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Bad Times Ahead for Broadband?

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Updated: The sales of Cable modem termination systems (CMTS) declined 32 percent in the third quarter of 2008 to $246 million, according to research firm Infonetics Research. In comparison, $360 million worth of CMTS’ were sold in the second quarter of 2008. One way to interpret this is as yet another data set pointing to a severe slowdown in demand for broadband across the board. We had earlier pointed out that the economic problems were impacting U.S. communications companies, especially those with exposure to hot housing markets. No wonder UBS analyst Nikos Theodosopoulos is projecting global service provider spending will go down by as much as 10 percent in 2009.

Any slowdown could be bad news for gear makers like Arris (s ARRS), which provides broadband gear to companies like Comcast (s CMCSA). At a recent UBS telecom conference Robert Stanzione, Chairman and CEO of Arris, said his “key growth opportunities going into 2009 will be largely centered around DOCSIS 3.0 deployments,” along with sales in the international markets. The company felt that the cable capex could be flat or down net year, but Stanzione said Arris will do well anyway, because it thinks DOCSIS 3.0 will be key priority for cable companies and they will spend on it.

Not so fast. Infonetics analyst Jeff Heynen thinks that with consumers holding onto their purses tightly, the cable companies might slow the rollout of DOCSIS 3.0 wideband services, as “it remains to be seen whether consumers will want to upgrade their broadband connections when budgets are already strained.”

12 Responses to “Bad Times Ahead for Broadband?”

  1. No worries….U.S. Subsidies for broadband are one the way….

    DECEMBER 2, 2008, 4:38 P.M. ET Stimulus Plan to Include Internet-Access Funds
    By COREY BOLES and FAWN JOHNSON – Wall Street Journal

  2. As reader Nimrod pointed out CMTS is not cable modem. Are slower sales of CMTS bad omen for broadband? I would think not, since the need for bandwidth seems to be increasing. Remote home offices are made possible by broadband. The plethora of content ( read TV shows ) available on demand gives consumers a great deal of freedom. I am not an early adopter and still find broadband as necessary as electricity, and I would think that many people are like me. I therefore dont think these research reports spell doom and gloom for broadband.

    Ranjit Nayak

  3. Mari, the Motorola shipment numbers that were up were mainly in Europe and Latin America, they shipped zero Docsis 2.0 cable modems to many of the top NA MSOs. The cable modem shipments are for Docsis 3.0 modems but that’s only temporary until the new Docsis 3.0 eMTAs are finished and approved for deployment.

    MSO strategy is buy only eMTAs since their costs are going down fast and it’s more cost effective and operationally effective to have one device (emta) instead of two (cable modem and voip adapter).

    As for Docsis 3.0 deployments, the LightReading article is a citing deployment plan announcements not actual deployments. Don’t get me wrong Comcast will be very aggressive with Docsis3.0 deployments but the economy will dictate their pace.


  4. It’s also important to note that cable operators are selling less pure cable modems and more eMTAs which are cable modems with VOIP. I’m not sure what the mentioned research is actually counting.

    As for DOCSIS 3.0, I’m sure it’s a very important product for cable operators to deploy in order to compete with FiOS however from what I’m hearing the current price points seem significantly high especially when consumers are already paying a lot for video and voice. I’m sure there will be bundles and that they will try to beat the FiOS price point but it’s not going to be a cheap service which will slow the adoption.

    The other issue with DOCSIS 3.0 is that providing 50+Mbps service will require adding more CMTSs (cable modem termination systems) which is very costly, not to mention the plant (HFC) preparation required to support increased capacity. Because of this you will see DOCSIS 3.0 rolled out slowly and only in very competitive FiOS markets such as Boston and NYC.


  5. I believe the following is related to CMTS (Cable modem termination systems) and not Cable modems.
    “The sales of cable modems declined 32 percent in the third quarter of 2008 to $246 million, according to research firm Infonetics Research. In comparison, $360 million worth of cable modems were sold in the second quarter of 2008.”