DOCSIS may have
done its job
almost too well...
Very few vendors really got behind the CCCM effort, though Intel Corp. and Coresma actually did submit CCCM products to CableLabs for certification testing. But the whole project didn't really amount to much. Despite that, cable still got its wish as competition and pricing pressure caused cable modems to dip below $50 per unit. Actually, units can be purchased today for less than $40.
But here come the consequences. Toshiba, one of cable's best CE and retail partners, made a business decision to exit the cable modem business for good. Toshiba couldn't justify being in the business any longer–and this from a company that until recently had been a strong number-two supplier to the industry!
Toshiba's decision was a shock to some cable operators. Some MSOs were willing to pay more just to keep Toshiba in the game, but it was too late. Even someone at Motorola, by far the largest supplier of DOCSIS gear, said Toshiba's exit was bad news. Toshiba, he said, was the only cable modem supplier that could strike fear into the Motorola camp.
For me, it was déjà vu. The first DOCSIS casualty of any real significance was 3Com, which backed out of the cable modem and CMTS business in mid-2001. I remember asking 3Com why they were bugging out. At first they gave the run-of-the-mill PR speak. After about the third time I asked the question, 3Com finally provided the real answer: "We're not making any money." Toshiba's answer in 2004 was the same.
There's no doubt that DOCSIS has done a phenomenal job of opening up the market to multiple vendors and giving cable a healthy lead over DSL. But maybe it did at least one job (driving prices down) almost too well.
You've probably heard that Pioneer Electronics is dropping its cable set-top OEM business to go after the retail market because its direct cable sales business was becoming unprofitable.
That brings me to Next Generation Network Architecture LLC, a high-level project that's contemplating how operators might make the jump to all-digital. Some of the options on the table call for thin-clients that cost the operator less than $50–again, that magical figure.
While that price target is for high-volume, skin-and-bones, ultra-thin devices, "the numbers in NGNA are unrealistic today," claims one set-top maker. Tomorrow, perhaps those numbers will become more realistic, particularly if we're talking about tens of millions of units. Still, the old saying, "Be careful what you wish for–you just might get it," could apply here. It will be difficult to market a $50 set-top if there's no one willing to actually make it.