How a Predictive Planning Report Can Save HFC Broadband Providers Money Now

Fiber to the Home (FTTH) is not an either/or, it is an evolutionary path.  

To be shortsighted in this venture can end up being more expensive than taking a step back, thinking of the long-term implications of your network, and capturing the lay of the land within a complete analysis. 

Running full steam into a fiber build will not always put your company ahead of the competition. This is a story of the Tortoise and the Hare, not the Flash—who discovers superspeed overnight. 

The Predictive Planning Report (PPR) will assess the investments required to go all-in on new technology, like FTTH, while focusing on the improvement of a hybrid fiber-coaxial (HFC) network to evolve into an FTTH iteration.  

Before seeing a predictive planning report, 70% of providers are confident a fiber to the home upgrade is the only way to accomplish their goals. Afterward, nearly half of those companies understand how extending the life of their HFC plant to evolve into FTTH might be the better option. 

There were so many different styles of assessments an engineer was able to draw from, and it became confusing for prospective broadband providers and operators. To explain the “why” and “how” of evolving a company’s network was tedious and complicated when most providers were looking for high-level answers. 

Thus, the PPR takes those assessments, utilizes CCI’s extensive experience and knowledge base, and rolls the data into one report. Instead of fifteen different options, there is a single, combined solution showing a strategic path of growth. 

How the Pandemic Fueled the Fire 

Throughout 2020 and 2021, the shift into a work-from-home (WFH) culture has encouraged and intensified a panic moment. 

Overnight, HFC broadband providers were scared into thinking an immediate change could become a necessary evil. Every home became an office, a meeting room, and a school zone, and all required video conferencing capabilities with a higher demand for bandwidth. 

As the demand for bandwidth across the nation changed, it’s safe to say every provider with a traditional bandwidth expansion plan to evolve over the next two to three years was forced to condense their plans into one year to meet demand. At some level, every traditionally prepared company was now behind the eight ball at the onset of COVID-19, and most would admit they were simply not prepared to absorb two plus years of bandwidth growth in one year. The reality is not only were short-term plans altered but long-term (five to ten year plans)—regarding moves like FTTH—were also impacted. 

At any rate, a predictive planning report can easily find areas of the network to improve strategically to begin unraveling the evolution into fiber to the home, rather than diving in headfirst without a paddle. 

Competitive Pressures with RDOF Funding

The other point to consider is the competitive environment within the region or market.  

A provider might come up against competition with deep pockets and government funding (e.g. the Rural Digital Opportunity Fund (RDOF)) to support new network architecture or allow for a new entrant into the market within a greenfield scenario. It will be a challenge for existing providers to keep their current subscribers in the face of this new competition. Conducting a PPR is recommended because it is the best way to fend of competitors and evaluate what is the most sensible action to take. 

Under these circumstances, it isn’t uncommon to meet a veteran broadband provider who is experiencing that panic moment mentioned above. They insist on “doing something now” to drive customer satisfaction through better customer support, and they are dead set on the needs and wants of the end user.  

The old saying, “The fastest way to get where you want to go is slowly,” applies here. To match up against the competition, it may seem urgent to take immediate action, but action placed in the wrong area can widen the gap between you and your competition. Completing assessments for your existing network will find the best competitive move to curtail the advances of new providers. 

On the flip side, some broadband providers are the single source of connectivity within their community. There is no competition. So, the main goal of the company is a functional network to serve, support, and keep its subscriber base happy. 

Sometimes, demands from subscribers may be enough to require a broadband provider to make a faster migration to FTTH. If not, underserving the subscribers can allow for another competitive provider to enter the market and overbuild the area.  

Making the Choice Between FTTH Upgrade or HFC Evolution 

Every broadband provider is different. Most companies have their own thought processes and strong suits within their network and on their staff.  

For a company that needs more bandwidth, the immediate answer may be FTTH without looking back. It isn’t that this is necessarily the wrong plan or strategy, but oftentimes, it doesn’t have to be the strategy right now. 

For providers who stick with HFC, the iteration of what the next steps are might illude them. But every company is different from technicians to engineers to owners. Therefore, there will be varying degrees of experience, regarding the technology background the company has, their areas of expertise, whether they operate some FTTH today, or if they are strictly HFC. 

The Downside of Giving Existing Subscribers New Equipment 

On the surface, rewarding a subscriber with new equipment might seem positive, but subscribers want to be rewarded with better service, not equipment.  

Many times, broadband providers will build a FTTH network without taking into consideration the complete cost of building out the new drop plant. It’s common to consider drop plant construction as a success-based cost only for new subscribers, however the costs associated with existing subscribers are often overlooked.  

Because the provider is feeding current subscribers with the current HFC system, the drop and every component is already situated inside the home. However, when they go FTTH, they must build the entire outside plant, thereby forcing their hand into building a brand-new drop and putting an optical network terminal (ONT) on or inside the home. 

Those extra costs do not create any additional direct revenue. Essentially, the company eats the cost of an upgrade for a subscriber who may be perfectly content with their current service offerings. 

There are a few ways to recoup some of these expenditures, like increasing the cost of your speed packages to existing and new subscribers, although typically, that does not sit well with current subscribers. It is important to understand exactly how long it might take to recoup the lost CapEx attributed to new equipment. This is one of the hallmark features of the PPR. 

OpEx vs. CapEx Expenditures 

The other component of a phased, evolutionary approach is weighing capital expenditures (CapEx) against operating expenditures (OpEx) within each potential path forward.  

Consider a broadband provider who has poured valuable time and money into truck rolls servicing an area where the technology is behind the curve. It’s possible to have happy customers but the provider is suffering with finances. In some instances, providers will attempt to make updates while out in the field, replacing outdated amplifiers during truck rolls to kill two birds with one stone. 

Over time, being deployed every other day to hunt ingress, or repair areas of the plant, will begin to show within the company’s bottom line. While this may spot fix a few locations and bring some temporary relief, it typically does not create a scalable practice for employees and many times burns them out. It can also lead to a mixed platform in the plant that does not allow for uniform service offering roll out, making both technical troubleshooting and marketing difficult. 

To relieve stress from on-call technicians and engineers, the PPR can target very specific weak spots in a network to go after that will bring an immediate return on investment.  

To keep your network hearty and healthy for your subscribers, your company can start decreasing OpEx and save money now by eliminating truck rolls. The conversation around CapEx and OpEx will also bring strategic areas to light, not only from a subscriber need but from a technology need. 

How to Conduct Data Analysis Within the PPR 

Every CEO and CFO wants to know the timeline and how the timeline affects their return on investment (ROI). This is the most dynamic part of the conversation because the leadership must heavily consider the financial aspects.  

CFOs can know and believe FTTH is the answer, but the PPR helps define the realized costs of a project. Comparing the project costs of an HFC model with the FTTH model can give valuable insights other solutions do not provide. Putting real, actionable data in front of a CFO is extremely powerful, and it’s the best way to put their mind at ease, no matter which path is selected to use moving forward. 

Predicting Profitability: ROI Model 

From a return on investment (ROI) model, you start with the profitability of the current packages offered by the broadband provider. Considering the profit margin of individual packages will help determine how to get to an achievable, accurate number down the road.  

An example of data analysis for a report would be taking the profitability of a 25-Mbps, 50-Mbps, or 100-Mbps modem from a company, then analyzing the profitability of their video service and the profitability of their telephone service. Once everything is rolled into a single report, it helps depict what the month-to-month profitability is on a per-modem basis and provides an understanding of how the company will pay back any of the potential upgrade paths at a later date.  

Different paths forward will typically lead to new service offerings, which in turn may have new profitability outcomes compared to the existing system. The only way to truly find the ROI on a project is to fully compare all the investments and returns of each future option. 

The final PPR presentation unveils the report complete with the serving areas of the entire network, and the total project cost with every iteration at each location. This shows a complete cost architecture with an itemized timeline to get it done. 

Proof is in the Network Report 

By using a predictive bandwidth analysis on the system and showing the traditional line of growth for bandwidth consumption through the CMTS or any delivery system the company has in place, a growth pattern will become distinguishable to then support the future timeline. 

Walking through the report and explaining how the numbers are determined leads to an understanding and transparency to prove the effectiveness of the phased approach.  

For some networks, a phased solution might be the best solution, whereas other networks may need to jump straight into the FTTH upgrade. This greatly depends on the health of the network as it exists today. 

Creating a Realistic Timeline for FTTH Evolution 

When you start with the basics and see the network as it stands today, you are quickly able to rationalize timelines, discuss the reality of the situation, and make accurate projections of a network’s evolution.

Determining how to get FTTH now can force providers to seek immediate solutions to speed up the timeline. However, this can lead to indecision or impulsive decisions to justify the FTTH urgency. All timelines are dependent on the findings of the predictive planning report. Extending the lifespan of your existing HFC can take a provider 7 years, 10, years, even 15 years down the road before FTTH is absolutely necessary. This allows for a slower migration than initially thought possible.  

During the evolution toward FTTH, taking a step back and realizing the potential of updated HFC technology allows providers to work toward their end goals more responsibly, save money, and execute package upgrades offered at higher price points. As new packages are launched, these new revenue streams provide an opportunity to push a full FTTH upgrade a few years out and consider what the smartest route is without feeling rushed into an expensive upgrade.  

It is important to note, a progressive HFC to FTTH evolution is NOT the best route for every broadband provider. Sometimes going to FTTH immediately is 100% warranted. Many different factors and variables can affect your FTTH strategy and rollout, and no single provider is the same as the next. 

Gather Your Data and Get Started

Building a path toward fiber to the home is the smartest thing a broadband provider can do. Developing an evolutionary chain allows a company to prevent overspending associated with ripping out a capable network and reinventing the wheel on a gut feeling.

A phased, step-by-step HFC to PON approach may offer the difference between a short-term 100% investment or a long-term 70% investment to get to the same desired result. 

CCI’s PPR is unique with a prognostic aspect that other reports do not have. A report projecting future predictions for bandwidth needs is uncommon.  

While broadband providers often have an instantaneous bandwidth usage report to gain some visibility into their network, this is merely a “snapshot in time” detailing day-to-day data collection, based on historical information. CCI uses historical data to predict the future demands that a broadband provider’s subscribers will require of them. 

 With the help of the experts at CCI, the old days of throwing strategies at a wall to see if they stick are over. The predictive planning report can determine how to extend the life of the HFC plant for a much longer period than first thought possible and decide if it is right for you.  

The report can prove that you, as the provider, do not HAVE to do it all once. 

Let CCI advise you with transparent numbers, data, and information, and no matter what you choose, we’re here to help you get it done.  

If your company is interested in exploring the evolutionary path from HFC to FTTH, contact an expert today for a full analysis of your network. 

🎙️ Listen to the entire HFC vs. PON and Predictive Planning podcast with Chad Kay now.