Report: Cable's virtualization drives down traditional hardware revenue

Broadband access equipment revenue for the cable industry will decline over the coming year due to virtualization. (Pixabay)

The cable industry's move to virtualization is driving down traditional hardware revenue at a faster clip, according to a report by Dell'Oro Group.

While the cable industry has made a slower move to virtualization than the telco space, some operators, such as Comcast, are starting to reap the rewards, but that means they are spending their capex budgets elsewhere. According to Dell'Oro Group, sales of cable broadband access equipment will decrease, with a 2% compound annual growth rate (CAGR) from 2019 to 2024.

The current virtualization that is taking place in the cable industry's network infrastructures will extend to other equipment areas, which will further reduce traditional hardware revenue.

Sponsored by Anritsu Company

Free eBook: Efficient Testing Will Contribute to Long-Term Success in the 5G Marketplace

As companies worldwide race to launch 5G successfully and avoid post-deployment setbacks, we see a massive rise in the demand for 5G test and measurement equipment. We will discuss how efficient testing can contribute to long term success in 5G marketplace.

“Global operators continue to invest in their broadband access networks, but are increasingly delivering more capacity with lower-cost, virtualized hardware,” said Jeff Heynen, senior research director at Dell’Oro Group, in a statement. "Virtualization, coupled with subscriber saturation in some mature markets will result in gradually declining revenue for broadband access equipment globally."

Virtual cable modem termination (CMTS) and converged cable access platform (CCAP) revenue will increase from $90 million last year to $418 million worldwide in 2024, according to Dell'Oro Group, Cable operators are moving to CCAP to reduce their powering and space requirements while also expanding broadband capacity. Comcast has been a big proponent of virtual CMTS.

Cisco, CommScope/Arris, Casa Systems and Harmonic are among the leading CCAP vendors, but sales were slow last year while some cable operators decided on their investment strategies.

Dell'Oro Group also said on Monday that mesh-capable routers and broadband customer premises equipment units would reach 30 million units this year.

RELATED: Cisco's Davidson: Cable at a crossroads with DAA and Remote PHY

Along with virtual CMTS, some cable operators are also looking at distributed access architectures (DAA) as the starting point for virtualized networks and software-defined networking. DAA drives cable operators' transition to all IP services, which in turn helps them orchestrate and activate all of the services from a converged infrastructure.

Suggested Articles

While some would argue that NFV doesn't deserve a third, fourth or fifth chance, MEF has thrown its support behind Lean NFV.

HPE has put the finishing touches on its $925 million deal to buy SD-WAN vendor Silver Peak, which narrows the gap on rivals such as Cisco and VMware.

AT&T and Akamai announced on Tuesday that they have extended their business partnership through 2023.