Dell’Oro Group VP Jeff Heynen warned the availability of advanced customer premises equipment (CPE) could become a limiting factor for cable operators looking to push gigabit speeds to more customers if current supply chain issues persist over the long term.
Heynen, who leads Dell’Oro’s market research for broadband access and home networking, told Fierce cable CPE shipments fell 10% between Q4 2020 and Q1 2021 and dropped another 4% between Q1 and Q2. The most recent slide “raised a red flag.”
“That’s not the right trajectory for an area where subscriber growth is really happening. So, there’s clearly a disconnect and that has to do 100% with the supply chain constraints,” he said, noting major vendors including Commscope, Technicolor and Broadcom have all reported backlogs.
Comcast and Charter have been adding subscribers at a healthy clip in recent quarters. While such operators likely have enough inventory on hand to manage continued subscriber growth, they could be forced to repurpose older DOCSIS 3.0 or 3.1 CPE and put customers on waitlists for next-generation equipment, Heynen said.
The analysts stressed that for now there’s “no reason to panic” but cautioned the trend is something to watch closely. If supply chain issues persist over the long term, it could create a gap between the services cable operators want to offer and what they can actually deliver without the right CPE.
“Some of the planned upgrades that they might’ve had for more upstream bandwidth, adding in OFDMA channels for example, that can happen certainly on the network side. But if you don’t have the CPE that can support those OFDMA channels, then you’re limited,” he explained.
On a more positive note, Heynen said Dell’Oro’s 2Q 2021 Broadband Access and Home Networking report showed growth in Remote PHY and distributed access spending for the second quarter in a row. Though such expenditures were largely put on the backburner during the pandemic, Heynen said the ramp is “a good sign that at least the long-term strategic goals of improving the outside plant are certainly back and underway.”
He added the report also highlighted a global focus on fiber for residential, enterprise and 5G transport use cases. To provide a sense of the scale of the investments taking place, he noted 130,000 XGS-PON OLT ports went into networks in North America in the first half of 2021, compared to just 17,000 in the first half of 2020. Europe is experiencing similar growth rates, Heynen said.