Cable, Telco Nets Grow Similar as Markets Converge
- Each has successfully gone after each others residential subscriber base. Cable operators are now the phone company for many and telcos provide as healthy an array of programming services as MSOs.
- The explosion of broadband Internet has given birth to a third dimension, over-the-top players. This is important for a lot of reasons, including the reality that OTT providers are using both cable and telcos as “dumb pipe” conduits to their customers. The trend is just starting: The OTT players are growing more technically sophisticated and building robust back office, fulfillment and content creation capabilities.
- Finally, while the cable industry has had some success in taking commercial business away from the telcos, the industry is truly moving up its game. To date, cable's success has primarily served SOHOs and small- and medium-sized businesses within its residential footprints. It has been far less adept in serving enterprises, which cross more regional borders, demand more and different feature sets and compliance with exacting service level agreements (SLAs). Cable’s parochial legacy – an advantage when dealing with SMBs with centers of operations that more or less match the operator footprint – is a disadvantage to enterprises that doesn’t want to mix and match providers across the country.
These three trends -- incursions into each others business, the emergence of OTT and cable's foray into commercial services -- tends to make the underlying networks evolve towards each other.
Commercial service provisioning perhaps is the best example. Mobile backhaul -- bringing signals from cell towers to various upstream points in the network -- is exploding as mobility explodes. It will continue to do so as LTE rolls out. Mobile backhaul uses many of the same fundamental elements as enterprise commercial services. Cable operators are superbly positioned for this business, and winning a chunk of it will justify creation of the infrastructure that allows it to serve enterprises.
Indeed, cable operators stand to be the favored provider, since mobile carriers associated with one wireline carrier will favor MSOs over a direct competitor's backhaul business unit. Now cable can bank on twin revenue streams of mobile service providers and enterprises.
What Does this Mean to the Infrastructure?
A key question should be asked: What do these trends mean to the underlying technical evolution of telephone and cable platforms? The first assumption is that cable and telephone networks always will be different because of cable’s ace in the hole (or in the wall): its last mile coaxial cable. While that always will differentiate the networks, the resemblance will grow as their networks -- especially at the core -- grow more similar.
Lightwave Online, and the print publication from which it evolved, long has been the go-to, authoritative source for information about optical networking in the telephone industry. Its parent company, PennWell Corp., purchased Broadband Technology Report at the end of 2011.
It’s a great move from the points of view of the two sites: Treating cable and telco optical networks as completely discreet entities that don't deal with many of the same issue and use much of the same equipment is legacy thinking. They aren’t the same – but they will grow more similar as cable’s phone and telcos video subscriber rolls increase, as OTT uses both as a conduit and as mobile backhaul demands grow. Another way of putting it: The emphasis is shifting from the differences to the similarities.
Stephen Hardy, Lightwave’s Editorial Director and Associate Publisher, noted the coalescing. “In both networks, fiber is creeping closer to the end customer,” he said. “The question is how close they will get and what technology will be used for the final connection.”
The near future promises to be as interesting as the recent past. Hardy suggests that the capabilities of DOCSIS 3.0 gives cable’s coaxial legacy the ability to satisfy the greatly increasing demands and may chill any move to ditch HFC in favor of an all-optical approach.
He suggested watching events at the two ends of the network. In the core of the network, the big cable operators will look, along with telcos, at the next generation of 100 gigabit per second (Gbps) networking, which is the long-term replacement for the current generation of 40 Gbps equipment. On the end user side, he sees how the industry progresses on the nascent Ethernet over passive optical networks (EPoC) standard, which could further dampen the move of cable to an all-optical approach.
The cable and telephone industries have a long and complex relationship. This isn’t likely to change as the era of “frienemies” and “co-opetition” rolls on. One thing is certain: Telco and cable engineers, decision makers to whom they report and vendors must keep close pace on what is happening in both industries.
Carl Weinschenk is the Senior Editor of Broadband Technology Report. Reach him at email@example.com.