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Cable MSOs Ponder IP Upgrades to Network

Some cable operators are moving towards Internet Protocol (IP) delivery as a means of offering their customers advanced interactive video services via the cable modem, according to a new study from ABI Research. However the change to IP will come at a cost: most of the customer premises equipment (CPE) provided by operators to their subscribers will have to be exchanged for IP-capable versions.

Principal analyst Michael Arden says that "Existing cable networks only allow quite basic video-on-demand services. They really can't handle high volumes of traffic and bandwidth demand, which limits the size of the content libraries that operators can offer. IP delivery not only moves a lot of the content that's clogging up the multicast network onto the IP network, but the greater bandwidth permits other advanced television services such as online shopping and viewer voting that create new revenue streams for operators."

Of the world's regions, North America and South Korea are the two areas best placed, by virtue of their existing infrastructure and adoption of key DOCSIS standards, to make this transition to IP delivery.

With the exception of a few set-top boxes and residential gateways that have built in support for the current DOCSIS standard used for delivery through cable modems, most of the presently installed base of CPE will have to be replaced to support IP delivery. And when the new DOCSIS 3.0 standard is finalized, all CPE without exception will need replacement, at a cost of up to $1000 per household.

This will create a huge opportunity for dominant CPE vendors Motorola and Scientific Atlanta; they will also be involved in the required upgrades to the cable modem termination systems at the operators' headend installations. Operators may also need new, larger servers and storage in order to handle the larger libraries and greater interactivity that IP-based delivery will allow.

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