MoffettNathanson: Why Charter’s Network Upgrade Budget is Less Than Comcast’s

Comcast is targeting “less than $200” per location to upgrade its network to support higher and more symmetrical broadband speeds, but Charter is only targeting $100 per location with the same goal, note financial analysts from MoffettNathanson. The analysts delved into the differences between what the two companies are planning and speculated about the difference in cost estimates. The number of locations targeted for the two companies are similar – 50 million for Comcast and 55 million for Charter. The key differences between the anticipated costs, according to MoffettNathanson:

• Charter’s plans call for upgrading to DOCSIS 4.0 for only 85% of its target 55 million locations, while Comcast DOCSIS 4.0 plans apparently encompass all 50 million of that company’s target locations.
• The two companies plan to use different DOCSIS 4.0 options. Charter plans to use Extended Spectrum DOCSIS (ESD), while Comcast plans to use Full Duplex DOCSIS (FDX). The former dedicates different frequencies to upstream and downstream communications within the coaxial portion of a hybrid fiber coax (HFC) connection and supports greater capacity on the downstream path. 
• FDX is expected to be less costly eventually because it minimizes the need to make certain additional investments in the network, such as certain taps, but it requires special amplifiers that require further development, particularly if they are to become cost-effective, according to the analysts. As a result, Comcast may need to accomplish its network upgrades in two separate steps, increasing upgrade costs, the analysts speculate.
• Charter already has made greater use of switched digital video (SDV) in its network, eliminating the need to dedicate spectrum to content that isn’t being watched and therefore making more spectrum available for broadband.