DEFINITION & SURVEY:

Residential gateways (RGs) combine a DSL, FTTH, cable or 3G/LTE modem with routing and switching capabilities and a WiFi access point, and are increasingly used by service providers to deliver voice, data and video services. For example, this author has a RG for AT&T U-verse, which includes a VDSL modem, WiFi AP for home internet use, and a separate WiFi bridge/ private network for U-verse wireless receivers.

IHS-Infonetics conducted in-depth interviews with service providers across the globe who use residential gateways to provide broadband services and found that only 31% of respondents plan on virtualizing their residential gateways by 2017.

RESIDENTIAL GATEWAY SURVEY HIGHLIGHTS:

• 75% of respondents currently offer Gigabit Ethernet connections on residential gateways, growing to 88% in 2016.
• Among the wireless interfaces IHS asked about, 802.11ac shows the most growth, with 69 percent of respondents saying they plan to include it in their residential gateways by next year.
• Consistent with last year’s findings, Arris topped the list of perceived top residential gateway vendors, followed once again by Pace.

Analyst Quotes:

“Despite the obvious benefits of virtualizing residential gateways in the home-namely shortening of provisioning time and elimination of truck rolls-our survey respondents aren’t completely convinced it’s something they will implement in the next couple of years. Nearly 70 percent said they weren’t planning on doing so or didn’t know if they would be virtualizing their gateways by 2017,” said Jeff Heynen, research director for broadband access and pay TV at IHS.  

“Unlike the data center, where virtualization has been in place for some time, it will take longer for service providers to virtualize their residential access networks and CPE,” Heynen said.  

SURVEY SYNOPSIS:
The 25-page 2015 “IHS Infonetics Residential Gateway Strategies and Vendor Leadership: Global Service Provider Survey” captures service providers’ strategies for deploying residential gateways and delves into which applications will be the primary drivers for residential gateway deployments. The study also covers service provider opinions of manufacturers including Actiontec, Alcatel-Lucent, Arris/Motorola, Comtrend, D Link, FiberHome, Huawei, Netgear, Pace, Technicolor, ZTE, ZyXel, and others.

Separately, IHS Infonetics said that softness in cable broadband equipment spending seen in the first quarter of 2015 continued into the second, with global revenue dipping 2 percent quarter-over-quarter, according to IHS. Traditionally, the second quarter has been a very good one for cable broadband expenditures.

“Right now, the cable broadband market is like seeing the forest for the trees. The second quarter of the year was slower, but looking at year-over-year revenue comparisons, the market grew by double digits. There’s no question that the continued rollout of 100Mbps+ services via DOCSIS 3.0 today and DOCSIS 3.1 later this year will continue to drive the market forward. There are committed initiatives in place at Comcast and Liberty Global, with others certain to follow as the year progresses,” said Jeff Heynen, research director for broadband access and pay TV at IHS.

In an email, Mr. Heynen wrote to this author: “First, let’s make sure we are talking specifically about the cable broadband CPE market only (DOCSIS modems, etc.) and not the CMTS/CCAP business, which is network infrastructure. If we are comparing revenue for just DOCSIS CPE (no set-top boxes), then pre-Motorola ARRIS had around a 20-25% market share in terms of global revenue, compared with Cisco’s 15-20%. Once ARRIS gobbled up Motorola Home, its global revenue share jumped to 35-40%, while Cisco’s stayed at roughly 15%.”

Author’s Note on Arris:

In an email, Kim Howard, IHS-Infonetics Marketing Manager (and this author’s principal contact at the firm) wrote:

“We’ve been tracking ARRIS for as long as I can remember. The report I looked at goes back only to 2005, but we have older data too.   At that time, ARRIS’s cable broadband equipment revenue was only about a quarter of Cisco’s, but then they pulled ahead of Cisco in 2009 by a bit.”

From an April 13, 2010 Forbes article:

“Time Warner Cable and Comcast have increased their business offerings through Arris. Arris has upgraded its modems to the latest DOCSIS 3.0 technology which supports higher broadband speeds up to 100 Mbps. Cable operators like Comcast and Time Warner Cable are now offering higher broadband speeds through Arris modems.”

In April 2013,  Google sold its Motorola Home business to Arris. (Google later sold it’s Motorola mobile handset business to Lenovo). Motorola Home covers cable TV modems/set top boxes and internet devices, which combined with Arris’ existing businesses creates what it’s calling “the Premier Video Delivery and Broadband Technology Company.”   

In a June 10, 2015 report IHS-Infonetics said “ARRIS dominated the cable broadband market again in 1Q2015, supported in part by the early availability of its E6000 CCAP-capable product.”  

CABLE BROADBAND MARKET HIGHLIGHTS:

• Global CCAP, CMTS, CMC and edge QAM revenue totaled $465 million in 2Q15
• In the key North American market, DOCSIS channel shipments were down 25 percent sequentially in 2Q15 after increasing 13 percent in 1Q15; revenue was also down 19 percent due to a slowdown among a handful of larger operators
• Coax media converters are being used in emerging markets, particularly China and Southeast Asia, to provide lower-cost C-DOCSIS services to multiple dwelling units; IHS expects this trend to continue through at least 2019
• Thanks to the early availability of its CCAP-capable product, Arris dominated the cable broadband market once again in Q2, capturing over half of worldwide revenue

To purchase any of the IHS-Infonetics reports, please visit www.infonetics.com/contact.asp

WEBINAR: CABLE SERVICES IN THE CLOUD ERA
Join Jeff Heynen Sept. 29 at 11:00 AM ET for Delivering Cable Services in the Cloud Era, an event examining how virtualization will impact the MSO network and looking at key residential and commercial offerings enabled by NFV and SDN. Register here.