CableLabs and SCTE/ISBE to Merge as Insular Cable Industry Consolidates

Emir Halilovic, Principal Analyst

Summary Bullets:

  • CableLabs and SCTE/ISBE signed a letter of intent to combine, with the process likely to be finalized in December with the expected endorsement by thousands of SCTE/ISBE members.
  • The move marks yet another sign of cable industry consolidation, itself a product of impending cable MSO technological transformation.

The two largest R&D engineering houses focused on innovations for cable operators announced plans in November to join forces.  CableLabs, whose membership comprises only cable system operators in the U.S., Canada, Mexico, Central America, South America, the Caribbean, Europe, Asia, and Australia, announced it will align with the Society of Cable Telecommunications Engineers/International Society of Broadband Experts (SCTE/ISBE), which represents both operators and vendors.  In point of fact, the two bodies have complemented each other’s work for a long time.  The merger is supposed to bring the two constituencies closer together and accelerate the pace of commercialization of new standards – primarily the impending introduction of symmetrical 10 Gbps services (or 10G for short).  After the combination, SCTE/ISBE will become a subsidiary of CableLabs on January 1, 2021.  The activities of the two organizations will continue virtually unchanged though, and SCTE/ISBE will continue to offer memberships to potential members not affiliated with CableLabs. The combination signifies that the already insular cable industry is coming even closer together.  However, as the technology landscape outside of the cable ecosystem changes rapidly, further focusing of the cable sector might not be the most important change the industry needs.  A number of technical and non-technical challenges will continue to loom:

  • Competition: Particularly in the U.S., the cable industry has been shielded from competition for a long time, when it comes to both content distribution revenue streams and its broadband access business. As the traditional cable content distribution business continues to wane and broadband access options continue to multiply, cable operators and their vendors have to keep the pace with innovation in parallel technology sectors, like fiber access and fixed-wireless, and find the way to profit from cloud, edge computing, and 5G mega-trends.
  • Virtualization to Containerization: The race to 10G and faster adoption of DOCSIS 4.0 is one facet of the effort required, but much more work will be required to promote more aggressive virtualization of cable MSO infrastructure, along with automation and introduction of software-defined networking across MSO network domains.  The effort to adopt technologies used at scale in the telecom industry at large and in webscale infrastructures is not only beneficial for cable operators; it is vital.
  • Velocity/Time-to-Market: The cable vendor space overall has seen sizeable losses over the past few years, as the pace of network transformation in the cable industry slowed.  The ongoing consolidation of cable technology vendors threatens to increase the cost base of cable access and further lower the profitability of cable MSOs.  Faster introduction of mainstream telecom and webscale technologies can both foster competition and increase the pace of innovation in the cable industry.  

Cable industry organizations such as CableLabs and SCTE/ISBE and their constituents should recognize this need and work to expand the cable supplier ecosystem and take advantage of improved economies of scale by adopting technologies used in fiber access and webscale infrastructures.  Further closing of the ranks might lead cable MSOs in the direction of their European brethren: fading into insignificance and getting swept up as an asset to complete much wider fixed/mobile telco strategies of multinational telcos.     

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