CableLabs: Cable Industry May Need Another Burst Of Broadband Spending To Keep Up

A controversial, speculative report from the cable industry research arm CableLabs suggests that the $60 billion upgrade that started a decade go may not be enough to keep up with broadband growth and Verizon’s $20 billion fiber-optic-to-home investment. According to the WSJ’s Peter Grant, the report “warns that at present growth rates cable operators’ existing technology may not be able to compete efficiently with Verizon on Internet services. ‘At some point, optimization of the (cable) network becomes more expensive than simply deploying’ fiber directly to homes.”
The capex specter has been hanging over cable operators, constantly hearing from analysts and investors who want capital spending down so they can see the greatest payoff from the last round of infrastructure upgrade. It’s not a stretch to say that today’s broadband and telephony growth would not have been possible without that major upgrade but it came along with assurances that it was future-based and designed to support the transformation into a digital indusry. What CableLabs is suggesting now — with incomplete data since its financial backers don’t share all — is that cable operators can handle the growth near-to-mid term but may not be able to keep up over the long term. Verizon’s build out could take 10-15 years. No one is suggesting another $60 billion will be needed, and, as Grant, notes technological advances may make it possible to do much more with less if there is a next round. In fact, CableLabs told Grant “no major investment is needed for cable to effectively compete.”
Top tech execs from Comcast and Time Warner Cable told Grant they disagree with the study. TWC CTO Mike LaJoie: Its assumptions “are not reflective of what our reality is.” I would be surprised to hear differently from any of the majors.

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