HFC vs. PON and Predictive Planning (Make Life Better)

Director of Outside Plant Services, Technology, and Consulting at CCI Systems, Chad Kay, discusses the highs and lows of return path upgrades, what operators will do moving forward.



A topic continuing to come up within telecom is upstream bandwidth.

The home has become a classroom, office space, and a literal hub of unlimited data needs, because of work from home and learn from home initiatives. For many service providers and operators, this sudden shift in the needs of their customers has influenced a push for increased speed.

When do you flip the switch and jump from HFC plant to fiber-to-the-home, PON, or a hybrid solution? The answer isn’t so black and white. It is custom to the situation.

Start with the customers’ needs. Work through the technology, as far as what are they providing today, and what they must provide tomorrow.

Fiber resources are facing logistical headwinds and logjams, which ultimately cause delays in a new build. In the interim, it may be wise to consider developing the system as it is today to lead into fiber-to-the-home, i.e. HFC progressing toward fiber-to-the-home.

CCI Systems has the tools to create custom solutions to save your company money, time, and retain your reputation with your customers. Our predictive planning report can craft the right solution for your company, and it provides insights that can generate interest from an engineer to the CEO.

Watch the entire episode for all the details. (Transcript has been edited for clarity.)

 

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Transcript

Joe Smith (00:10): All right, everybody. Welcome to the “Make Life Better” podcast. I'm Joe Smith, and today, we're talking about a very interesting question. We've done this one before, but it seems to last the test of time. That's talking about upstream bandwidth. If you're a service provider that has HFC plant, and you're struggling with how much fiber-to-the-home (FTTH) / PON network you're going to put into that plant, that's been a conversation that's just been going on and on. And then, we went through this thing called a pandemic with COVID-19, and the need for upstream bandwidth for all of us—including me—who are working from home, and now, actually broadcasting from home. That adds a little weight and makes the need for upstream bandwidth a little bit more important. Does it not Chad Kay from CCI Systems?

Chad Kay (01:04): Correct, Joe. When you think about it, and when the pandemic came through, take every provider out there and take their three-year planning and squash it into one year. Talk about the amount of stress that's going on in the world right now. Now that people are in this quagmire of, “Am I going back to the office. Am I staying home? What am I going to do?” Operators are kind of chasing their tails right now, and I feel their pain. I can see where the problems lie. 

Joe Smith (01:32): That's exactly right, and I think you and I spoke about this before in the past. By the way, Chad Kay, Director of Outside Plant Services, Technology, and Consulting here at CCI Systems, joining us for our podcast, the “Make Life Better” podcast, here today. Thanks, Chad, for coming aboard. You've done so much wrapped around this topic, and that's why we wanted to jump into it. What are you starting to see out there? We touched on it briefly that the pandemic has really put the emphasis on upstream bandwidth, but just bandwidth needs, in general. Whether it's you and I working from home, or a lot of kids in the house that used to be at school, so the devices are on fire in some of these houses, which creates the need for bandwidth, like it's electricity in the day, right? You have to have it. 

Chad Kay (02:21): Well, think about it, right? You took every kid, and you took them out of the classroom, and now, every home becomes a school. Then, you take the parents, and they have to work from home, so it's not only a school, it's also an office space. Every residential customer became a hub. What else? How else do you explain it? They literally became a hub of just unlimited data needs, an unknown for a lot of customers.

Joe Smith (02:47): Yes, I know if our bandwidth is down or our service is out, I'm in trouble. I start unplugging, I unplug everything from the wall, that's what I'm always told. Just reset, reset, and get going. So, Chad, service providers; I know CCI Systems actually owns their own service provider as well, so this is a topic that you're very familiar with from the operator’s perspective, and from the CCI system side where you do a lot of those types of consulting engagements, outside plant assessments, needs. This decision between (as an operator) how long do I continue to utilize the benefits of the HFC plant when either my competition is putting in fiber-to-the home and/or my customers’ demanding it because we need the speeds? Are their operators still confused or struggling with those decisions on when do I flip that switch or is it an and/or situation?

Chad Kay (03:49): It's funny, you mention it, right? We started off with the whole, we condensed a three-year into one-year strategy, where people had a customer comfortable, a customer had a comfortable approach to a three-year strategy that got condensed into one year. Hence, everything has to speed up, and they’ve got to get caught up. For a lot of providers, they weren't prepared. They had the runway, prior to this. Now, they don't. Now, they have that need that has to be escalated. What do I do? Do I put it into the HFC plant? I think you stated the question perfectly. Or do I go fiber-to-the-home or some sort of hybrid? The answer is it's really custom to their situation. And the reason why I say it that way is because start with the customer's needs and work through the technology as far as what they're providing today. What do they have to provide tomorrow? That's really the question.

Chad Kay (04:38): Let's just take a scenario, and just say this. I make a decision I'm going to go fiber-to-the-home. Well, anybody out there listening, this is going to know that I go for fiber resources to build a fiber plant. I'm two years out just from the from the actual material aspect of it have, I got to order fiber and it's not a very Or, and then also, let's look at design architecture is going to take about six months to put together. And then oh, by the way, I got to do brand new installs on all my customers, we're looking at a two-to-three-year strategy. Even if I make the decision that I'm going to go fiber-to-the-home, I still have three years, I'm leaning on that HFC plan. So, our customer is confused. And do they know what to do? Well, I think they have a lot of choices in front of them. But that confuses them. Right.

Joe Smith (05:25): I know, I would think that when you and I were prepping for this, I was taken aback thinking about how there are extremely smart operators all across this land. And the Comcast's of the world, they've made a lot of those decisions, but they're also getting a lot of that material right now. One of the things that stood out was you could have as an operator of, I don't know, 10,000 subscribers and/or above—somewhere in between—and had a good plan. And then, all of a sudden you get to now, and fiber is drying up, like you said, right? A lot of their components, parts, technologies, pieces, everything from—you name it, is way out. You just said fibers. How far out if you ordered today?

Chad Kay (06:11): A year, easy, if you were putting in an order today. And that's depending on how much and what quantity do you want.

Joe Smith (06:19): If you were an operator and made a plan two years ago, realistically, could it have just changed because of supply issues?

Chad Kay (06:25): Absolutely.

Joe Smith (06:26): You could’ve went: I'm going full fiber-to-the-home, I'm funded, and you're just like, “I'm a year off from now doing that.” What do they do? That’s what I'm, I guess I'm just amazed, like, they have to make a decision on the fly based on what?

Chad Kay (06:40): Oh, based on what they're providing their customers today, and how much they want to put into it, and how deep down that rabbit hole they want to go. If there weren't orders placed today, obviously, the people in industry know that it's going to take a year to get fiber here. How can I best suit my customers in the meantime? That's really where we're coming in and leaning in with, doing some of the—you touch base on some of the assessments that we do. We've actually rolled them into a bigger, what I would consider is a predictive planning report that actually pulls it all together. And what we had to do from our standpoint… (Now, understand it's me and a team of engineers, so we can get real nerdy, real fast, and we can geek out on stuff, right?) But, what we had to do is put ourselves back into the customers chair, and say, “Okay, this is all great guys, and yeah, we can do all this stuff technology-wise, but what does it cost? And how far down the future am I going to go with this thing? And that was really what we had to do. We had sit in their seat for a while.

Chad Kay (07:40): We actually took this report to make it more along the lines of, “How far will this technology get me?” And then, actually lean in and say, “Okay, how much does it cost and what's the payback on that technology?” Now, don't get me wrong, there's a lot of it that is compared to fiber-to-the-home, but it also takes into consideration that if that is your strategy, and that is your plan, we want to help develop the system as it is today to lead towards fiber-to-the-home. One of the biggest misconceptions is it's either HFC or fiber-to-the-home. It's not one or the other, it's really how you can actually lean in and say, “HFC progressing towards fiber at home.” And that's kind of our messaging that we've really come to understand from doing these reports and working with customers. It's just getting them to understand that you're taking those evolutionary steps to get to that essential fiber-to-the-home. Now, is that in three years, five years, seven years, ten years…? Well, it depends on the situation they have to date, how much money they're going to put in the system, and how fast they really want to get towards the services they want to provide. Because everybody says, “This is the tip of the spear. We want to future proof this thing, we want to make sure we don't touch it for a while.” Well, what do you want to provide your customers? It's really your customers need that dictates that technology that you need to have.

Joe Smith (08:57): Got it. So, a lot there to break down. One is, early on you had mentioned the team, and so, you and I have been at this for quite a while (and I think maybe you even longer, although it's not based on our haircuts or the ability to grow hair), I think we both have been doing this about 25 to 30 years within this this industry. Knowing CCI like you do, and I do, it's unique as far as like… you brought up the predictive planning report (and we're going to get into that), but a tool is a tool and a spreadsheet’s a spreadsheet, but what goes into that? Just talk about that a little bit like… What does that team look like? It's not just a couple of consultants, it's engineers.

Chad Kay (9:39): Oh, it's engineers. It's technicians. It's doing a deep dive into the system. Just take any customer that would be listening to this right now. What does it look like from their perspective? We start with the very simplest of tools, the predictive saturation report. And why is it called a predictive saturation report, versus just saturation, is that people look at that instantaneous data result from the CMTS [cable modem termination system] on how much it's using upstream or downstream. But this actually predicts out two-to-three years and forecasts the usage, and the unique part about is… We keep talking about customer's needs, well, everybody's upgrading speeds, because of the pandemic, we kind of talked about that… That report, in general, predicts out to three years to show what that usage would be per service group on a CMTS. It leads them down that path as far as what the CMTS needs would be to support an HFC architecture. Once we have that, that's where the engineer aspect comes from.

Chad Kay (10:39): From an on-site perspective, we send our engineers to your site, and they do the deep dive into the plant. How's it running today? What is the cable like? As far as, think about it, there's 20-to-30 year old cable out there that a lot of people really are throwing the question out there, do I want to put another upgrade on this old cable system? That's what we're doing the deep dive into. We're looking to see what the quality of that cable is and how much of it really can stand the test of time, or does it need to be replaced? And then with the existing technology that we're digging into, we’re seeing what steps make sense as far as breaking down cascades, putting more fiber out there. We touch base on not either/or, leading to. If we're going to put fiber into the system, let's look at going fiber-to-the-home, and let's put that into that planning that we've been talking about. You break that all down, that's great for like anybody who's techie, savvy out in the field listening to this, they're going to be like, “Yeah, that makes sense. Okay, cool.” But, when you talk about a CEO, and a CFO, they want to know two things: how much is it going to cost and when is it going to pay itself back?

Chad Kay (11:48): And that's the other part of this report when we collect all the data. Throughout the years at CCI, we've really broke down some pretty cool budgeting tools that can show us the construction cost, the material cost, and the labor cost that goes into all this. By using several different tools that we have crafted for ourselves, we now put that into this report, so we can break down those solution sets, and then show it show the CFO, show the CEO. Okay, your guys are happy over here, and they pick something, but we want to show you this graph, and that's pretty much the ROI graph, the return on investment. And that's where we break it down for them to show them this is what it's going to take, this is the cost, this is what you can do as far as provide for your customers, and here's the return on investment. The unique part about doing this predictive planning report is it breaks it down for everybody. Like I said, we really had to get out of our own comfort zone and get into that provider aspect, so that we can actually show people that: yeah, we know this, we provide, we do this same thing for our own customers, and we need to actually be able to provide that for other people in the same situation.

Joe Smith (12:55): And for those of you that are listening on Spotify, or any of the other platforms that this podcast is broadcasted on, come back and check us out (the video portion) through the website and other tools, and see the tool. We’ll have examples that Chad was just talking about onscreen, so if you want to get a glimpse of that, please check back there. Chad, you mentioned who this report is for; it’s CEO, CFO, engineering, kind of everybody, And when you get a chance to look at the tool, that predictive planning report, you're going to understand what we're talking about in more depth. And you and I have spoken before, but examples of customers when they look at that tool and different portions of it. Per your experience, when you sit down and go through the results, are there some moments where they kind of chuckle and say, “Holy cow! I didn't realize that.” Because you talk about getting into underground conditions, aerial of the outside plant…

Chad Kay (13:59): It’s everywhere, right? It just covers all the bases. And is it eye-opening? Absolutely. I've gone through— I'll give you two scenarios: one customer was really just kind of where we started this conversation off, that is saying they didn't know which way to go, and really needed that help and that guidance. We did it from that perspective…

Joe Smith (14:18): Sorry to interrupt, but which way to go from a PON-HFC, or an aerial underground…?

Chad Kay (14:23): Honestly, like, their hands were tied, and they didn't know if they could use anything in their HFC, so they really wanted us to come in and prove or disprove the HFC could get them to the next five years. They knew fiber-to-the-home was a way to go, they just didn't know what they could do on the HFC side of life. And is it even viable for their customers? By doing this report, it was really eye-opening, because let's face it, everybody has been taking care of their plant for the last 15 year, 20 years. They might not be up to speed with the technology that's out there, where we have that that cutting edge, we're seeing that every day, so we can come in and consult and advise appropriately, if it makes sense for them. It was very eye-opening. They're like, “Oh, wow, we didn't realize we have this many options in front of us. We thought HFC was tailoring off.”

Chad Kay (15:11): The other side of the report is it can be a little resistive at times—and I'm kind of giggling because I'm thinking of the two, three people I've done this with— is that “I'm going fiber-to-the-home. I don't know why you guys are wasting your time with this. There's no reason for this,” or “We don't want to touch this for the next five to seven years.” And we come in with the stats—and it's not to show that how costly fiber-to-the-home is—it's more along the lines of showing you, “Hey, HFC can do what you want it to do to a point.” Obviously, we all know the technology is changing, but the unique part about it is it opens their eyes on the cost aspect of it, and the potential upgrade capabilities that they're offering today. Again, talking about the technology and everything around it. The CEO and CFO goes, “Well, yeah, I don't want to spend that kind of money right now.” That might not be a bad steppingstone, right? Like you said, it's not an either/or, it's a steppingstone. Understanding the steps to get to fiber-to-the-home—sometimes, it's more costly to look at it that way. 

Joe Smith (16:08): Well, and we've seen, and this is real, where some operators have come into a situation like you've described, and it blows their mind that they just save twenty million dollars, depending on the size. And that's not exaggerating, where they extended the life of their HFC plant. Of course, they use the fiber technology and PON in new areas, in different areas, but they continued using the HFC in a competitive environment (the one I'm thinking about), and held on a bit longer, and stretched their dollars further. And as we spoke about in the beginning with the shortage of fiber and different things, It could be well-intended, but you may have to make a little right turn for the next couple years to keep things going at a pace that your customers expect.

Chad Kay (17:00): Yeah, absolutely.

Joe Smith (17:03): A couple of times you had mentioned, also, I keep going back to that construction piece of the report, because I think that is some of the unique portions of that end-to-end report is… You go town by town, area by area, and you've been grilled before by customers saying, “No, no, no, no. How did you come up with that number and why is that one more costly than this?” And it does get into some of those actual construction type costs, correct? 

Chad Kay (17:27): Oh, absolutely, and it gets right down into the weeds. And we don't want to bore everybody to tears on it, but in reality, it may be something along the lines of where I'm using a loaded cost from contractors I know, and they may have buddies of theirs that do it for a cheaper rate. So, we break it down into their numbers. On the first initial review, we're doing a construction review and a technology review. Because a customer out there may have better cost than say the-guy-down-the-road because they're just using their neighbor, or their buddies, or they can do it on the weekends, right. I've heard all scenarios that come along with it. But in truth, they need to know the true costs, so we try to load that and then do that review. This isn't going to be just something we pitch over the fence, and just say, “Here's your report,” and then move on. It's more along the lines: we want to walk through it, we want to get it right down to the actual budgetary items that they can plan on, and that's what we're really looking forward to, is helping folks out there with this tool and get it done. Get it done for them.

Joe Smith (18:26): Sure. And that tool and report is used for multiple years and updated as they go and adjusted. From your experience and what you've told me, it's becomes quite a valuable tool, almost like another person on your staff to help you guide you through the reality of the situation.

Chad Kay (18:44): Well, when we've done this for several customers now, they've actually put it as calendar marks to say, “Hey, we need to review this with CCI and make sure that our numbers are holding true.” And they can budget and plan accordingly, plan for the next two to three years. If you told me today that you could tell me what I'm going to be doing for the next three years, I'd be happy.

 [Laughing]

Joe Smith (19:08): Exactly. Very clear. One thing Chad, we said in the beginning it really isn't about PON or HFC or pushing one or the other. And tell us a little bit about how the decisions are made. Like, there's just clear numbers and strategy that goes into this. And that mentality that you bring, and a little bit about the passion of how you evolved this report into what it is today.

Chad Kay (19:36): To be honest with you, it's like we said earlier, we had all these reports that were real, real tech savvy data deep dives. And it's not for everybody to sit there and review data sheets and go through PowerPoints and listen to stuff that you could fall asleep to pretty fast, right? We had to get to a point where it was more informative, but didn’t lose the tech savvy aspect of it, right? You can hear the passion in my voice when I talk about it because all of a sudden people are listening, they're attentive, they're leaning into the conversation, and saying, “Why did you choose this one? Why did you choose this?” And it's fun because now it's not only telling them about their system, but it's educational. They want to know more, they're craving it. Having that two-way conversation is super engaging.

Joe Smith (20:24): You’re challenging, at times, the strategy of your customer, or the operator, based on the numbers. That's what I like. It doesn't come down to what you or CCI wants the operator to do, it's just based on these numbers, these costs, and the technology available to you. You may want to consider more HFC, less HFC, more PON—everything after that is after that, let's make that decision, and make sure they align with your strategy.

Chad Kay (20:52): Absolutely. And who can argue with numbers, right? That's the best part, right? Because you're almost coming in with the ace up the sleeve saying, “Okay, I know your system. I know what the numbers are telling me. Okay, let's have a conversation. Let's start talking about what's best for your future.” Through the educational consultant standpoint, it's really getting a course correction, so it's almost like the satisfaction at the end of the day, like you did something to help somebody, it's really what it gets down to. You're helping someone make a very important decision for their future, so it really feels good at the end that day when you deliver one of these things.

Joe Smith (21:28): And who can argue with the numbers, I know your coworker Nate Czerwan could probably argue with the numbers as long as it's come from you.

Chad Kay (21:36): I apologize for anybody who's ever worked with us before, because we are The Odd Couple. We have gone toe-to-toe, on a customer's behalf, all on a positive. I mentioned that positively, but it's literally, we're looking at the black and white scenarios nonstop for them. So, it's always been fun. And then, of course, they always get a chuckle from the end of it because it's like, “Yeah, you guys have been together way too long.”

Joe Smith (21:59): Well, it's a great debate on their behalf. We do hash that out before we get in front of the customer, and it's very healthy. If you've been to the NCTC show in the past, The Independent Show, you've definitely, likely, run into to Chad before, along with Nate. Chad is going to be there again this year, The Independent Show from the NCTC coming up the week of October 4. And this topic is really good, just because we already have a couple things set up at that show. Our very own Todd Gingrass will be participating on a panel, and lo and behold, the title of that session is “Deploying Fiber: HFC vs. PON”. And then, we're going to be hosting a users’ group as well, I think that is on… actually Monday, October 4. We'll have more information coming out on that as well.

Joe Smith (22:50): But we do encourage you if you're at the NCTC show to make sure you go talk to Chad, see the tool. We’ll have it at our booth, and he will be more than happy to walk through the steps, the process, to get there. Now, if you can't wait until October to jump into more of what Chad is talking about and get some specific examples, after you see what you see on this podcast, and if you go look at the video, please email us. Get ahold of us at ccisystems.com and we'd love to start having that conversation. Chad can't wait to talk about this with anybody and everybody he can. Chad, as always, great to see you.

Chad Kay (23:34): Yes, thank you so much for the time today, Joe, and encourage anybody to reach out at any point in time. Thanks for the time. You bet. 

Joe Smith (23:40): You bet. We’ll make sure we keep sending more snippets of this out with that, so it won't be hard to find you, Chad, and we look forward to seeing you at the NCTC. Very good. At CCI, our mission is to make life better for all that interact with us. This is the “Make Life Better” podcast. I hope you enjoyed it and come back again to discuss our answers to top-of-mind questions you're asking each and every day.