In many ways, 2021 feels like the year fiber became real. Companies across the board unveiled plans for sprawling fiber deployments and billions in funding began pouring in from governments and private equity players alike. But the firm focus on fiber as we head into 2022 begs one big question: what does the future look like for cable?
Jeff Heynen, Dell’Oro Group VP of Broadband Access and Home Networking, gave Fierce his take on what to expect in the coming year. First and foremost, he said, fiber isn’t going away.
“I don’t think that you can talk about cable without also talking about fiber,” he said. According to Heynen, there’s a growing mindset among certain cable players that “now would be a good time to go ahead and start to overbuild with fiber, particularly if some of the subscriber growth that has slowed down continues to impact the bottom line.” Indeed, the beginnings of this trend could already be seen in 2021, as companies like Blue Ridge Communications in the U.S. and Virgin Media O2 in the U.K. announced plans to rebuild their entire cable networks with fiber.
In North America, Heynen said Tier 2 and Tier 3 players are the ones jumping ship to fiber the fastest, in part because it’s less expensive for them to do so than it would be for a company like Comcast or Charter Communications. They’re also being driven by a need to stay competitive and the prospect of cost savings stemming from the removal of active electronics in the field.
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For larger players like Comcast and Charter which are sticking with DOCSIS, Heynen tipped 2022 to bring more activity around distributed access architecture (DAA) and more work to prep their outside plant for the rollout of DOCSIS 4.0. Comcast is expected to press ahead with Remote PHY technology, driving an increase in Remote PHY device shipments. But those like Charter and Cox Communications who want to pursue Remote MAC-PHY technology will run into one key problem.
“The challenge is going to be the silicon,” Heynen said. “Unfortunately, the silicon issues and the supply chain issues are going to be the thing that holds Remote MAC-PHY back in 2022.”
In terms of technology, Heynen tipped automation to be another focus area for cable in the coming year. For broadband in general “speed is going to become less important because we’re starting to get to equivalencies with gigabit and all that,” he said. Instead, consumers will start focusing on factors like reliability and latency, among other things.
“Cable, they need to get to that point where they can customize the provisioning of services based on a customer profile,” he added.
Competitive pressure
Cable players are obviously expected to face competitive pressure from fiber going forward. But Heynen and analysts from New Street Research indicated they’ll also need to keep a wary eye on fixed wireless access (FWA) broadband.
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“We think fiber and FWB adds will increase as the footprint across which each is offered expands. Unless the entire market accelerates, cable adds have to slow,” New Street Research analyst Jonathan Chaplin wrote in November.
Heynen concurred, stating “I do think it’s a threat.” While FWA providers are finding early success pulling unhappy DSL customers, he argued there’s going to be a point at which existing cable subscribers could be lured away by a FWA provider with stellar customer service.
“There’s a real potential challenge here coming from on one side fiber and on the other side fixed wireless,” Heynen concluded. “Discounting it is just the wrong approach.”