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9 August 2021

Virgin Media O2 deals severe blow to future prospects for DOCSIS

All eyes were on newly merged UK quad play operator, Virgin Media O2, as co-parent Liberty Global filed its second quarter results, with the spotlight fixed on broadband plans.

Doomsday for the DOCSIS cable technology has been the narrative for some time, as suppliers such as Cisco continue to look on nervously at the roadmaps of cable giants like Liberty, and the announcements about UK plans – now the joint venture between Liberty and Telefónica O2 has been finalized – gave little comfort.

Liberty Global had looked certain to shift a large portion of its UK network infrastructure to DOCSIS 4.0, but has now decided to leapfrog that technology at

Virgin Media O2, and let DOCSIS 3.1 serve its purpose, while pushing fiber deeper into the new fiber-to-the-premises (FTTP) network.

This is a damning one for the cable industry. Cable operators the world over look at Liberty with idolizing eyes, so any small movement of the needle directly impacts network technology stocks, with DOCSIS 4.0 looking certain to take a hit from the latest U-turn.

It now seems that vendors willing to accept that HFC (hybrid fiber-coax) networks such as DOCSIS are destined for extinction, as full fiber completely overtakes this portion of the network, will be best positioned to survive the future of fixed connectivity.

Naturally, decision-makers at Virgin Media O2 and Liberty Global are keen to avoid any pandemonium, instead sugar-coating the move as an overlay rather than a replacement.

Virgin Media O2 plans to enable 1Gbps speeds on its DOCSIS 3.1 network by the end of this year for UK subscribers, with a roadmap to double that to 2Gbps in the coming years. DOCSIS 4.0 could bring ultimate theoretical speeds of 10Gbps upstream and 6Gbps downstream, but Virgin Media O2’s DOCSIS journey will now end at 3.1.

That is despite Virgin Media O2 calculating that DOCSIS 4.0 network upgrades cost about £60 ($83.50) per premise in the UK market, compared to £100 ($139) per premise for FTTP, which it describes as a marginal difference. The plan is to upgrade 93% of its 15.5m homes passed to FTTP (within an unspecified timeframe), which works out at about £1.44bn ($2bn) for FTTP, compared to about £864m ($1.2bn) for DOCSIS 4.0. All manner of other costs need to be factored in here, such as the transition to distributed access architecture for DOCSIS 4.0, but this still makes FTTP way more expensive.

Virgin Media O2’s logic is that FTTP networks have better long term revenue-generating prospects and can future-proof the company’s fixed network business for the next decade.

Media access platform provider ATX Networks conducted a survey earlier this year, quizzing more than 40 operators of various sizes on DOCSIS 4.0. Only 6% said they would never deploy DOCSIS 4.0, compared to 37% which expected to begin migrating to DOCSIS 4.0 in the next 3-4 years. However, with DOCSIS 4.0 sliding out of favor at Tier 1 operators, the hands of the smaller players will either be forced into plunging capital into fiber infrastructure, or have to pull forward their roadmaps for DOCSIS 4.0 to compete with accelerated fiber plans from these larger rivals.

DOCSIS 4.0 brings wider channels and a broader frequency range, as well as extended spectrum technology to bring downstream spectrum to 1.8 GHz and upstream to 684 MHz – creating a large spectrum for data to play with and a foundation for 10G.

DOCSIS 4.0 comes in two flavors – FDX (Full Duplex DOCSIS) and ESD (Extended Spectrum DOCSIS). FDX technology refers to the ability of network devices to simultaneously transmit both upstream and downstream in the same spectrum, specifically in the spectral region between 108 MHz and 684 MHz, while downstream-only spectrum extends from 684 MHz up to 1.2 GHz. ESD technology refers to the traditional frequency division duplex (FDD) mode of operation but extending the upstream-only spectrum up to 684 MHz, while also extending the downstream-only spectrum up to 1.8 GHz.

Operators are leaning towards FDD, which offers cable operators more of a traditional approach to allocating spectrum, while FDX addresses spectrum expansion by enabling traffic to flow upstream and downstream in a shared frequency range. Comcast is a recent major name to have tested a FDD 4.0 device in a lab setting earlier this year, installing a Broadcom system-on-chip in a simulated network environment where it delivered 4Gbps symmetrical speeds.

Virgin Media has been banging the fiber drum since 2015 with Project Lightning, an initiative which has fallen well behind some of the targets set (the pandemic came as a convenient excuse for many operators), so the decision to ghost DOCSIS 4.0 is not a complete surprise. However, the door has not slammed shut on DOCSIS 4.0 within the rest of the Liberty Global footprint, as the operator explores a mix of network upgrade options including wholesale access and FTTP, alongside DOCSIS 4.0.