Growing The Cable Industry: Thought Leaders Outline Next-Gen Plans

Cable industry executives flocked to The Cable Center in Denver recently for a day of briefings by analysts and senior executives both from multiple system operators (MSOs) and key industry hardware suppliers.

For more than eight hours they heard about everything from the life cycle of the industry’s DOCSIS standard to the revolution in video delivery represented by the use of Internet protocol (IPTV) and the challenge that presents to the industry.

The conference, “Cable Next-Gen Broadband Strategies,” also delved into such issues as the abject failure of Sprint and its putative 4G technology WiMAX to deliver the wireless broadband on which the industry had once counted – and hopes for a new cable industry deal with sometime competitor Verizon. CT Reports was there, and here’s what we learned:

Will IPTV Take The ‘TV’ Out Of Cable?

With an ever-increasing number of “over the top” (OTT) video providers entering the market via IP over the broadband that is delivered to a majority of Americans by cable-TV companies, experts have begun to question whether the “TV” part of cable TV may eventually come to an end – or at least become a minor part of the business.

The entry of OTT providers – starting with such incumbent players as Netflix and Hulu, soon to be joined by a mélange of competitors including Intel, Google and Apple – has made video both competitive and far less profitable than in the past, argued Marwan Fawaz, founding principal at broadband, cable and digital media strategic consulting company Sarepta Advisors. Video is “not as attractive as it was 10 years ago,” he said, adding “everyone and his brother wants to get into video.”

“If you look at the number of broadband subs and video subs, there’s going to be a crossover,” Fawaz predicted, at which point cable companies have more broadband subscribers than they do video customers. Looking into his crystal ball, Fawaz pointed to “a mall concept, where you (the cable company) are the anchor store.” In that store, he continued, broadband (rather than video) becomes the lead service.

In order to compete successfully with a video product in such a climate, cablecos need to begin to capitalize on their incumbent strengths now, advised Paul Connolly, director/Business Development in Cisco’s Office of the CTO. “Brand, consistency of service, holistic knowledge of the customer, become the secret of success,” he said.

According to Connolly, the move to IP video means consumers will view ever more video over unmanaged broadband connections, in sharp contrast to today’s managed set-top devices. “We need to assume that the unmanaged case for the network…is the norm,” he noted, continuing, “if it happens to be a managed device, you optimize on that and make the experience even better.”

The market entry of new OTT players also is a challenge to existing content providers, explained Peter Roberts, vice president/Sales Strategy and Development at Starz Entertainment: “The association of our brand with the content is critical to market success.”

Still, the big question remains about the timing of the transition of the cable-TV industry to IP video. “It’s not a matter of if you make it, it’s a matter of when,” said Sarepta Advisors’ Fawaz, estimating that at least some MSOs won’t begin making that transition for their own video content for at least another five years.

Even then, MSOs probably still will continue to deliver their content using current RF technology for years. It may not be until 2020 that the industry sees its first all-IP video MSO, the experts agreed. “There’s still a huge amount of legacy out there,” Connolly concluded.

Happy Birthday, DOCSIS. Many Happy Returns?

DOCSIS has turned 15, counting from March 26, 1997, the date the first DOCSIS specification was ratified. However, it remains unclear whether the teenaged spec will make it much past middle age. At this point, the current DOCSIS 3.0 has about 10 years of life left, at which point either a new generation will be needed or it will be overshadowed by newer technologies.

“A lot happened in the first few years” of DOCSIS’ lifespan, said Jon Chapman, a Cisco Fellow in Cisco’s CMTS Business Unit and the acknowledged “father of DOCSIS 3.0” for his role in crafting the channel-bonding technology that enables the current incarnation of DOCSIS to deliver speeds now reaching into the hundreds of Mb/s. Indeed, “none of us was sure this would really work,” Chapman recalled, meaning lots of work still was needed on that first DOCSIS 1.0 spec to make the technology what it is today.

That work was done and “not a lot has happened in the last six years” since DOCSIS 3.0 specs were released, Chapman continued. Perhaps dramatizing that is the fact there still are only six models of cable modem termination systems (CMTSs) on the market and, of those, only three are fully certified – the same three that have been marketed for years now, all from CASA Systems (ARRIS, Cisco and Motorola make the other three, which have only “Bronze” level certification). That’s not to say that Chapman and others don’t see at least incremental improvements in DOCSIS during the next decade.

“We can actually see how we can get to 5 Gb/s down, 1 Gb/s up,” he commented, with hope of a functional 1 Gb/s upload speed by the end of this year. That’s a challenge, though, noted John Holobinko, vice president/Strategy and Business Development at Motorola Mobility’s Mobile Devices and Home Unit. The problem, he explained, is ingress and impulse noise on the upstream link. “Half the bandwidth is compromised by that,” he estimated.

Also, work continues at a furious pace to support video as an IP service over DOCSIS. That makes sense in a world where raw speed isn’t enough any more. “There’s a point where speed doesn’t make sense any more; it’s all about the payload,” said Bob Hunt, president and strategic advisor at BroadbandBuzz.

“Going from 50 to 100 (Mb/s), or 50 to a billion – customers don’t appreciate that,” agreed Peter Percosan, managing director at Cable Europe Labs. “It’s delivery of the experience.”

There is no single thought on what will eventually replace DOCSIS in a decade or so. Any prognostication that far out always is tricky when technology is concerned.

What now is being seen as one possible candidate to take over from DOCSIS eventually is the emerging EPON Protocol over Coax (EPoC) scheme, in its infancy at the IEEE 802.3 Working Group. The group was created in November 2011, and it held its first meeting March 13-14 in Waikoloa, Hawaii. Significantly, one of the key presentations at that meeting was by CableLabs Director of DOCSIS Specifications Matt Shmitt. Other members of the committee include representatives from Comcast, Time Warner and Cox, clearly illustrating the cable industry’s interest in the EPoC technology, which envisions the possibility of such services as 10 Gb/s downstream using the same hybrid coax/fiber infrastructure that already is in the ground.

Still, for the near future, DOCSIS will remain supreme, if for no other reasons than the sheer size of the installed base and the fact that only an incremental upgrade is needed to increase the speeds DOCSIS delivers. Indeed, only 10 more DOCSIS channels are expected to be needed to get to the magic speed of 1 Gb/s. “Any alternative technology must provide superior economics to the cost of 10 DOCSIS channels in 2015,” argued Holobinko. And that’s not likely to happen.

Cutting The Cable: The New Wireless Strategy

With the romance between MSOs and Sprint ending (even Sprint finally admits WiMAX is not a winning wireless broadband technology), the entire industry is sitting on edge, waiting to see if the Federal Communications Commission (FCC) and the U.S. Department of Justice will allow Verizon’s planned $3.9 billion wireless spectrum purchase from Comcast, Time Warner Cable, Bright House Networks and Cox Communications to move forward (for more information, click here).

Under that deal, Verizon is buying the spectrum the cablecos thought they might use to set up a nationwide wireless network of their own. Instead, the group will use Verizon’s wireless network to deliver broadband to their subscribers as part of a quadruple play. The pending purchase would give Verizon powerful marketing allies in areas where it isn’t strong in wired broadband, and it would give MSOs a nationwide supply of wireless broadband that facilitates such popular market features as roaming.

There is no question that there’s been a radical change in MSO thinking about wireless. In 2006, “the focus was on how do we mobilize our video?” said Hillol Roy, a fellow at IBB Consulting. Thus, cablecos bought spectrum during the FCC’s auctions, shocking the wireless industry. Since then, he said, the MSOs holding that spectrum decided “if you want to build a wireless network all by yourself, it’s very expensive.” And that was the thinking behind the Verizon proposal.

In addition, operators are discovering few subscribers are interested in paying for the massive wireless bandwidth needed for video over the nation’s cellular networks. “Seventy-five percent of the tablets going out the door are Wi-Fi only,” noted Karen Brown, senior director/Industry Intelligence at One Touch Intelligence. That’s led to a proliferation of Wi-Fi endpoints as the new baseline strategy for MSOs to deliver broadband.

Interestingly, the cable industry also sees the Verizon deal as a kind of victory over the top-ranked U.S. wireless provider. “In non-FiOS territory, they’re kind of acknowledging” that cable has a stronger wired broadband offering than Verizon does, said Brown. She calls the deal “coopetition” because, in at least some areas, MSOs will both compete with Verizon on the wired side and resell Verizon wireless services (for more information on “coopetition,” click here).

Brown, Roy and many other industry experts think the wireless broadband marketing deal with Verizon and the planned spectrum sale will stand on their own as separate deals. Even if the FCC and the DoJ block the spectrum sale – just as AT&T’s purchase of T-Mobile was blocked – they believe the marketing part will prevail. At least, the industry certainly hopes so.

— Stuart Zipper