When it comes to technology and the future, bandwidth is the quintessential building block upon which new revenue-generating services depend. In the digital world, bandwidth fuels profits (the same way that oil fuels energy markets). And like oil, bandwidth is a finite resource. Or is it?

Logic suggests that bandwidth is, indeed, finite. After all, every cable system has 750, 850 or perhaps 1,000 MHz of capacity at its disposal, give or take a few MHz, with each analog channel sucking away 6 MHz. Still, the question of whether cable can keep up with the telcos on bandwidth has fueled debate. Here’s the reality: Verizon and AT&T’s fiber networks are quite impressive on paper (in case you haven’t heard, the rumor is that AT&T may abandon that ADSL-2 mess and just go fiber-to-the-home like its Bellhead cousin Verizon).

These “passive optical networks,” or PONs, can shoot billions of bits for miles with no amplification. At first, broadband PON will crank out 622 Mbps, but the telcos plan to move to gigabit PON, which will produce 2.5 Gbps streams, most likely split among 32 homes. We’re basically talking about speeds approaching 100 Mbps per home—enough for multiple HD video streams and plenty of other bells and whistles. Should cable be scared? Alert, perhaps. But not scared. By the time consumers are kicking and screaming for this kind of bandwidth, DOCSIS 3.0 will have enabled much faster speeds to many cable homes. And the February 2009 deadline for broadcasters to finally return their analog spectrum will enable MSOs to reclaim much of the spectrum hogging the majority of cable capacity. “Growing demand for HD, VOD, voice and much higher-speed Internet will require conversion of much or all of today’s analog spectrum to digital sooner than later to remain competitive with telcos,” says Mike Arden, principal analyst, broadband, at ABI Research.

Just this month, Broadlogic Network Technologies unveiled its TeraPIX video processor, which powers a residential gateway box placed outside or just inside a customer’s home. The technology enables a cable operator to go all-digital on the network but still provide analog conversion within the home. Installing all those gateways across a system could be pricey, but it’s one option MSOs have to reduce churn and keep customers happy. And don’t forget switched digital video which, once implemented, could make a lot of these capacity issues disappear.

Think of it this way: Oil is finite, but technology could someday create 1,000-mile-per-gallon cars. The same is true with bandwidth. Cable can use technology to keep up with the telcos for the foreseeable future. It’s a question of commitment and execution.

Michael is executive editor of CableFax Daily. He can be reached at mgrebb@accessintel.com.

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