declined and are expected to be only $197 million for the full year (Figure 1).

Figure 1: Cable Broadband Access Equipment Forecast, 2018-25 - next-gen vs non-next-gen
Figure 1: Cable Broadband Access Equipment Forecast, 2018-25 – next-gen vs non-next-gen

Non-next-gen CMTS/CCAP equipment will account for 75% of market revenues in 2020, or $590 million. But this won't remain the story for long. As the pandemic crisis subsides, there will be a shift, spurred by cable operators' capex investments in headend efficiencies and higher bandwidth capacities. These initiatives will be supported by the move to cloud-enabled CMTS/CCAP and a distributed access architecture (DAA) technology.

Within Omdia's forecast, the next-gen segment consists of cloud-enabled CMTS/CCAP (also known as virtualized CMTS/CCAP), Remote PHY and Remote MAC/PHY devices and shelves, and digital fiber nodes. Collectively, these technologies represent the transformation away from a centralized HFC network infrastructure housed in cramped, high-cost headends and towards an orchestrated, reallocated architecture. Previously siloed aspects of the networks can be flexibly combined and supported by cloud and software provisioning. By 2025, next-gen equipment revenues will be over $863 million, or 77% of total cable access equipment revenues.

Movement towards virtualization and disaggregation

Cloud-enabled CMTS/CCAP products require significantly less physical equipment in the headend, alleviating space constraints, as well as such associated opex costs as power, cooling and real estate. By 2025, 38% of cable broadband access equipment revenues will be from virtualized CMTS/CCAP deployments, compared to just 16% in 2019 (Figure 2). Cable operators are deploying distributed technologies in the outside plant in tandem with implementing headend virtualization to realize the full benefits of a disaggregated architecture.

Figure 2: Global Cable Broadband Access Equipment - by segment, % of total - 2018-25
Figure 2: Global Cable Broadband Access Equipment – by segment, % of total – 2018-25

To reiterate, many cable operators are focused on legacy CMTS/CCAP technologies in response to the work/learn-from-home network demands during 2020. Thus, the steady ramp of DAA has deteriorated in the short term. Fortunately, the distributed equipment market has kept afloat during the year by existing cable operator contract obligations and several major vendor wins.

In 2019, DAA revenues were 22% of the market total, but are expected to be only 11% of revenues for the full year 2020. As DAA network upgrades ramp in 2021, distributed equipment revenues will grow significantly throughout the forecast period, approaching 39% of total revenues in 2025. Omdia will be updating the cable broadband access forecast again in the first half of 2021.

Want to learn more about what's happening with cable network upgrades? Then join me and sign up for Light Reading's latest free digital symposium, Cable Next-Gen Network Architectures, on Thursday, October 8. Please click here to find out more and register for the event. I will be presenting my latest forecast there.

Further Omdia cable forecast information can be found at omdia.com or [email protected].

— Jaimie Lenderman, Senior Analyst, Service Provider Networks, Omdia

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