Acquired Electronics360

Consumer Peripherals

The State of Cable Modem and Gateway Industry

24 October 2016

Cable modems provide high-speed link to Internet, TV and gaming services for tens of millions of households across the U.S. Over 61 million U.S. homes subscribe to high-speed cable Internet service. Cable modems are also one of the core components of many home-based businesses. The market continues to grow, with increasing cable modem speeds and improved Wi-Fi. But before delving into some of the trends, it’s important to walk through the basics.

Cost Savings for the Consumer

One of the main reasons consumers purchase their own cable modem is to take advantage of the cost savings that come with eliminating cable rental fees. It may come as a surprise to some, but only about 15% of cable Internet subscribers own their cable modem. This is surprising because those knowledgeable consumers who decide to purchase their own equipment typically save $120 per year in cable modem rental fees. Companies like Comcast and Cox eliminate the cable modem rental fees when consumers provide their own equipment, creating significant cost savings for the everyday customer.

MG7550 Cable Modem.MG7550 Cable Modem.

For the most part, larger cable service providers have a certification program that ensures a cable modem will work well with their service. Certified modems are typically listed on the service provider’s site, such as mydeviceinfo.xfinity.com for Comcast. The cable modems available at retailers such as Best Buy, Walmart, Target and Micro Center have typically been certified by Comcast, Cox and other major service providers, and often the product’s box lists at least some of these service providers. Amazon and Newegg are also big retailers of cable modems, and each cable modem or cable gateway (modem plus router) typically shows the main service providers who have certified the product.

FCC Regulations

On the other hand, companies like Charter typically bundle the price of the cable modem into the cost of their Internet service, preventing the discount.

This issue has caught the attention of the Federal Communications Commission (FCC) and Charter’s policy may change as part of the FCC’s set-top box proceedings. The FCC Chairman has proposed an overhaul of the rules for set-top boxes in an effort to reduce cable bills and to let consumers choose among competing set-top boxes at retailers. Cable modems are being considered as part of the proceeding, with the goal of lowering customers’ costs and encouraging the choices that come with a robust retail cable modem market. Right now, Americans pay $21 billion per year ($231 average per household) in cable set-top box rental fees, with a significant percentage of that in cable modem fees.

The Need for Improved Performance

In addition to saving money by providing their own cable modems, customers can often achieve improved performance through upgraded equipment. Most Americans have come to depend on Wi-Fi service; and when it’s not available, they’re not happy. A recent study noted that 75% of people say one week without Wi-Fi would leave them grumpier than one week without coffee. Viewers are also spending more time watching digital video and consuming more content than ever before. YouTube reports that mobile video consumption rises 100% each year.

This need for stronger Wi-Fi is especially important for people who live in dense areas such as apartments or condos. Many times, they hunger for better Wi-Fi as neighbors’ Wi-Fi signals interfere with each other. Residents of large homes also experience reduced performance when rooms are located far from the router or in a multi-story home.

As mobile phones, HDTVs and game stations command more robust Wi-Fi, the market is trending toward better-performing Wi-Fi products to meet demand – which all attribute to the growing cable modem market.

Currently, retail cable modem and gateway sales in the U.S. are approximately $400 million per year. A 16x4 cable modem purchased at retail is typically faster than the 8x4 cable modem provided by most service providers. Industry leader Motorola finds that its top-selling cable modems on Amazon are the 16x4 MB7420 cable modem and 16x4 AC1900 cable gateway. The MG7550 features very strong Wi-Fi including Power Boost, and independent lab Netperian found the MG7550 had much better Wi-Fi when compared to ARRIS’ and NETGEAR’s AC1900 cable gateways.

For consumers, cable modems are user-friendly and easy to install. Most well-known U.S. suppliers provide tech support with people who are based in the U.S.

The Future of the Industry

Looking ahead, people will continue to demand faster Internet speeds and faster Wi-Fi that reaches all rooms in the home. Video streaming, HDTV, gaming and virtual reality devices all use lots of data, and homes have more and more devices including smartphones, HDTVs, computers and game stations accessing the Internet.

There is no question that cable service providers and cable modem manufacturers can deliver very high speeds and strong performance. A key question will be the cost for all that performance, and companies like MTRLC will continue to do what it can to make sure that Americans can get superb performance at a reasonable price.

Frank Manning is the CEO of MTRLC LLC. The company designs, produces, markets and supports Motorola brand cable modems and gateways under exclusive license from Motorola. For more information about Motorola cable modems, please visit www.motorolacable.com.



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