An array of challenges is revealing a hard truth about the hybrid fiber-coaxial (HFC) network: There are real business risks from legacy network equipment obsolescence. These risks bring about questions regarding the longevity and relevance of the cable network, and choices to make between investing in an optical fiber or coax cable.
This blog addresses how operators can mitigate risks and overcome the challenges from legacy cable networks that have started to decline into technology obsolescence.
Challenges to the cable industry
Cable MSOs are facing challenges that include competitive technologies, supplier disruptions, and rising customer expectations. Of course, the industry has faced headwinds before. However, today there is an unprecedented combination of factors that significantly increase the risk of financial decline:
Fiber overbuilds and competition
About 15 years ago, telcos launched fiber overbuilds in select U.S. markets. Cable operators responded by deploying the next iteration of DOCSIS, as well as exploring cable-friendly passive optical networking (PON). Although cable competitors eventually capped these costly builds back then, today's market scope tells a different story.
This time, there are more players in the game, ranging from small municipalities to ambitious telcos. These competitors also include the internet giants, like Google. All these players are well funded, with access to additional government subsidies in some cases. While broadband subscriptions have declined since the COVID-19 pandemic peaked, cable’s competition has shown impressive resilience. According to ACG Research data, from 4Q 2020 to 1Q 2022, U.S. telcos consistently outpaced MSOs in quarterly broadband growth rates.
If cable operators fail to act now during this critical window, there are serious risks of losing subscribers and market share. The financial loss with the burden of an aging network not only limits growth and investment opportunities but perhaps could even spark a business decline to the point of no return.
Supply chain and cost of goods
The disrupted supply chains across multiple industries impacts cable operators looking to evolve the network. Costs of goods and services are going up, and as the capacity of the legacy network diminishes, so does overall business agility.
According to the Federal Reserve of New York Global Supply Chain Pressure Index, pressure has indeed declined from the time during the pandemic spike. However, the pressure indicators remain higher than historical norms. The current levels weaken industry supply chain systems worldwide, forcing cable technology providers to fight to secure components, such as silicon chips.
Delays will slow down part replacements for hardware, which will in return postpone deployments, and slow business reactivity perhaps even to a halt. The race is on to accelerate network transformation to more quickly roll out the high-speed internet services that consumers are impatient to leverage.
End of life and end of support
Even if components can be secured, some suppliers have begun exiting the market through end-of-life and end-of-support notices for designated products. Most notable to date has been the Cisco GS7000 optical node, but over time we will see more such news involving integrated (i)CMTS gear and CMTS line cards. These notices signal a significant market shift and industry wake-up call.
Consumer behaviors and needs. Increased growth in streaming services and other bandwidth-heavy apps – healthcare, education, commerce, etc. – and the use of home networks for business purposes is putting pressure on aging networks, around the world. In some regions, we are seeing increases in households that consume several TBs of bandwidth per month.
To deliver reliable services to ever-more demanding consumers, operators themselves must be able to rely on the technology in their access networks.
Near-future enhanced services
Also looming on the horizon is the metaverse. According to McKinsey, private investment in meta technologies hit $10 billion in 2021 and ballooned in the first eight months of 2022 to $120 billion. The consulting firm believes the metaverse could generate up to $5 trillion in value by 2030. No one can yet ascertain its full impact, but the prudent course is to be ready for any such application that leans heavily on broadband networks.
Drivers to transform and upgrade the network
Urgency: There is real urgency today for cable operators to make important decisions about their legacy networks. It's clear that today's current context has operators facing multiple threats that are all converging now: the demands of digital transformation, the growing strength of broadband competition and emerging uses of the broadband network that are yet to be even fully scoped.
Of course, no industry is immune from digital transformation, nor is any network protected from obsolescence. For cable operators, that means the advantages of simplified and software-driven networks are becoming impossible to ignore. This is especially true amidst rising costs, labor constraints, legacy cable infrastructure dependencies and competitive threats.
If network modernization can reduce energy consumption, deliver higher throughput, improve network performance, promote automation, and enable flexible delivery of services, whether via fiber or DOCSIS, then it is less of an option than a business imperative.
Funding and government subsidies
Subsidies have changed once-prohibitive cost structures in countries around the world. The U.S. Rural Digital Opportunity Fund (RDOF) was initiated in 2019 with $20 billion available to broadband service providers, including MSOs. It was followed by the 2021 Infrastructure Bill that provided three times more broadband funding, but its implementation explicitly favors fiber.
The cable industry has deemed 10Gbps (10G) a goal achievable via fiber and DOCSIS. Telcos and others are aiming for the same mark or beyond. Alphabet’s Google Fiber, for instance, after scaling back five years ago, has transformed itself into a “multi-gig” service with the eventual goal of 100 Gbps symmetrical.
Acceleration of new service rollouts
Thanks to the pandemic, work-from-home became an overnight reality, with most companies now offering some form of hybrid work. Healthcare at home began as telehealth, but now includes other initiatives such as hospital-at-home and chronic care management. New online models in post-secondary education are emerging.
These evolutions to usage are all on top of growth in advanced video, gaming, IoT management, security, managed WiFi, and a host of services delivered to dedicated businesses that require resilient, symmetric gigabit Internet and automated operations. The bottom line is that MSOs are already stretched, well before the next wave hits.
How cable operators can stay relevant
A network becomes obsolete while remaining functional when it is no longer efficient or relevant to the needs of end users. In this scenario, as subscribers churn, competitors gain market share, costs rise, and the service provider slips into a downward spiral.
Operators can avoid this fate and prepare for the ultra-connectedness that we’ve all come to expect in every facet of our lives. Relevance comes from virtualizing to increase your network and business agility and leveraging distributed access architecture (DAA) with solutions that offer different pathways to 10G.
Why operators need to virtualize the cable network now
Virtualization offers freedom from dependencies and reduced CAPEX, OPEX
The CableOS® Cloud-Native Broadband Platform from Harmonic, for example, eliminates the need for hardware-based legacy cable network equipment in the headends or data centers. It deploys on common off-the-shelf (COTS) hardware to improve ROI with more affordable, high-performance hardware, with lower (and greener) operating costs and components that are better suited to resist the supply chain disruptions facing legacy infrastructure providers.
Virtualization enables faster upgrades and provides a more flexible network architecture
This can handle evolving demands for high-speed broadband, enhance network performance, and optimize capacity requirements. Capacity management and scaling are significantly easier within a virtualized infrastructure than in hardware-heavy legacy cable networks.
Virtualization can enable greater network visibility and easier management.
A software-based solution unlocks the power of automation and data collection. CableOS Central, for example, is a set of apps from Harmonic that integrates into existing monitoring and management systems. It includes 24/7 global support to proactively identify issues, and it features automated and continuous data collection, dashboards, auditing capabilities and remote configuration that promote fast and efficient resolution.
DAA compounds the benefits of virtualization
The full strategic benefit of virtualization is truly realized when paired with DAA. With Harmonic's CableOS Platform, operators gain the advantage of using a single platform for multiple architectures and deployment scenarios. The CableOS Platform supports different flavors of DAA, DOCSIS 4.0 and PON.
There are immediate power savings to be gained from leveraging virtualization and DAA together. Virtualization and DAA can drastically reduce space, power, cooling, and cabling requirements within datacenters. One European operator reduced OPEX thanks to the CableOS Platform and DAA devices to garner a 40 percent improvement in power costs, coming at a critical time when regulators have warned of a 180 percent increase in electricity prices in 2023.
Harmonic’s DAA devices offer industry-leading power efficiency through advanced power management technology and multiple node segmentation options. One major operator in North America was able to achieve 70 percent energy savings with a 20-to-1 rack reduction thanks to the CableOS Platform and DAA devices from Harmonic.
Modern solutions offer versatility to ease transformation
For plant extensions, operators will want to benefit from a flexible solution with a viable path to 10G PON fiber. The goal is to enhance the broadband service offering, gaining capacity and network reliability without costly overbuilds or purpose-built hardware.
The right solution can enable capabilities for multiple architectures, whether for DOCSIS, as well as different flavors of DOCSIS 4.0, both Frequency Division Duplex and Full Duplex DOCSIS, multiple versions of DAA and even 10G fiber. Modern solutions that offer more options to evolve will alleviate operational challenges for operators in the long term.
The CableOS Platform allows operators to use the existing DOCSIS infrastructure to deploy 10G fiber and interoperates with third-party nodes and devices.
Its DAA devices are engineered to extend the life of an MSO’s installed base of optical nodes by using a node-specific adaptor without requiring any modifications to the legacy node platform. The latest design of the Pebble edge module, in fact, provides a solution for transforming the end-of-life Cisco GS7000 nodes into fully capable DAA nodes.
Although the path forward will vary between and within MSOs, as they may adopt different models for specific markets, the solutions they deploy will need to be able to facilitate greater network agility.
Easing the transition to a modern network
One hallmark of a modern, virtualized network is the capability that results from linking cloud-native software and edge clouds. Moving data from the network core to its edge enables cable operators to increase service efficiency and quality within the network, thus improving network reliability, resilience, and security.
With CableOS Platform, for example, operators can readily adapt and supplement their network through edge-cloud extensions, such as Flexible MAC Architecture (FMA), 5G OpenRAN, and video CDN, as well as FTTH XGS and 10 EPON. Implementing the equivalent extensions on legacy cable networks would typically involve wholesale replacement of components and infrastructure. A modern network delivers additional operational, business and network performance benefits, justifying the transition:
Operations. To reiterate, transitioning to virtualized-DAA network results in immediate OPEX reductions in space, power, cooling and cabling. Power savings are potentially massive. Common control allows for managing, operating and configuring the access network from a single physical location vs. having CMTS installations in multiple locations. Constant data collection and integrated PNM boost network reliability.
Business and Strategy. Fast time-to-market allows for initiating marketing campaigns for 1 Gig (or higher) equivalent service sooner than would have been possible with overbuilding. The virtualized DAA network sends a strong message to customers and local overbuilders about your 10G roadmap. Improved cost structures, greater customer retention and more likely subscriber growth improve overall business health. Capital is no longer stranded in the aging infrastructure of diminishing value and effectiveness.
Network Performance. Gigabit speed offerings are becoming the new table stakes, and the cable industry’s DAA initiative was launched in part to support its 10G target. DAA-enabled DOCSIS 4.0, with expanded upstream capacity, also supports symmetric broadband, relevant to gaming, video conferencing, crypto-mining and other applications. A modernized, edge compute-compatible network can also deliver low latency, required by many heavily used apps, and supported by Harmonic’s Low Latency DOCSIS solutions.
Fiber, cable, and the future
With a virtualized DAA network, you can deliver 10G, symmetrical broadband, and low-latency services. With your legacy network infrastructure, you can’t. Today’s infrastructure may appear to be a safe harbor, but that’s because it’s familiar and has served us all very well over the past two decades.
A sober view of the challenges, threats and constraints facing the cable industry reveals that the current safe harbor has become a tangible business risk. Fiber-based competitors and telcos are gathering strength, legacy cable network solution providers are strained and starting to turn out the lights, and consumer expectations in today’s ultra-connected world are soaring.
In this context, the decision to virtualize and deploy DAA network with R-PHY, which protects your subsequent fiber, DOCSIS and even wireless options, is a good call. Virtualization and DAA solutions allow you to deploy fiber, the latest versions of DOCSIS, and more. What will cost you more, is to delay the transformation. The time to upgrade to a more modern, relevant and flexible access plant has arrived.
Several MSOs and service providers worldwide have taken that first step since 2016 using Harmonic's CableOS Cloud-Native Broadband Platform making CableOS the number one platform for vCMTS and DAA. Why don't you join them? Let us know how we can facilitate your network transformation and accelerate your services to 10G.
In his role at Harmonic, David is responsible for growing Harmonic’s access network business in EMEA, helping not only to deploy advanced technology solutions with leading cable operators, but forging technology partnerships with other key industry vendors. David also works closely with cable operators to improve their video solutions - optimizing deployments as they move towards OTT, IP and increasingly cloud-based video infrastructures.