Thursday, August 3, 2017

If Access Networks are "Not Commoditized," Then Higher Telco Capex is Required

Networks “are not commoditized and therefore value is a function of price and quality,” argues James Sullivan, J.P. Morgan head of Asia equity research (except for Japan). So it is “value” that ultimately drives usage, capex and opex.

If so, then U.S. telcos have a key choice to make: increase the value of their internet access services to keep pace with cable competitors or lose even more market share.

Back in 2004, cable modem and digital subscriber line internet access speeds were fairly similar (average between 3 Mbps and 6 Mbp), even if cable had a speed edge. By 2006, when cable operators introduced DOCSIS 3.0, cable took a lead it has not relinquished,  while DSL only grew speeds a bit.

Still, as recently as 2013, when typical cable modem connections were substantially faster than typical digital subscriber line connections, and by which time U.S. consumers were showing a clear preference for cable modem service, some might still have argued that DSL was competitive, from an end user experience perspective, with cable modem service.

That seems to have changed dramatically in 2014, as cable operators widely deployed DOCSIS 3.0 systems.

To be sure, many would argue that, in some instances (where access lines are short), G.fast will make a difference, closing the performance gap. Others are betting on fixed wireless using 5G.



DOCSIS version[13]
Initial release date
Maximum downstream capacity
Maximum upstream capacity
Features
1.0
1997
40 Mbit/s
10 Mbit/s
Initial release
1.1
2001
40 Mbit/s
10 Mbit/s
Added VOIP capabilities, standardized the DOCSIS 1.0 QoS mechanisms
2.0
2002
40 Mbit/s
30 Mbit/s
Enhanced upstream data rates
3.0
2008
1.2 Gbit/s
200 Mbit/s
Significantly increased downstream/upstream data rates, introduced support for IPv6, introduced channel bonding
3.1
2016
10 Gbit/s
1 Gbit/s
Significantly increased downstream/upstream data rates, restructured channel specifications
3.1 Full Duplex
TBD
10 Gbit/s
10 Gbit/s
Introduces support for fully symmetrical speeds




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