In this third part of my ‘cable story’ blog, we’ll get into how to better monetize the pipe.
It’s not a big secret that the video business is being commoditized. Actually, only a third of the serviceable cable homes and businesses in the U.S. are currently paying subscribers for cable video services (US Cable market – Dec 31, 2017), and to add to the equation, the content costs are flying sky-high. As a direct result, revenues and profits are under pressure. Several leading indicators continue to show that this will only intensify in the coming years.
On the other hand, high speed broadband services are gaining more and more customers (and revenues), and becoming to be the new cash generator. So video is down, but broadband is up. Everybody’s still reasonably happy, right?
Not exactly. Video is a very significant element in any cable provider’s P&L. Actually, it’s the biggest revenue foundation for them (to the tune of 40% of the revenues for U.S. cable providers in 2017). The investments in the network are indeed providing more revenues from the broadband side, but at the same time creating an easy path for subscribers to drop their video service.
Which means it is again time to make more out of the cable network. The real gains are to be found in the cable access network, and, to be more exact, in its new architecture innovations. One piece is the move from analog to digital IP networks, the related rise of distributed access architectures (DAA) and virtualizing the head-end. This brings IP termination closer to the subscriber, which brings better broadband service, better network economics, and enables advanced services. Another element is the impending arrival of full duplex DOCSIS (FDX) — a true game changer in that it enables symmetrical services that compete better with FTTx/PON services.
The business side of migrating to IP network and FDX is huge because new markets can be now opened for cable providers, like mobility and the enterprise marketplace. And new services are now possible to businesses, like SD-WAN or hosted surveillance. For consumers, new services like collaboration, gaming and IoT indicate that the potential upside from network reinvention is huge. This sums up to increased revenues and a protected footprint, while offering better efficiencies and an extension of the network life span.
The mobile opportunity for cable operator was mentioned before but is certainly worth a closer look. Why? Because 5G is here – with enhanced mobile broadband that requires both access densification and a significant increase in backhaul capacity. Cable providers have the densest network connectivity in the ground, ready to plug cells into it and then run xHaul over DOCSIS, so it’s just fitting to match the two.
Actually, there are many who posit that the cable infrastructure will ultimately win in wireless, and this is clearly because it’s the most densest wired network.
The business opportunity for Cable providers in mobile has two major aspects: Offering mobile services to their subscribers with their own infrastructure, and wholesale backhaul to mobile service providers and private mobile operators, such as municipalities and businesses.
Making 5G work on cable needs expertise and mobile-ready capabilities for the access network. Cisco is leading the innovation in providing 5G timing sources through DOCSIS, and also in optimizing mobile and cable schedulers to significantly reduce latency and improve customer experience. And we are doing it with the major players in this field, and working to standardize these innovations.
5G and Cable are indeed a match, and Cisco is the partner that can help you realize it.
Read more on the ‘cable story’ in my previous posts:
- The Cable Story, Part 1: Is that light at the end of the tunnel a train, or sunlight?
- The Cable Story, Part 2: Thoughts on How to Reinvent the Cable Network
And on Cisco’s cable access solutions.