Television Hardware

Cable Players with DOCSIS 3.0 Square Off Against Telcos and Broadband Fiber

24 February 2014

The cable industry achieved record revenue last year in the sales of broadband equipment, and the forthcoming version of its primary tool against the fiber connection of telcos promises even faster cable speeds, according to a new report from IHS Technology.

Sales of cable-related customer premises equipment (CPE) such as gateways and modems brought in revenue last year of $2.10 billion for the cable industry, up from $1.98 billion in 2012. It was the highest-ever revenue level for cable equipment installed in customer homes after a steady rise in numbers through the years.

Cable CPE equipment will start to decline this year after the peak 2013 takings, but overall revenue will remain close to the $1.90 billion range in the years ahead, as shown in the figure.

Global revenue forecast for cable broadband customer premises equipmentGlobal revenue forecast for cable broadband customer premises equipment

The cable service known as DOCSIS 3.0 has been the chief tool of multisystem operators to offer wideband service comparable in speed to the fiber product deployed by the telecommunications companies, such as FiOS by Verizon and U-verse from AT&T. True, DOCSIS 3.0 is maturing, which explains revenue flattening for the next few years. But the upcoming DOCSIS 3.1, which will begin to ramp in 2016 and 2017, will provide another period of growth after 2017.

DOCSIS, or Data Over Cable Service Interface Specification, puts cable operators on even footing with telco fiber players by creating the framework for fast, flexible, inexpensive and future-proof data services.

DOCSIS gains ground

DOCSIS was first introduced by the cable industry to compete head-to-head with telecommunications companies in the lucrative broadband Internet services market. DOCSIS defined a standardized method of transmitting digital data over existing hybrid-fiber coax, or HFC, networks, enabling a very high-performance alternative to the digital subscriber line (xDSL) technologies used by the telcos. But when telcos latched on to fiber, cable operators had to come up with a similar competitive offering, eventually doing so with critical upgrades to DOCSIS to match fiber in performance and price.

After many years of effort and investments by cable opereators, the initiatives have started to pay off, culminating in two years of record performance and an enviable advantage in technology and costing alike.

Overall, the 3.0 standard is a robust specification with very few limits on future bandwidth improvements, enabling aggressive speeds of 1 gigabit per second (Gbps) or faster—more than enough to compete with fiber speeds for the foreseeable future.

Today DOCSIS 3.0 is a standard deployment in developed countries, with its use greatest in North America, followed by Europe and Japan. And while the older DOCSIS 2.0 is still a major factor in developing regions like Latin America, India and China, IHS expects 100 percent of CPE shipments by 2016 will conform to DOCSIS 3.x.

Meanwhile, DOCSIS 3.1 aims to attain even faster speeds of at least 10 Gbps downstream, and the improved standard will let cable operators move toward a unified protocol for data, video and voice transmission. IHS expects CPE supporting DOCSIS 3.1 to be available by next year, even though the infrastructure upgrade will take much longer.

Gateways are the top cable equipment in use

Gateways currently account for the majority of cable CPE shipments, making up at least 52 percent in 2012 of the market that also included voice and data modems.

Two factors have been responsible for driving the adoption of gateways. First, consumer demand for mobile connectivity is creating an enormous market for Wi-Fi, a built-in capability in gateways.

Second, cable operators are starting to aggressively seek out revenue opportunities beyond triple-play services and looking at other needs for the home, such as remote management, security and in-home connectivity functions that gateways can provide.

Arris is No. 1 cable broadband CPE maker

The cable CPE market has long been dominated by just a handful of manufacturers. Today the players in the first tier are down to two—Georgia-based Arris, which had acquired Google’s Motorola home division; and Cisco Systems of California. Together both manufacturers account for two out of every three modems and gateways sold in the market.

In the second tier after Arris and Cisco are competitors like Technicolor, Netgear and Ubee Interactive. A third tier follows, comprising a very small portion of the market at less than 3 percent, populated by the likes of D-Link, Hitron, Huawei, SMC Networks and Zoom Telephonics.

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