Broadband Services Inc. says that better management of operators’ customer premise equipment (CPE) can do wonders for the bottom line. The idea is that proactively managing CPE gear can reduce the need to buy new equipment and create efficiencies with what already is owned. BSI, which signed a deal to provide its CPEase inventory management package to Shaw Communications, says that the savings can be stark. The reality is that cable operators, accustomed to living in a capital expenditure-intensive world, generally go out and buy what they need instead of more carefully managing what they already own. Changing this orientation is hard psychologically. Moreover, operators who do accept the message may not have the proper tools to do it seamlessly. Three-fold efficiency It is an entirely different mindset. "Inventory functions in a billing system today don’t have full inventory capabilities, especially reverse logistics, which includes cleaning, screen repair, putting them on the shelf and getting them back to technicians," says BSI Vice President of Product Marketing Joshua Ginsberg-Margo. Once the message is accepted, bottom line gains come from three areas, Ginsberg-Margo says: less new gear will be needed; the costs of recovery, reconditioning and redeploying will be reduced; and because equipment will be returned to the field quicker, warehousing costs will be less. Modeling by BSI puts some numbers behind the rationale. Ginsberg-Margo says that a typical metropolitan system of 1 million subscribers with 35 percent digital penetration, annualized digital growth of 10 percent and digital churn of 4 percent can cut its capital expenditures on new boxes from $24 million to $12.5 million. Shaw is using BSI’s technology for both its cable operation and the Star Choice satellite programming company it controls. Peter Bissonnette, president of Shaw Communications, says that the main emphasis will be in tracking gear through Star Choice’s retail channel. Initially, the software will track set-top boxes on the Star Choice side and set-top boxes and modems on the cable side. Eventually, he says, the program will grow, ultimately being used to inventory amplifiers and receivers. The demand model Today, operators essentially are throwing money at the problem of box deployment. "What we want to do is migrate into a world that’s demand driven," says Ginsberg-Margo. "For most industries, that is the norm. For broadband and cable, it’s capital driven, because they have the money." The industry indeed may have ample cash flow, and digital penetration is growing. That doesn’t mean, however, that it won’t benefit from tighter deployment practices that will cut costs. In the BSI model, a number of variables are used to determine purchasing requirements, including the amount of equipment in stock, what is on order and what is expected back from customers. This is juxtaposed against changes in technology. For instance, CPE gear incapable of supporting video-on-demand (VOD) isn’t as strong an asset in this matrix as one that does. These variables change on an almost daily basis, which puts pressure on operators. "Discipline is the most important thing to follow through with in the demand planning process," Ginsberg-Margo says. -Carl Weinschenk The headline above makes many executives at the top MSOs squirm. But it’s true nonetheless: upgrades are continuing. "MSOs want to tell investors that upgrades are done," Alan Bezoza, senior vice president, broadband cable research at investment house Friedman Billings Ramsey, says. And in broad terms, that’s accurate. But nailing down the exact percentage of upgraded cable miles is tricky, in part because of shifting definitions. "(They) are now including 550 (MHz), two-way as upgraded," Bezoza continues. "However, VOD and voice are forcing them to go to 860 (MHz) in many cases." "A Big Uptick" Thus upgrades continue quietly at some of the larger MSOs. But it’s more of a public matter elsewhere, especially for those who got back into cable by purchasing assets from MSOs that never upgraded. "We’re doing a lot of that," Don Loheide, VP of network engineering at Sequel III, whose cable operations, Cebridge Connections includes systems formerly owned by Classic Communications. "In some cases, we’re upgrading metro areas and redeploying gear to smaller systems." "There are a lot of upgrades going on," Mark Bishop, SVP of hardware at the National Cable Television Cooperative (NCTC), says. "We’ve seen a big uptick in our business," he adds, pointing as well to growing demand for services from companies such as CableServ and dB-tronics that upgrade the gear itself. Those vendors appear to be busy with customers of various sizes. Audley Alexander, CableServ president, said in March that his firm was engaged in a 750 MHz to 860 MHz amplifier upgrade for one large-and unnamed-MSO. Christian Hope, president of dB-tronics, confirms that demand is strong: "We are currently involved in numerous projects nationwide ranging from 750-870 MHz GaAs (gallium arsenide) upgrades to 450-550 MHz with feed-forward technology. Even some 330-450 MHz upgrades are still going on." Why an MSO would hesitate to publicize these kinds of enhancements is unclear, given their apparent ability to deliver bang-for-buck with surgical-strike precision. Gear from dB-tronics, for instance, the integrated network amplifier (INET) TB750G which is a drop-in replacement for Scientific-Atlanta trunk and bridger amplifiers, allows an operator to go from 550 to 750 MHz just by changing modules, says Hope. The firm’s fiber-optic return transmitters also enable modular upgrades of legacy nodes. And return-on-bandwidth calculations make a strong case for a wide upstream, which could account for the "strong demand" that Hope sees for his "40 MHz field-installable upgrades kits." -Jonathan Tombes

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