Cable’s Slow Ride to Fiber
How fast will the cable industry move to all-fiber plant? A Credit Suisse financial analyst believes the industry will be slow to upgrade from coax in less competitive areas, not seeing any urgency in upgrading to faster, more reliable technology, with speed and type of upgrades paced by the competition within the markets they serve.
“We expect kind of different choices to be made in different [population dense] areas,” said Grant Joslin, Vice President US Telecom Equity Research, Credit Suisse. “If you're in an area where you've got millimeter wave wireless and you've got one fiber competitor or two or three fiber competitors, that's the kind of area where you would prioritize [DOCSIS upgrades] first and as soon as you've got components coming in, you would love to do those upgrades.”
Joslin said there would be less urgency for upgrading to DOCSIS 4.0 in less competitive markets. Suburban areas who lack fiber competition get upgraded as a defensive basis, while rural and deeply rural areas are likely the last to be upgraded. He said that the upgrades from DOCSIS 3.1 to 4.0 would likely be more gradual and not resulting in a significant capital expense for larger service providers, given their existing expenditures.
“Charter and Comcast spend $9 to $10 billion a year for their business as usual CapEx,” said Joslin. “We think the entire cost of the [DOCSIS 4.0] upgrade over the many years that will be done is somewhere in the $10 to $11 billion range.”
The DOCSIS 4.0 upgrade path delivers some cost-offsets to cable operators in addition to potential user speeds of 9 Gbps downstream and 4 Mbps upstream, including better reliability through active monitoring of field equipment and reducing the need for labor-intensive node splits by adding more overall capacity in the coax side of the network.
Joslin noted that most cable operators won’t get the reliability of fiber through the DOCSIS 4.0 upgrades, but the industry is quietly building an on-ramp to all fiber through their latest hardware rollouts. “As part of the Step 1 piece of the upgrade there's a technology called GAP, the generalized access platform. If an operator decides that there’s no more use throwing good money after bad or they don't see any more lifespan in the DOCSIS technology, it's just a module swap [to move to fiber].”
Operators could move to fiber on a gradual basis, first migrating high-bandwidth users onto fiber to relieve pressure on the coax network and then ultimately upgrading everyone to fiber. “It’s a more elegant way [to migrate] than burn the entire network down and put in a new one,” Joslin said.
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