In our post last month, we postulated that Comcast’s MVNO business is a narrowly targeted first step and that a facilities-based strategy is likely needed for a longer term wireless business that provides owner economics. The latest news of Comcast and Charter’s joint venture in wireless appears to signal that the cable operators will be united in the latest cable’s wireless entry and merger and acquisitions discussions that are likely on-going. One major question keeps coming up: Is the cable network ready for wireless – LTE today and 5G in the future?
Based on mobile operators’ preference for the Centralized RAN architecture, where remote radio heads (RRH) are connected via dark fiber to centralized baseband processing units for interference mitigation and inter-cell coordination, fiber investments are on the rise. Recent Verizon announcements on its partnerships with Corning and Prysmian Group are good examples of this trend. For dense urban areas, one can imagine a small cell every 600 feet or so for capacity densification and ultra-low latency 5G services. To take advantage of deflationary technology advancements in fiber optics, one can imagine mobile operators deploying several hundred, and perhaps over a thousand fiber strands in a metro ring to connect each radio node with massive MIMO antennas. In this way, they can handle very large bandwidth carriers in the millimeter wave and sub-6GHz bands, using centralized baseband pools in metro data centers. Can cable networks handle this type of high-bandwidth wireless network deployment that requires fiber fronthaul/backhaul?
We know that cable operators are upgrading to DOCSIS 3.1 for faster speeds and higher throughput links over hybrid-fiber coaxial (HFC) plants. A Comcast executive implied recently that about 25% of his HFC plant is fiber, with the rest being coaxial plant. As cable operators continue to evolve their HFC plants towards a “fiber deep” architecture, the physical plant will become more “passive” and further performance improvements and flexible architectures are likely. The network change involves removing intermediary amplifiers (from a fiber node in a neighborhood to a household premise), in favor of amplifiers at the fiber node capable of driving a signal all the way to a customer home without re-amplification along the way. While the percentage of fiber in HFC plants may rise as cable operators perform “node splits” to expand capacity and fiber overbuild during incremental plant upgrades, the fiber reach beyond a current level of 1500-3000 feet away from customer homes probably won’t decrease much as broadband capacity of coaxial plant has further room to grow through technology advancements.
Depending on the density of fiber strands between cable headends and fiber nodes and beyond, it is feasible to connect remote radio heads on cable network plant. More importantly, the existing right of ways that the cable operators have along its aerial and underground plants are significant advantages that mobile operators and wireless infrastructure suppliers can only envy. The right of way to overbuild fiber along the dense cable network footprint is probably just as valuable as the network itself. The evolution towards “fiber deep” passive architecture and split-baseband RRH affords flexible wireless overlay options for the cable operators.
While merger and acquisition rumors swirl in the industry, wireline and mobile operators are both moving towards fiber-rich wireline networks. The increasing density of fiber-rich networks that power 5G and small cell networks could in turn threaten cable’s dominance in the fixed broadband market – after all, mobile backhaul networks can be extended to capture fixed broadband market opportunities. Of course, cable operators aren’t sitting still either. Envisioned 5G services and increasingly dense wireless networks are undoubtedly hastening the inevitable fixed mobile convergence. It will become harder to distinguish fixed vs. wireless competition as each side leaves their silo.
Kyung Mun is a Senior Analyst at Mobile Experts LLC. Mobile Experts is a network of market and technology experts that provides market analysis on the mobile infrastructure and mobile handset markets. Over the course of his 20+ years in wireless and cable industries in a dynamic range of roles from engineering to product management and technology strategy, he has contributed to the advancement of mobile communication, while working at leading companies in the mobile value chain including Motorola, Texas Instruments, Alcatel-Lucent, and a few startups in between. He holds undergraduate and graduate degrees in electrical engineering from the University of Texas at Austin and Georgia Tech, and studied finance and strategy at Southern Methodist University.