DOCSIS 3.0 Builds Better Business Model
New specification is flexible, scalable and agile
As the deployment of DOCSIS 3.0 picks up steam, the dramatic increase in data transfer speeds of the new specification have garnered the headlines. However, it may end up being the little considered benefits of DOCSIS 3.0 that have the most important impact on a cable operator’s business for years to come.
Before DOCSIS 3.0, practically every new service offering decision had a large investment price tag attached to it (both time and money). The pleasant change for MSOs with DOCSIS 3.0 is the fact that the inherent flexibility and scalability of the specification, as well as the years of previous investment in physical plant, will allow operators to apply a much simpler set of business rules to new service offerings. Rather than consider yet another plant rebuild, which would certainly be frowned upon by Wall Street, MSOs now can focus only on whether or not the customer base will appreciate and pay for DOCSIS 3.0-based products and whether these new services represent the most effective deployment of their spectrum. This simplification of their business rules makes MSOs both large and small more agile in the marketplace, ready to quickly take advantage of new opportunities.
SPEEDS, FEEDS AND FLEXIBLE INFRASTRUCTURES
In today’s hyper-competitive broadband marketplace, competing for subscribers simply on the basis of DOCSIS 2.0 data rates has become a tenuous proposition for many cable operators. Now though, thanks to channel bonding and the other performance-enhancing features of DOCSIS 3.0, the MSOs are not only in the game against recently announced fiber-based product offerings, but the speed and overall performance of cable operators’ services can be head-and-shoulders above competitive offerings.
The core enabler of DOCSIS 3.0’s higher data rates is the concept of channel bonding. Unlike DOCSIS 2.0, which is an architecture based on single channels, the DOCSIS 3.0 specification is able to combine four or more DOCSIS 2.0 channels to create a single DOCSIS 3.0 channel with data rates that start in the range of 160 megabits per second (Mbps) downstream and 120 Mbps upstream. The specification defines a minimum DOCSIS 3.0 logical channel as four bonded DOCSIS 2.0 physical channels, but there is no upper limit in the spec to the number of channels that can be combined. In addition, the physical DOCSIS 2.0 channels that make up a bonded DOCSIS 3.0 channel need not be contiguous in the spectrum or have identical performance parameters, such as QAM modulation settings or latencies.
Presently, digitally connected homes can be served quite effectively by bonding four channels together, yielding an aggregate data rate of up to 160 Mbps. This is the “sweet spot” for this segment, but a greater number of channels could be bonded together to support other demands in the marketplace, such as the lucrative business services segment. For example, six to eight channels could be bonded together to satisfy demand for business service offerings in the range of 240 - 320 Mbps.
|Figure 1: These two spectrum charts show a typical breakdown of a cable operator’s spectrum today (top) and what it will become in the future as DOCSIS 3.0 is deployed (bottom two charts). Gradually, as more video is transported as IP data, such as IPTV, the portion of an operator’s spectrum devoted to IP will expand.|
The important thing to remember is that for the cable operators, DOCSIS 3.0 allows them to apply simple business rules to decide whether and how they will offer new services and not new technology or a plant rebuild. Because the maximum number of channels which can be bonded together is not defined, DOCSIS 3.0 channels with data rates as high or higher than 1 Gbps can be created. Data rates this high may be important for Internet access products, but they will be equally valuable when considering future IP-based products, such as IP television (IPTV).
CHANGING THE RULES
Certainly for competitive reasons, operators can’t ignore the faster data rates of DOCSIS 3.0. In fact, the requirement to offer much higher Internet access speeds will be the primary driver for initial deployments of the technology. But if the MSOs’ expectations for DOCSIS 3.0 ended here, they would be missing perhaps the most valuable aspect of the underlying technology. Because of the flexibility, scalability and agility inherent in the new specification, DOCSIS 3.0 can change the business model that operators follow and the rules that govern it.
Previously, the business model for every new service offering invariably came with a cost associated with additional capital investment in the operator’s infrastructure. Among other factors, the model would have to take into account just how quickly the investment in new network equipment or upgrades could be recovered from the revenue generated by the new service. The longer the payback on the capital investment, the less desirable would be the new service offering.
DOCSIS 3.0 turns this model on its head by minimizing new capital investment almost entirely from new service offering decisions. Of course, investments will be needed in new cable modem termination systems (CMTS) at the headend and cable modems in the home, but the network itself is left largely untouched. Because DOCSIS 3.0 has grown organically out of DOCSIS 2.0, and because of its flexibility, scalability, and spectrum agility, MSOs can continue to reap all of the benefits from the years of investment they have already made. Instead of the old model, MSOs can now apply new business rules to their decisions, rules that focus more on current spectrum utilization and do not include new capital investments.
IPTV offers a case-in-point. Perhaps the most common questions posed to cable executives today are: “When will you offer IPTV and how extensive will the network rebuild be?” The short answer is that once consumer demand is sufficient, the major investment will be the reclamation of currently allocated spectrum.
Initially, cable IPTV will likely be limited to video programming directly developed by the MSO. In this case, little to no additional CMTS capacity will be required. MSOs will be able to utilize their existing edgeQAM solutions to deliver directly to standard DOCSIS 3.0 modems, no specification changes required.
Once the operator makes the decision to extend the video offering beyond in-house programming – think YouTube-like Internet sources – additional CMTS capacity will be required.
Thanks to the flexibility of DOCSIS 3.0, it is likely that the initial launch of an IPTV product could be delivered over the same DOCSIS 3.0 footprint deployed to support the Internet access product. Flexibility is key to this equation. As IPTV demand increases, it is possible to add capacity as little as one channel at a time. DOCSIS 3.0 gives operators the ability to roll out new services like IPTV without the massive investment of a network rebuild. In fact, it is possible that no new video headend equipment (such as QAM modulators and others) would be needed to offer IPTV.
Of course, protecting operators’ investments in their networks is important, but protecting their investment in consumer premise equipment (CPE) like set-top boxes (STB), cable modems (CM) and other devices is just as important.
|Figure 2: Today’s set-top boxes handle MPEG video and IP data separately, distributing each to the appropriate end-point devices. VoIP telephone calls are treated as data and distributed over the home’s existing telephone wiring.|
Service continuity and investment protection are paramount and new services based on DOCSIS 3.0 help make this possible. Current DOCSIS 2.0-based services, Internet access and telephony services will not be affected during the transition to DOCSIS 3.0. Interoperability is guaranteed because DOCSIS 3.0 has grown out of DOCSIS 2.0.
In addition, current video services will continue to function as customers have come to expect. In the customer’s eyes, the addition of an IPTV product will be similar to the addition of HDTV. The only changes, and they will indeed be minor, may be adjustments to the operator’s video tiers resulting from reclaiming spectrum and new low-cost CPE devices. It is important to note that both legacy and new-generation STBs will work on the same network and in the same homes. No in-home changes are required.
COMING SOON TO HOMES NEAR YOU
The assumption in the marketplace is that there actually is consumer interest in the new features and services enabled by IPTV technology and that consumers place an enhanced value on such offerings. This being the case, it is fair to assume that a consumer will be willing to pay a fee for this service, much in the same way that they now pay extra for HDTV. The value proposition will likely include enhanced interactivity, near limitless choices of MSO-offered video programming, much of it niche-oriented, as well as video programming coming from sources that the MSO has no direct relationship with.
Because of the perceived value of IPTV among consumers, subscribers likely would be interested in a DOCSIS 3.0-enabled STB. The important point for operators is that no new investment in the network would be required to deploy a new generation of STBs – just the opposite. Such a scenario would protect the investment the operator has already made in the infrastructure, allowing that investment to generate revenue for a longer period of time. The only thing that goes to the bottom line faster than lowering a cost factor is to eliminate the cost factor entirely, and that’s precisely what DOCSIS 3.0 does for decisions on new service offerings.
The typical STB today accepts MPEG video and IP data, but it distributes them separately to distinct end-point devices in the home. MPEG video streams coming from headend video servers are transferred to television sets and other display devices in the home. IP data coming from the Internet is directed through the STB to PCs and other computing devices in the residence. Telephony is treated as data but it is also handled separately through the STB and distributed to telephones throughout the home in the old-fashioned way, via existing phone wiring.
The backward- and forward-facing nature of the DOCSIS 3.0 spec allows DOCSIS 3.0 technology to perform the functions of a transport gateway for both MPEG video and IP data. Unlike current STB technology, a DOCSIS 3.0 transport gateway could abstract the source of all incoming signals. This means that IP and MPEG transport video will be delivered to connected televisions in exactly the same fashion. To the consumer, it will be “just TV.”
An additional benefit of a transport gateway is that it is also possible to deliver the entire video offering (IP and MPEG transport) to any IP-enabled STB in the home. The transport gateway manages the conversion of both IP transport to MPEG and vice versa in one low-cost CPE. Of course, the new devices connected to the home network would need an IP interface. For those that do not have one, such as current television sets, a small and inexpensive IP interface module could either be embedded in the device or sit next to it.
With this sort of arrangement in homes, consumers can organically grow their video entertainment, computing, storage, voice and other capabilities as they wish. Without threatening the operator’s value proposition, subscribers also have the ability to access video and other data streams from sources that the cable operator does not yet have a direct business relationship with, but which are available on the Internet.
A DOCSIS 3.0 transport gateway, like the one shown in Figure 2, would suddenly give MSOs the ability to approach decisions involving new service offerings with simple business logic unencumbered by questions of network rebuild expenses. New IP-based services can be quickly launched with little or no new capital investment in the network. The questions concerning a new service come down to basic business rules, such as quantifying subscriber demand, revenue potential and operational costs.
|Figure 3: A DOCSIS 3.0 transport gateway would be able to abstract the source of the incoming MPEG and IP signals and deliver both as IP data to connected devices. With this type of arrangement, consumers can organically grow their video entertainment, computing, storage, voice and other capabilities as they wish.|
MAKING IT REAL
This vision of a transport gateway can be rationalized with the state-of-the-art in the cable industry and consumer electronics today. What emerges is a new type of STB that encapsulates all of the aspects of the home network shown in Figure 2 within a single enclosure.
This STB performs the functions of a transport gateway by protecting the investments operators have made while offering consumers an easy way of implementing all of the entertainment, voice communications and computing functionality they want. For example, instead of attaching a new storage device to a home network when the home’s music library has grown beyond its current disk space, the homeowner simply connects an additional storage module to the STB/transport gateway. The networking occurs inside the box.
As with an external IP home network, devices like computers would have to be IP-ready to connect to this new STB/transport gateway. For TV sets that are not IP-compatible, and most are not at this time, the small, inexpensive video handling module could either be installed between the transport gateway and the TV or it might be incorporated into the transport gateway itself, eliminating the need for an external module. Another alternative would be to embed it directly into the TV.
In fact, the transport gateway could be configured in a variety of ways to support various bundles of services and to protect the cable operator’s investment in network equipment. For example, a transport gateway may include QAM receivers for legacy video sources while the operator’s network transitions to IPTV.
DOCSIS 3.0 represents a revolutionary evolution for cable operators. It is revolutionary insofar as DOCSIS 3.0’s channel bonding and its blazingly fast data rates are catapulting the industry ahead of competitive technologies. But, at the same time, the transition to DOCSIS 3.0 is evolutionary. Operators can make this transition while they protect the capital equipment investments they’ve already made in their networks, lengthening the payback time on those investments and thereby increasing their rate of return. The evolution to DOCSIS 3.0 does not come with a capital equipment price tag associated with it.
As a result, operators will find themselves in a revolutionary position: they will be able to apply basic business rules of supply and demand to their service expansion decisions.