Jeff Heynen, Author at Dell'Oro Group

Two startups with shared advisory board members are hitting the market with solutions designed to facilitate cable’s convergence with wireless and 5G. The announcements are well-timed, given the funk cable operators find themselves in as net broadband subscriber losses mount, but also as those same operators continue to take a sizable share of new mobile subscribers. Additionally, the cable industry, which has for years benefited from decades of shared development cycles and deployments of the latest DOCSIS technologies, finds itself with multiple paths forward (DOCSIS 3.1+, DOCSIS 4.0, fiber, FWA, etc.) and trepidation that the next technology decision will leave it further behind its competitors.

Air5 and Air Wireless each aim to solve different problems cable operators face today. However, both share a core belief: cable operators’ future success depends on their ability to get to market quickly and build networks that transparently handle both fixed broadband and wireless traffic and services across their networks. In a recent blog, I detailed how US telcos are betting on service convergence to continue to chip away at cable’s massive broadband subscriber base. It stands to reason that cable operators will fight back using the same approach.

Extending DOCSIS Wirelessly

First, Air Wireless is pitching a solution that allows cable operators to extend their DOCSIS networks and services wirelessly using E-band spectrum, ranging from 60 GHz to 90GHz, and a point-to-multipoint architecture that looks and feels very similar to how optical nodes are distributed throughout an HFC network. The technology isn’t new. In fact, Air Wireless acquired the assets from a Slovenian startup known as Globtel, which had developed the Gigaray platform to transport voice, video, and DOCSIS data traffic wirelessly from a base station to transceivers located at businesses, MDUs, and residences. The transceivers connect to existing DOCSIS 3.1 modems and set-top boxes, allowing for a quick and easy method for aggregating and backhauling DOCSIS traffic.

The primary benefit of the Air Wireless solution to operators is time-to-market. Operators can extend their DOCSIS networks without having to run fiber to a new node location. Or, an operator can deploy the solution as a way to get services to an MDU or new neighborhood quickly and in advance of a more traditional buildout of an HFC network. In rural areas or regions where the costs associated with deploying fixed infrastructure just don’t make sense relative to subscriber ARPU, the Air Wireless solution gives operators a more cost-effective option for DOCSIS network extensions. Because of this flexibility, the company is reported in customer trials around the globe.

In the US, the key opportunity lies in the upcoming BEAD-, RDOF-, and Capital Projects Fund-related rollouts, which are time-sensitive and aimed at addressing lower-density rural and underserved areas. In India, cable operators such as Hathway, Den, and others are seeking ways to expand their networks and remain competitive with Reliance Jio and Bharti, both of which have begun significant fiber expansions. The Indian government continues to subsidize rural broadband rollouts to remote villages, where the Air Wireless solution could play a role in distributing broadband services. In Europe, where permitting delays and labor costs make network expansions costly, the Air Wireless solution could be used to extend DOCSIS networks more quickly.

One of the more interesting applications for the Air Wireless solution that also has global appeal is using the platform as a way to overbuild and upgrade existing HFC plants to deliver end-to-end DOCSIS 3.1 capabilities and take advantage of the more flexible modulation formats offered by OFDM. Many operators are still using DOCSIS 2.0 and DOCSIS 3.0, in some cases without channel bonding. Instead of potentially swapping out amplifiers or doing faceplate upgrades for new diplex filters, operators could use the Air Wireless platform with Remote PHY or Remote MACPHY modules to move to DOCSIS 3.1 more cost-effectively. In Latin America, for example, where cable operators are moving to fiber instead of upgrading from DOCSIS 2.0 or 3.0 to DOCSIS 3.1, the Air Wireless platform could give them a more cost-effective way to add throughput without the significant labor costs associated with trenching fiber.

Converging DOCSIS and 5G

While Air Wireless is focused on extending DOCSIS networks wirelessly, Air5 is focused on converging DOCSIS and wireless networks, taking advantage of architectural similarities between mobile backhaul networks and DAA-based DOCSIS networks. The CU (Centralized Unit) and Distributed Unit (DU) of 5G networks are roughly equivalent to the Remote PHY, Remote MACPHY, and select functions of the vCMTS in DAA networks.

Ultimately, the vision is that optical nodes become small cell sites with a shared infrastructure allowing cable operators to continue delivering DOCSIS data services as they do while also either continuing to offload their MVNO mobile traffic onto their Wi-Fi networks or directly onto the converged network via radio units that can handle the frequency conversion required to hand off mobile traffic. The shared infrastructure will require an upgrade to existing outside plant equipment so that DOCSIS data can still be delivered in spectrum up to 1.2 GHz, while 5G traffic can be transported anywhere between 3 GHz-5 GHz. New amplifiers, which Air5 is working on with partners, will have to be deployed. That might be a hard pill to swallow for operators who are just about to upgrade much of their installed amplifier base to 1.8 GHz.

Fixed-mobile convergence has been in various stages of discussion and deployment for years if not decades. So, why is this time different? Let’s consider a few different reasons:

Mobile subscriber growth and service bundling are critical for cable operators. In the US, the largest cable operators have seen significant growth in their mobile subscriber numbers, providing a silver lining to the dark cloud of broadband subscriber losses. Cable operators have grown their mobile subscriber base via MVNO relationships with Verizon and T-Mobile, but they are increasingly looking to deploy their own CBRS spectrum to become more self-reliant. Service bundling—especially if it allows subscribers to do truly seamless hand-offs between 5G and Wi-Fi networks while maintaining a single subscriber identity—is a critical goal of all operators.
Cable operators have powered outside plants. One of the biggest arguments against HFC networks, when compared with PON-based fiber networks, is actually a significant advantage when it comes to convergence: Power. HFC networks rely on signals that need to be amplified approximately every 2500 feet. To support this, 90-volt AC power inserters have been deployed at consistent intervals to provide for the powering of nodes, amplifiers, and Wi-Fi access points. In fact, US cable operators have deployed over 600 K Wi-Fi access points partially due to the availability of power at strategic locations. Cable operators not only have enough power to deploy small cells but also the fiber necessary to backhaul these small cell sites.
Control and user plane separation makes convergence easier. Because 5G core networks provide control and user plane separation, it becomes easier to converge 5G and Wi-Fi networks across the RAN and core. Additionally, cable operators’ transition to DAA architectures helps to virtualize DOCSIS networks. This gives operators much greater flexibility to offer network slicing, allowing Wi-Fi traffic can ultimately be managed by a converged 5G and DOCSIS core. This process begins with an evolution of the vCMTS to a vBNG and then an AGF (Access Gateway Function), which essentially serves as the bridge between the wireline network and the mobile core.

Expanding the Component Vendor Ecosystem

One of the benefits of convergence is the potential increase in the number of component vendors developing new chips to support the larger, combined TAM (Total Addressable Market.) There is probably no segment in the communications sector that could use a supplier expansion other than DOCSIS, which has historically been dominated by Broadcom. In fact, in a recent blog, we argued that Broadcom’s decision to accelerate the availability of a 3 GHz-capable unified chip that supports DOCSIS 5.0 could be an effort to “pre-empt efforts by upstarts such as Air5, which is developing products that fuse 5G and DOCSIS networks and, simultaneously, opening up the shrinking DOCSIS component ecosystem to suppliers in the RAN and mobility sectors.”

We have already seen significant consolidation of DOCSIS infrastructure and CPE suppliers in the last year and we fully expect that this will continue, as the DOCSIS equipment TAM, by itself, is not enough to sustain the current vendor ecosystem. Component supplier consolidation is expected soon, as well, certainly with Qualcomm’s rumored exploration of an acquisition of Intel.

Lurking around are the likes of Nvidia and AMD, who are looking to merge signal processing and GPUs. Though these components would be designed for use in mobility networks, there is no reason they couldn’t be adapted to work in converged networks, as well.

At this week’s SCTE Tech Expo Event in Atlanta, executives from Broadcom, Charter Communications, and Comcast officially opened up access to a unified DOCSIS 4.0 chipset to all interested cable operators and vendors. Previously, the unified silicon had been limited to those operators willing to pay to join a JDA (Joint Development Agreement) with Broadcom, allowing them first access to the chips and the ability to offer them to their CPE, node, RPD, and amplifier suppliers. In addition to Charter and Comcast, that group included Cox Communications, Liberty Global, and Rogers Communications.

The announcement comes a full year after Comcast and Broadcom announced they were collaborating on a unified approach that could support both flavors of DOCSIS 4.0—Comcast’s preferred Full Duplex (FDX) variant and most other tier 1 operators’ preferred Extended Spectrum DOCSIS (ESD) version.

The hope of the unification effort and the announcement of more widespread availability is that the bifurcation in the industry will end and that more cable operators who have been on the fence about moving to DOCSIS 4.0 will feel compelled to move forward now that they have the flexibility of accessing both versions.

But is this really going to happen? Will the operators who were locked out of the exclusive tier 1 JDAs scrap the network evolution strategies they developed as an alternative to DOCSIS 4.0, just because Broadcom and its key operator customers have finally decided to hand over the keys? Further, which operators would actually consider running both versions of DOCSIS 4.0 in their networks, especially when ESD requires amplifier upgrades to 1.8GHz, while Full Duplex does not?

The Reality of DOCSIS Implementation

The answer to the last question is none. The flexibility to support both variants with a single piece of silicon sounds elegant in theory. But in reality, the likelihood of an operator delivering Full Duplex to select systems and Extended Spectrum to other systems is slim to none. That is just as true for the non-JDA operators as well as for the tier 1 operators who have been part of the JDA from its inception.

For a large majority of operators who were not part of the JDA, the DOCSIS 4.0 ship has sailed. The path forward for them is to continue maximizing DOCSIS 3.1 through mid- and high-split upgrades, coupled with a transition to DAA to improve overall signal quality and throughput. This also includes re-purposing spectrum previously used for QAM video via a transition to IP video. These operators will be the first to deploy DOCSIS 3.1 Plus, using the extra OFDM channels of DOCSIS 4.0 modems alongside simple software upgrades to their centralized CCAP platforms or by the deployment of vCMTS platforms. These upgrades will allow operators to deliver downstream speeds of 8 Gbps and upstream speeds of 1.5 Gbps—very competitive with the vast majority of ISP fiber offerings. Also, by layering on Low Latency DOCSIS (LLD), operators can significantly drop their latency to 5 milliseconds, surpassing what most fiber-based ISPs can deliver today.

And in those systems where there is a likely threat of a fiber overbuilder coming in to disrupt their market, cable operators are responding with fiber themselves, using 10G EPON, XGS-PON, and, in some cases, 25GS-PON to protect their serving areas and subscriber base.

These strategies were developed as a way to respond quickly to competitive threats. Between the rise of fiber ISPs, open access fiber networks, and MNO fixed wireless services, these cable operators had to evolve their networks to remain competitive without having initial access to the unified DOCSIS 4.0 silicon. Just because they now have access to the silicon will not result in a deviation from a network evolution strategy that has been signed off on by the senior leadership teams of many cable operators. Unifying the two technologies of DOCSIS 4.0 into a single piece of silicon is, for many operators, simply too little, too late.

Frustration over DOCSIS 5.0 Development

Compounding some operators’ (and equipment vendors’) frustration with the DOCSIS 4.0 development process was the follow-on announcement that Broadcom, Charter, and Comcast were collaborating on DOCSIS 5.0, which would push broadband speeds to 25 Gbps via spectrum extension in the outside plant to 3 GHz, easily doubling and even tripling the spectrum in many current generation networks. Though the three companies said that they plan to lead an effort to develop specifications for the entire industry, some have noted their frustration that the work has been done outside the normal process of working through SCTE and CableLabs first.

For many operators, both large and small, the bifurcation of the DOCSIS 4.0 technologies reflected a go-it-alone mentality among the major tier 1 operators, which had not existed in the development of previous generations of DOCSIS. The announcement of DOCSIS 5 with chips being demonstrated at the show simply reinforced concerns that the evolution of DOCSIS won’t be determined by the collaboration of the industry as a whole, but rather by Broadcom, Charter, and Comcast.

It is possible that Broadcom’s motive in accelerating the availability of a 3Ghz-capable unified chip is to pre-empt efforts by upstarts such as Air5, which is developing products that fuse 5G and DOCSIS networks and, simultaneously, opening up the shrinking DOCSIS component ecosystem to suppliers in the RAN and mobility sectors. With Qualcomm rumored to be exploring an acquisition of Intel combined with Air5’s proposed solution, Broadcom might be feeling some heat in a market segment it has dominated for quite some time. Hence, the desire to define the next upgrade cycle and secure operator consent now.

Challenges of Upgrading to 3 GHz

But pushing the outside plant to 3GHz is a monumental and costly effort. New amplifiers would need to be added and existing amplifiers re-spaced in order to deal with higher dB loss along the cascades. Similar issues have been dealt with in the past through innovative developments of amplifier components and there will likely be continued innovation to make the 3 GHz upgrade more economically feasible.

It’s worth considering whether any of the major operators planning to upgrade to 1.8 GHz will now forego those upgrades across their footprint and instead wait on 3 GHz amplifiers. When it comes to tap replacement, it seems likely that operators will prefer to deploy 3 GHz versions. However, the situation around amplifiers is far less clear.

Shifting Focus to Fiber

Broadcom, Charter, and Comcast giveth, and they taketh away.

Just when the industry is supposed to have clarity and unity around DOCSIS 4.0, the announcement of DOCSIS 5.0 sends operators (and vendors) back to the drawing board.

Certainly, for the two largest cable operators in the world, getting ahead of the curve is essential, especially after being caught flat-footed by T-Mobile, Verizon, and AT&T with their fixed wireless offerings, that continue to siphon away valuable broadband subscribers. Defining a long-term path forward by maximizing their active plants is critical. It is also important not to underestimate the fact that cable plants are line-powered and hold a distinct advantage over passive plants when it comes to the future deployment of small cells and Wi-Fi hotspots to further the goal of service convergence.

But for many more cable operators whose network evolution today is about maximizing DOCSIS 3.1, the future is clear and it already involves a diverse vendor and component supplier ecosystem. That future is fiber.

The jockeying for position in the US broadband market shows no signs of slowing down. In just the past two weeks, Verizon announced a $20B deal to acquire Frontier Communications and push the combined entity to a fiber footprint of 25 million homes and a fixed wireless footprint of approximately 60 million homes. Meanwhile, AT&T announced partnerships with four open access network providers to help it expand the reach of its fiber services outside its existing wireline footprint. AT&T will serve as an ISP in these markets, delivering both residential and enterprise services via these partnerships. AT&T is on track to pass a minimum of 30 million homes with fiber by 2025 in its own footprint, as well as an additional 1.5 million homes through its Gigapower joint venture with BlackRock. AT&T has also quietly increased the availability of its Internet Air FWA (Fixed Wireless Access) services to over 130 markets, as It potentially positions the service to move beyond just a means of capturing existing DSL subscribers.

These deals follow on the heels of T-Mobile’s proposed acquisition of Lumos Networks, which is slated to pass 3.5 million homes with fiber by the end of 2028. Under the terms of the deal, Lumos will transition to a wholesale model with T-Mobile as the anchor ISP. This is exactly the type of arrangement T-Mobile has established with some of its other infrastructure partners. However, with its partial ownership of Lumos, T-Mobile can presumably generate better returns and healthier margins from its broadband service offerings. The joint venture also is consistent with T-Mobile’s goal of expanding its market presence and footprint without expending a significant amount of capital. In fact, if you take the $1.4B that T-Mobile will ultimately invest in Lumos as it increases its homes passed from 320K to 3.5M by the end of 2028, T-Mobile’s cost per home passed ends up being somewhat less than $500.

That $500 per home passed figure could be even lower should Lumos continue to secure additional American Rescue Plan Act (ARPA) Capital Project Fund grants as well as a portion of the $3.6 B in aggregate BEAD (Broadband Equity, Access, and Development) funding across North Carolina, South Carolina, and Virginia.

The primary reason for T-Mobile’s push into both direct fiber network ownership and partnerships with open access fiber providers is that the operator has over 1 million customers on a waiting list for its fixed wireless service. These customers can’t be served because they are in markets where T-Mobile does not have enough 5G capacity to serve them. As T-Mobile expands the reach of its fiber offering, it can not only provide service to these customers but also existing FWA subscribers. Once an FWA subscriber switches to T-Mobile Fiber, that opens the spectrum for additional FWA subscribers.

US Telcos Smell Blood

US telcos are moving quickly to expand the reach of their fiber, fixed wireless, and ISP services to complement their nationwide mobile networks because they smell blood among the largest cable operators. Telcos are disrupting the broadband market faster and more efficiently right now—a disruption that could very well be amplified by Federal and State subsidies.

With the rollout of 5G networks having had little impact on the profitability of mobile services, fixed wireless has emerged as the most successful use case for mobile network operators (MNOs) can monetize their excess 5G capacity. FWA’s timing couldn’t have been better, with inflation having increased from 2021 on, pushing subscribers to seek out more affordable—but still high quality—broadband service offerings. FWA hit the market providing a powerful combination of affordability, speed, and availability.

The success of FWA combined with overall fiber network expansions has given telcos a potent tool for not only the convergence of mobile and fixed broadband services but also the emergence of these services being offered on an almost nationwide basis. It’s pretty simple math. If you can offer a product or service to a larger number of end customers, the higher the likelihood of continued net subscriber additions, all other things being equal.

Even in markets where there is overlap between fixed wireless and that MNO’s own (or marketed) fiber broadband services, there isn’t really a danger of cannibalization, because the two services will very likely address very different subscribers. As the telcos’ ARPU (average revenue per unit) results have shown, subscribers are willing to pay more for fiber-based connectivity. In 2Q24, for example, AT&T announced that its fiber broadband ARPU is $69 and that the mix shift of its subscribers to fiber has pushed overall broadband ARPU up to $66.17, representing a 6% increase from 2Q23.

Meanwhile, in the second quarter, T-Mobile reported an ARPA figure of $142.54, which was up from $138.94 in 2Q23. Partially fueling that increase was an increase in the number of customers per account, due largely to the adoption of FWA services. Remember, T-Mobile prices and treats its FWA offering as an additional line of service, making it very simple to add to an existing T-Mobile account.

With a starting price point of $50 and typical download speeds ranging from 33-182 Mbps and upload speeds of 6-23 Mbps, T-Mobile is clearly targeting the low-mid cable broadband tiers—and having a great deal of success in converting those subscribers.

Going forward, the 1-2 punch of FWA and fiber will allow the largest telcos to have substantially larger broadband footprints than their cable competitors. Combine that with growing ISP relationships with open access providers and these telcos can expand their footprint and potential customer base further. And by expanding further, we don’t just mean total number of homes passed, but also businesses, enterprises, MDUs (multi-dwelling units), and data centers. Fiber footprint is as much about total route miles as it is about total passings. And those total route miles are, once again, increasing in value, after a prolonged slump.

For cable operators to successfully respond, consolidation likely has to be back on the table. The name of the game in the US right now is how to expand the addressable market of subscribers or risk being limited to existing geographic serving areas. Beyond that, continuing to focus on the aggressive bundling of converged services, which certainly has paid dividends in the form of new mobile subscribers.

Beyond that, being able to get to market quickly in new serving areas will be critical. In this time of frenzied buildouts and expansions, the importance of the first mover advantage can not be overstated.

The push and pull of broadband and wireless subscribers isn’t expected to slow down anytime soon. Certainly, with inflation continuing to put pressure on household budgets, consumers are going to be focused on keeping their communications costs low and looking for value wherever they can find it. That means we are returning to an environment where subscribers take advantage of introductory pricing on services only to switch providers to extend that introductory pricing once the initial offer expires. That shifting and its expected downward pressure on residential ARPU will likely be countered by increasing ARPUs at some providers as they move existing DSL customers to fiber or, in the case of cable operators, move customers to multi-gigabit tiers.

The US broadband market is definitely in for a wild ride over the next few years as the competitive landscape changes across many markets. The net result is certain to be shifts in market share and ebbs and flows in net subscriber additions depending on consumer sentiment. One thing that will remain constant is that value and reliability will remain key components of any subscription decision. The providers that deliver on that consistently will ultimately be the winners.

In a blog post published earlier this week, details were provided on why CommScope unexpectedly decided to acquire the cable assets of Casa Systems for $45.1 million. The primary reasons discussed included strengthening CommScope’s cable presence and achieving the necessary scale for the transition to virtualized Cable Modem Termination Systems (vCMTS).

Another significant factor in CommScope’s decision to pursue this acquisition is the access Casa’s already-deployed Axyom vBNG (Virtual Broadband Network Gateway) platform to complement CommScope’s PON OLT and ONT platforms and provide operators with a more comprehensive fiber portfolio. The Axyom vBNG has already been deployed with Mexico’s Izzi as well as with other tier 1 operators that have not yet been announced publicly.

Similar to the vCMTS market, the vBNG market is still in its early stages of development, though vBNG deployments are expected to increase significantly in 2025 and beyond as operators continue to move away from BNG functions integrated directly on centralized, hardware-based edge routers, and look to separate control and user plane functions.

vBNGs serve as the access point for broadband subscribers, managing the connection between their modem and the service provider’s broadband network. vBNGs authenticate and manage those subscriber sessions, aggregate the sessions, and then route them to the service provider’s network. Additionally, vBNGs offer traffic shaping functions to deliver Quality-of-Service (QoS) features for specific subscribers, such as traffic prioritization and rate limiting.

As Fiber to the Home (FTTH) deployments and subscriber sessions continue to increase, operators will need to scale and distribute their BNGs to enhance network resilience and simplify IP address management and subscriber authentication at the edge rather than backhauling all of that traffic to a centralized BNG. This is as much the case for larger, tier 1 operators as it is for smaller operators who don’t necessarily need a large, centralized BNG. vBNGs running on COTS servers provide all operators with the flexibility to scale their throughout and simultaneous session management with their subscriber base.

Operators such as AT&T, Deutsche Telekom, Telefonica, Vodafone, and Comcast are all active in the standardization and development of vBNGs and there is a growing population of smaller ISPs trialing vBNGs from a group of vendors that include Casa Systems, Ciena, NetElastic, Six Wind, 5X9 Networks, UfiSpace, DriveNets, rtBrick, and Nokia.

Certainly, with the ongoing global subsidization efforts to expand fiber access, now is the right time for operators to begin rethinking how they architect their subscriber management functions. Even beyond fiber, fixed wireless access (FWA) providers are also looking at vBNGs that can provide the Access Gateway Function (AGF) of a 5G core. The AGF provides nearly all the same functionality of a vBNG, but is also focused on facilitating the interworking of wireline devices with the 5G core. For any mobile operator delivering FWA services, the AGF can play a critical role in the management and authentication of FWA CPE and subscriber sessions.

In a surprise move last week, CommScope emerged as the winning bidder for Casa Systems’ cable assets, edging out Vecima Networks and Harmonic. The winning bid of $45.1M represented a significant premium over Vecima’s initial stalking horse bid of $20M.

The move is interesting because CommScope is known to be exploring a sale of its ANS (Access Network Solutions) Division in an effort to reduce a debt load pushing $9B. CommScope announced its intent to acquire ARRIS in 2018 and completed the acquisition in early 2019 for $7.4 B. From 2018 to 2019, ARRIS’ CCAP revenue plummeted from $739M in 2018 to $442M in 2019, as operators completed their DOCSIS 3.1 upgrades and, more critically, Comcast capped its CCAP purchases in favor of transitioning to Virtual CMTS and Remote PHY. CommScope’s CCAP revenue improved slightly in 2020 and 2021 but has since declined further, reaching $293M in 2023.

Meanwhile, Casa, which from 2014-2018 generated cumulative revenue of just under $1.3B from its C40G and C100G CMTS and CCAP platforms and secured a significant footprint with Charter, Claro, Rogers, and other tier 1 operators, was unable to rebound from the 1-2 punch of a softer market for DOCSIS licenses and Charter’s announcement in March 2023 that Casa would be excluded from its massive network upgrade project. Additionally, Casa was unable to find enough traction for its vCMTS and DAA products to offset declining license revenue for its integrated CCAP platforms, although the company does have some DAA traction with Rogers Communications, Vodafone, Liberty Global, and Claro Colombia.

So, with both vendors seeing declining revenues for their CCAP platforms and an industry that is clearly moving away from integrated CCAP platforms toward vCMTS and Remote PHY, where both vendors have lagged behind their primary competitors, Harmonic and Vecima Networks, why would CommScope make this deal? And, beyond price, why would Vecima walk away from a deal that could have accelerated the market readiness of its own vCMTS platform?

Let’s consider a few different rationales:

CommScope needs to amass and scale vCMTS deployments: We have emphasized this many times, but the industry is still in the early stages of transitioning to vCMTS platforms. However, the addressable market of operators, and the larger DOCSIS and HFC market, are declining as more operators gradually transition to fiber. Therefore, we don’t expect the combined vCMTS and Remote PHY Device (RPD) market to ever reach to revenue levels seen in 2018 and prior for integrated CCAP platforms. With operators pursuing various strategies and combinations of DOCSIS and PON in their access networks, it is imperative for a company like CommScope to roll up as many potential vCMTS opportunities as possible—particularly among those operators committed to a strategy of continuing to rely on DOCSIS and HFC for the bulk of their residential connections. And Casa does count Rogers Communications and Claro Colombia as key vCMTS customers. Back in October 2023, CommScope did announce its first customer win for its vCore platform. However, there has been no follow-up announcement regarding a formal contract or additional wins since then, which leads us to our second reason.
CommScope’s vCore product is perhaps not as far along as it needs to be: Development on CommScope’s vCore vCMTS platform has been on-again, off-again over the last few years. Initially, virtualization of MAC functions was run on the E6000 chassis, ostensibly to support RPD rollouts by Cox Communications, among others. The idea was then to move these capabilities onto COTS servers to scale the CMTS VNFs (Virtual Network Functions) horizontally as new DAA service groups were launched. However, porting existing software, designed to function alongside the dedicated hardware of an integrated CCAP platform, onto servers is a challenging task. There was word throughout this process that CommScope was having a difficult time completing this development. Ongoing personnel and strategy changes certainly didn’t help matters, either.

So, perhaps the addition of Casa’s Axyom vCMTS and current customer base gives CommScope not only the opportunity to scale existing Tier 1 DAA customers but also to potentially rely on the Axyom as its primary vCMTS platform in the short term while it continues to improve the performance of its vCore platform. We speculated in a previous blog that this was the motivation behind Vecima’s interest in Casa, with Vecima announcing the availability of its own Entra vCMTS in the fourth quarter of this year. Ultimately, we expect elements of the Axyom and vCore platforms to be integrated into a single software stack to avoid parallel development efforts that could sidetrack operator deployments.

Casa brings additional short-term revenue opportunities that improve the ANS valuation: Despite the clear trend towards virtualization at the edge, there will also be a DOCSIS 3.1+ software upgrade cycle on existing CCAP platforms that could help to prolong those products’ lifespans and provide a short-term boost to revenue. We assume that the software upgrades necessary to support the additional OFDM channels will be quite a bit less than purchasing full licenses for the additional spectrum. Nevertheless, there will be enough new spectrum and licenses purchased on existing CCAP platforms to support mid- and high-split efforts, as well as DOCSIS 3.1+. This stabilization of short-term revenue, combined with the continuing traction Casa was getting with its vBNG product for FTTH deployments, could be enough to improve the valuation of the ANS Division and make a sale with more favorable terms possible.

Ultimately, CommScope’s decision to spend $45.1M on Casa’s cable assets and Vecima’s decision to walk away almost certainly comes down to how big each company estimates the vCMTS market will grow to and how much of that market can each vendor capture. Our current forecast, published in January, pegs the vCMTS market to grow steadily to $367M worldwide by 2028. That is a meaningful market on an annual basis. For CommScope, which experienced years of $1B+ revenues for its CMTS and CCAP platforms, potentially growing a product to that size is well within their comfort level. For Vecima, scaling to that size would have been very possible, but would also involve a significant amount of risk and potential potholes along the way. Vecima is currently scaling its RPD and R-OLT products to meet increasing Tier-1 demand. Absorbing Casa’s products, customer base, and employees could have siphoned away the momentum the company has already built.

Contact Us