DOCSIS 3.0 -- An Opportunity to Reinvent the Cable Business Model

In the broadband battle, cable operators were the early leaders, boasting faster speeds than the DSL service offered by their telco counterparts. However, as the telcos launch their ultra-fast fiber-to-the-home (FTTH) services, such those offered by Verizon and AT&T in the U.S.; FastWeb, Telefonica, and TeliaSonera in Europe; and Korea Telecom and PCCW in Asia, cable risks falling behind, hampered by its bandwidth limitations. DOCSIS 3.0 promises a way for cable operators to counter the telco threat by providing faster speeds to the end user—up to 160 Mbps downstream and 120 Mbps upstream—offering a more cost-effective approach for cable operators to compete and win against FTTH service providers with ultra high-speed data delivery. However, long-term success depends on going beyond competing on speed and focusing on using the extra bandwidth to create truly compelling offerings. DOCSIS 3.0 can help cable operators take that step by providing not only the necessary bandwidth, but the opportunity to truly differentiate their services by delivering high-definition digital entertainment and broadband services. However, without proper management DOCSIS 3.0 threatens to cannibalize existing cable revenues, as television networks explore over-the-top Internet distribution deals with content delivery networks or deliver content directly via the Internet. It also threatens profit margins, as the marginal cost of adding network bandwidth will not be covered by the marginal revenue. To take advantage and fully leverage new network technologies and opportunities, MSOs need to look at their existing OSS and billing environments and assess whether they can support these next generation services. Cable back office systems have historically been heavily customized, often in-house solutions that were generally developed to address a specific service or geographic region and designed to support static services billed on a flat-rate basis. Transforming these systems to support a new business model is a complex and challenging undertaking; however, those operators that succeed in this effort are rewarded with increased revenues, reduced operational costs, and stronger customer relationships.