From Comcast to Arris: Winners and losers in the cable industry's move to DOCSIS 3.1 and 1 Gbps speeds

By Mike Dano

Almost three years ago, Google's Chairman Eric Schmidt announced that the company's Google Fiber effort -- which provides fiber-based 1 Gbps Internet speeds -- was a real thing. "It's actually not an experiment. We're actually running it as a business," he said at a conference in December 2012.

That's almost exactly the same time that CableLabs began to work on the DOCSIS 3.1 standard, which some U.S. cable operators expect to begin deploying commercially early next year. DOCSIS 3.1 technology is essentially the cable industry's competitive response to fiber networks and their 1 Gbps Internet speeds.

CableLabs, the nonprofit research and development consortium for cable operators, makes no secret of why it started work on DOCSIS 3.1: "Gigabit speeds were something very important" to the cable industry, explained Wayne Surdam, CableLabs' vice president of communications. DOCSIS 3.1 "ends up being a very effective way of delivering a high level of service using the [cable operator's] existing HFC plant."

Indeed, DOCSIS 3.1 is the cable industry's answer to a range of competitive threats and market trends:

  • Today, Google Fiber provides 1 Gbps Internet speeds in nine cities, with plans to roughly double that number.
  • A range of Internet providers, including AT&T and Verizon, are working to counter Google Fiber's expansions with their own fiber-based 1 Gbps services.
  • The number of cable TV subscribers continues to decline. SNL Kagan reported that the U.S. cable industry lost 350,000 pay-TV customers in the second quarter of this year -- which was actually the industry's best performance since 2008. At the same time, cable companies added 608,000 Internet customers during the second quarter.
  • Finally, and perhaps most importantly, Parks Associates reported that fully one quarter of Americans who switched to a new Internet service provider "did so in order to obtain a faster service at a comparable price."

It's that last data point -- from Parks Associates' survey of Internet and pay-TV subscribers in the second quarter -- that crystalizes the cable industry's lightning-fast embrace of the DOCSIS 3.1 standard. Americans want faster and better Internet connections, which they are increasingly using to watch YouTube, Netflix, Hulu and other video services. By moving from the existing DOCSIS 3.0  standard to the new DOCSIS 3.1 standard, cable operators can increase the Internet speeds they can provide to customers from around 300 Mbps to 1 Gpbs or faster -- without having to engage in the extremely expensive proposition of ripping out and replacing the coax cables that go into each cable subscriber's home.

"Broadband [Internet] delivery is becoming very, very important," CableLabs' Surdam said. "DOCSIS 3.1 provides at least another decade of viability for the HFC plant, if not more than that."

Developing DOCSIS 3.1: What it is and what it can do

"It is moving fast," John Rossi said of the development of the DOCSIS 3.1 specification. Rossi is the VP of technical marketing and applications labs at chipmaker STMicroelectronics. For close to a decade, STMicroelectronics has provided silicon to the companies that build the DOCSIS devices that sit inside cable customers' homes -- Rossi said the company's DOCSIS 3.1 silicon will be in production at the end of this year.

Rossi said that cable operators across the world continue to deploy DOCSIS technology. He said that DOCSIS 3.0, the most recent commercially available version of the transmission technology, is widely deployed across the United States, Brazil, Europe and elsewhere -- "it's starting to take shape in China," he added.

In the U.S. market specifically, Rossi estimated that close to 90 percent of the DOCSIS cable networks that have been deployed now use the DOCSIS 3.0 standard.

So how does DOCSIS 3.1 improve on DOCSIS 3.0? Basically, explained CableLabs' Belal Hamzeh, it allows a cable operator to transmit 50 percent more data over the same infrastructure. He said that the technology, in an ideal network configuration, can support Internet speeds of up to 10 Gbps -- though he noted that cable operators that deploy the DOCSIS 3.1 specification will likely start by offering 1 Gbps speeds.

Hamzeh, a director of network technologies at CableLabs, added that the DOCSIS 3.1 standard makes use of OFDM technology. OFDM was initially developed for wireless networks and now has migrated into cable networks, to make data transmissions more efficient. Further, the DOCSIS 3.1 standard makes more bandwidth available to cable customers; it is more energy efficient due to enhancements of DOCSIS protocols; and it provides cable operators with more flexibility in terms of how they configure their networks.

Importantly, DOCSIS 3.1 is backward-compatible with previous versions of the standard, meaning that cable operators can deploy it alongside existing DOCSIS 2 and 3 elements in their network.

But beyond just speed, STMicroelectronics' Rossi said that DOCSIS 3.1 will also support the maturation of the Internet and the technology sector in general. He pointed out that not only are computers and TVs now connected to the network, so are phones, tablets, printers, garage door openers, security systems … the list goes on.

"It quickly adds up," Rossi said. "Our usage of the network has changed over time. You want that throughput to be available to all those devices that are hanging on to the network."

Deploying DOCSIS 3.1: How, where and when

At the behest of cable executives, CableLabs began work on the DOCSIS 3.1 standard near the end of 2012. Just a year later -- on Oct. 29, 2013, in conjunction with the annual Society of Cable Telecommunications Engineers conference -- CableLabs released its initial DOCSIS 3.1 specifications. That's a noteworthy timeline considering it took almost three years for the DOCSIS 3.0 standard to be finished.

Since then, CableLabs has released several subsequent upgrades and expansions to the standard. The company is now gearing up to begin certifying DOCSIS 3.1 equipment from the industry's vendor community, with the goal of launching commercial services sometime early next year.

CableLabs' Hamzeh described the development of the DOCSIS 3.1 standard as "lightening quick." When questioned why, he answered: "Why not? If you have the brainpower and have the will, why not get it down?"

Comcast, the nation's largest cable operator, plans to be at the forefront of DOCSIS 3.1. The company is currently testing the technology with an eye toward launching it next year.

"Our intent is to scale it through our footprint through 2016," said Robert Howald, Comcast's VP of network architecture. "We want to get it across the footprint very quickly," Howald added, noting that the company hopes to have the technology deployed across its entire U.S. network footprint in the next 2-3 years. "We're shooting for two years," he said.

Much of the work to upgrade to DOCSIS 3.1 will be done in cable operators' hub sites -- larger operators like Comcast have hundreds of hub sites across the country. Inside those sites, operators generally will need to upgrade their Converged Cable Access Platform (CCAP) and Cable Modem Termination System (CMTS) to support the DOCSIS 3.1 specification.

Operators will also need to install DOCSIS 3.1-capable equipment -- such as modems or gateways -- in customers' homes so they can access the faster Internet speeds made possible by the technology. Along those lines, Comcast in May announced a DOCSIS 3.1 modem that it said will go into production this year and will be available to customers in early 2016.

Comcast announced its DOCSIS 3.1 modem earlier this year.

"There's a lot of test equipment in the field already," Howald noted. "The early testing this summer has been all around test equipment."

Howald declined to name Comcast's DOCSIS 3.1 equipment vendors, but he noted they are a mix of incumbent Comcast vendors and new ones.

"There's some innovative new vendors involved," he said, noting some are from the wireless industry. "Several vendors have done some innovative things there."

Many expect other top cable operators to join Comcast in deploying DOCSIS 3.1 starting next year. However, few operators have made formal announcements on the topic. For example, a representative for Time Warner Cable, the nation's second largest cable operator, said that "we're laying the foundation for DOCSIS 3.1 -- what major cable providers call Gigasphere -- today. Through TWC Maxx, we're taking our lineup all-digital, offering Internet speeds up to 300 Mbps and improving network reliability. As the new standard is certified and equipment manufacturers deliver new hardware and modems, TWC will be poised to adopt Gigasphere technology and products, including the potential for gigabit Internet speeds for residential customers."

The representative declined to provide details or a timeline for the company's DOCSIS 3.1 deployment.

DOCSIS 3.1 vendors: Winners and losers

Which vendors will supply new DOCSIS 3.1 equipment to Comcast and other cable operators? According to research firm IHS, Arris is the world's largest supplier of cable kit, both in operators' networks and in customers' homes, and the company stands to cash in on the move to DOCSIS 3.1.

On the network-equipment side of DOCSIS 3.1 specifically -- which includes CCAP, CMTS and other network hardware elements -- Arris and Cisco are expected to command solid positions.

Jeff Heynen, IHS' research director for broadband access and pay TV, said that during the past several quarters Cisco has lost share to Arris and Casa Systems, a relative newcomer that entered the market last year, due to its aging product lineup.

IHS' revenue market share for the first quarter of 2015 for CCAP, CMTS and Edge QAM hardware.

However, Cisco is hoping to win back market share with its new cBR-8 Evolved CCAP product, released earlier this year. Midcontinent Communications, Comcast and others have already agreed to deploy the product. Heynen said Cisco may well win back market share from Arris, Casa and others with its cBR-8.

Of course, Arris doesn't plan to stand still. "Arris will be a key vendor enabling cable operators' rollouts of D3.1," the company said in a statement. "We will integrate with multiple D3.1 cable modem silicon providers and are planning to offer a full D3.1 product portfolio in 2016. Initial product samples have already been provided to customers, and early customer testing of D3.1 devices is in process."

"We have a number of exciting DOCSIS 3.1 milestones planned for later this year, and we'll share more details in the coming months," the company added.

On the customer-premises-equipment (CPE) side of DOCSIS 3.1 specifically -- which includes gateways, Embedded Multimedia Terminal Adapters (eMTAs) and modems -- Heynen said that Arris is expected to retain a dominant position largely due to its $2.1 billion acquisition of Pace, a move that combines the industry's No. 1 and 2 players. Indeed, according to IHS, Arris commanded fully 36 percent of the CPE market in the first quarter.

IHS' CPE revenue market share for the first quarter of 2015.

Heynen said that, despite the cable industry's stated desire to increase competition in the CPE market, he expects Arris to retain its top position. "Nobody ever gets fired for buying Arris or Motorola equipment," Heynen said, explaining that cable operators rarely venture outside their known suppliers. Arris purchased Motorola's set-top business several years ago. "It's really the devil you know," he said.

For its part, Cisco bailed out of the CPE market in July with the sale of its CPE division to France's Technicolor for $602 million. That deal combines the market's No. 3 and 4 players.

As for DOCSIS silicon suppliers, Heynen said that Broadcom and Intel are the industry's two main competitors. He said that Broadcom supplies silicon for both network and CPE kit, while Intel just supplies silicon for CPE.

Beyond DOCSIS 3.1

Interestingly, deploying DOCSIS 3.1 is just the start for Comcast. Comcast's Howald said that once the company gets DOCSIS 3.1 up and running, "then we'll start to see more advanced features come into play."

He said the technology allows operators to tweak their networks to their needs, optimizing customers' home environments and maximizing their capacity.

"There's just a lot of flexibility" in the DOCSIS 3.1 standard, Howald said. "That just allows us to optimize the use of our network."

Further, DOCSIS 3.1 isn't the only arrow in Comcast's quiver. The company currently operates around 150,000 route miles of fiber in locations in Florida, Indiana, Michigan, California and elsewhere, and plans to continue buildout out fiber -- instead of coax -- where appropriate. The company's fiber-based Gigabit Pro service will offer up to 2 Gpbs speeds for around $300 a month.

"We've been building fiber for a very long time," Howald said, adding that "there's really not much difference" between coax and fiber now that the cost of deploying fiber has fallen.

"If it's new houses, they'll look at doing fiber," IHS' Heynen predicted. He said that fiber networks can physically carry more data than Hybrid Fiber-Coaxial (HFC) cable networks, and fiber connections are often what real estate developers request for new buildings.

But that doesn't mean DOCSIS will end with version 3.1 of the standard: CableLabs' Hamzeh confirmed that the company is considering a DOCSIS 4 standard. "We can't really talk about it," he said.

From Comcast to Arris: Winners and losers in the cable industry's move to DOCSIS 3.1 and 1 Gbps speeds