Next year’s upgrade to DOCSIS 3.1 will support cable broadband speeds up to one gigabit shortly after introduction.

Telephone companies relying on traditional ADSL service to power their broadband offering will likely face a renewed competitive assault in 2016 that will further reduce their already-challenged market share in areas where cable companies compete.

Cable operators are hungry for profitable broadband customers and the best place to find new prospects is at the phone company, where DSL is still a common technology to deliver Internet access. But while cable Internet speeds have risen, significant DSL speed hikes have proven more modest in the residential market.

In 2016, the cable industry intends to poach some of the remaining price-sensitive holdouts still clinging to DSL with revised broadband offers promising more speed for the dollar.

Cable broadband has already proven itself a runaway success when matched against telephone company DSL service. Over the last year, Strategy Analytics found Comcast and Time Warner Cable alone signed up a combined 71 percent of the three million new broadband customers in the U.S.

“Cable operators continue to increase market share in U.S. broadband,” said Jason Blackwell, a director at Strategy Analytics. “Over the past twelve months, Comcast has accounted for 42 percent of new subscribers among the operators that we track.  Fiber growth is still strong, but the telco operators haven’t been able to shake off the losses of DSL subscribers.  In 2016, we expect to see a real battle in broadband, as cable operators begin to roll out DOCSIS 3.1 for even higher speed offers, placing additional pressure on telcos.”

That battle will come in the form of upgraded economy broadband plans, many arriving shortly after providers upgrade to the DOCSIS 3.1 cable broadband platform. Currently those plans offer speeds ranging from 2-6Mbps. Starting next year, customers can expect economy plan prices to stay generally comparable to DSL, with promises of faster and more consistent speeds. A source tells Stop the Cap! at least two significant cable operators are considering 10Mbps to be an appropriate entry-level broadband speed for 2016, in keeping with FCC chairman Thomas Wheeler’s dislike of Internet speeds below 10Mbps.

Just a few years earlier, most providers wouldn’t think of offering discounted 10Mbps service, fearing it would cannibalize revenue as customers downgraded to get lower priced service. Increasing demands on bandwidth from online video and multiple in-home users have gradually raised consumer expectations, and their need for speed.

Unfortunately for many phone companies that have neglected significant investment in their aging wireline networks, the costs to keep up with cable will become unmanageable unless investors are willing to tolerate significant growth in capital expenses to pay for network upgrades. Frontier Communications still claims most of their customers are satisfied with 6Mbps DSL, neglecting to mention many of those customers live in areas where cable competition (or faster service from Frontier) is not available.

Where competition does exist, it’s especially bad news for phone companies that still rely on DSL. Earlier this year, Frontier’s former CEO Maggie Wilderotter admitted Frontier’s share of the residential broadband market had dropped to less than 25% in 26 of the 27 states where it provides service. In Connecticut, the one state where Frontier was doing better, its acquired AT&T U-verse system has enabled the phone company to deliver broadband speeds up to 100Mbps. But even those speeds do not satisfy state officials who are seeking proposals from providers to build a gigabit fiber network in a public-private partnership.

DSL speed upgrades have been spotty and more modest.

Frontier’s recent experiments with fiber to the home service in a small part of Durham, N.C., and the unintentional revelation of a gigabit broadband inquiry page on Frontier’s website suggests the company may be exploring at least a limited rollout of gigabit fiber service in the state. But company officials have also repeatedly stressed in quarterly results conference calls there were no significant plans to embark on a major spending program to deliver major upgrades across their service areas.

Some phone companies may have little choice except to offer upgrades where cable operators are continuing to rob them of customers. In the northeast, where Frontier has a substantial presence, cable operators including Charter, Comcast and Time Warner Cable are committing to additional speed upgrades. Time Warner Cable’s current standard speed of 15Mbps will rise to 50-60Mbps in 2016, up to ten times faster than Frontier’s most popular “up to” 6Mbps DSL plan.

Most of the broadband customer gains won by Comcast and Time Warner Cable come as a result of DSL disconnects. AT&T said goodbye to 106,000 customers during the third quarter. Verizon managed to pick up 2,000 new subscribers overall, almost all signing up for FiOS fiber to the home service. No cable operator lost broadband market share, reported analyst firm Evercore. Leichtman Research offered additional insight, finding AT&T and Verizon were successful adding 305,000 U-verse and FiOS broadband customers, while losing 432,000 DSL customers during the same quarter.

The message to phone companies couldn’t be clearer: upgrade your networks or else.

ARRIS, one of the country’s largest suppliers of cable modems, is under scrutiny after a security researcher discovered not one, but two secret “backdoors” potentially affecting more than 600,000 of the company’s installed cable modems/home gateways that could allow hackers access to a customer’s equipment and home network.

Bernardo Rodrigues published a report of the exploits on his blog, which affect ARRIS cable modem models including TG862A, TG862G, and DG860A. Rodrigues reports only ARRIS and your local cable company can fix the security problems, and neither seem to be in much of a hurry.

The ARRIS Touchstone 860, which can be identified by its model number depicted on the front lower right of the modem.

“Securing cable modems is more difficult than other embedded devices because, on most cases, you can’t choose your own device/firmware and software updates are almost entirely controlled by your ISP,” Rodrigues writes. Indeed, very few cable modems allow users to self-update their equipment with the latest firmware. To guarantee uniformity, that privilege is given exclusively to the cable company providing service, even if a customer owns their own modem outright.

“ARRIS SOHO-grade cable modems contain an undocumented library (libarris_password.so) that acts as a backdoor, allowing privileged logins using a custom password,” Rodrigues writes. “The backdoor account can be used to enable Telnet and SSH remotely via the hidden HTTP Administrative interface “http://192.168.100.1/cgi-bin/tech_support_cgi” or via custom SNMP MIBs.”

While exploring the potential security damage that backdoor could permit, Rodrigues stumbled on a second, open to additional exploitation by hackers.

“The undocumented backdoor password is based on the last five digits from the modem’s serial number,” Rodrigues wrote. “You get a full busybox shell when you log on the Telnet/SSH session using these passwords.”

ARRIS TG862

In plainer language, one or both backdoors will allow a hacker to bypass the modem’s usual security protections and provide the intruder with full remote access to the affected cable modem. Hackers have likely already identified the security lapse and have exploited it, with some suspecting access key generators are already available allowing the user to automate attempts to reach affected modems on a significant scale.

Unfortunately for consumers, neither ARRIS or cable operators appear to be rushing to update the affected firmware to eliminate the backdoors, having waited more than two months just to acknowledge Rodrigues’ report.

For now, customers using these devices exclusively as cable modems are least likely to suffer a serious security lapse. More at risk are consumers relying on these three models as both a cable modem and home gateway providing Wi-Fi access around the home. Theoretically, hackers could use one or both exploits to gain access to your home network. Consumers using one of the affected models should contact their local cable company and ask them to replace the device with an alternative, preferably from a different manufacturer.

At least one cable company reported they are working with ARRIS to correct the flawed firmware, but early efforts have not been successful. It may be prudent for some security-conscious customers not to wait.

When New is Not Improved

It is disappointing to see a company priding itself on independently measuring America’s broadband performance throw accuracy to the wind and start handing out misleading awards for America’s top broadband providers that their own speed tests often disprove.

Municipal and independently owned Internet providers have relied on Ookla to prove to the world they can offer superior broadband service over what is on offer from the local cable and phone company. Net Index was a useful, independent resource to track broadband speeds and trends based on millions of consumer-run Internet speed and health tests. A provider claiming “up to 10Mbps” service could quickly and easily be verified as a truth-teller or teller of tall tales. As of today, that is no longer as easy to verify:

Ookla Net Index has been discontinued

Ookla is devoted to providing world-class products and services. Sometimes that means saying goodbye to old sites, like Net Index, and hello to new ones…

Those “new and improved” products include:

The magic of fiber

Ever wonder why Comcast, one of the strongest defenders of classic coaxial-based cable technology, is suddenly getting on board the fiber-to-the-home bandwagon? New research suggests if they don’t, their market share could fall to 40% or less if a serious fiber competitor arrives.

“There’s some sort of magic associated with fiber,” John Caezza, president of Arris’s Access Technologies division, told Multichannel News. “Everyone thinks it’s better than [cable technology].”

The risks to the cable industry are clear: be prepared to upgrade or face customer losses.

Craig Moffett of Moffett Nathanson has never been a cheerleader for fiber to the home service. In 2008, Moffett vilified Verizon for its investment in a major fiber upgrade we know today as FiOS to replace its aging copper infrastructure, complaining it was too expensive and was overkill for most residential customers. He was more tolerant of AT&T’s less-costly fiber to the neighborhood approach, dubbed U-verse, that still used traditional telephone lines to deliver service into the home. Because U-verse did not need AT&T to replace wiring at each customer location, the cost savings were considerable. But the cost-capability compromise left AT&T with a less robust platform, with broadband speeds initially limited to a maximum of around 24Mbps.

While phone companies like AT&T and Verizon were saddled with the enormous cost of tearing out decades-old obsolete phone wiring to varying degrees, the cable industry seemed well positioned with a mature, yet still recent hybrid fiber-coaxial (HFC) platform that was upgraded in the 1990s in many cities. While still partly reliant on the same RG-6 and RG-11 coaxial cable used since the first days of cable television, cable companies also invested in fiber optics to bring services from distant headends to each town, removing some of the copper from their networks without the huge expense of bringing fiber all the way to customer homes.

For Moffett, it was the cable industry that had the network with room to grow without spending huge amounts of capital on upgrades. He has touted cable stocks ever since.

Moffett

What worries Moffett now isn’t Google, Frontier, CenturyLink, or even Verizon. He’s concerned about AT&T.

As part of its commitment to win approval of its merger with DirecTV, AT&T promised regulators in June it would expand AT&T U-verse with GigaPower — AT&T’s gigabit fiber to the home upgrade — to at least 11.7 million homes, nine million more than it has ever promised before. Comcast has a 32% overlap with AT&T U-verse, compared to Time Warner Cable (26%), Charter Communications (32%), Bright House Networks (25%) and Cox Communications (25%). Comcast had promised faster broadband with the advent of DOCSIS 3.1 beginning as early as next year. But the company isn’t willing to wait around to watch AT&T and others steal its speed-craving customers. This spring, it promised 2Gbps Gigabit Pro fiber to the home service to customers living within 1/3rd of a mile of the nearest Comcast fiber line.

Some in the cable industry complain Google’s huge marketing operation has saddled cable broadband with a bad rap — ‘it’s yesterday’s news, with Google Fiber representing the future.’ The marketing war has been largely won by Google, they say, leaving consumers convinced fiber is the better and more reliable technology, and they need it more than the cable company.

Cable’s defense is to consider some marketing changes of its own — including the idea of dropping the name “cable” from the business altogether, because it implies older technology. But despite any name change, most cable companies will continue to rely on HFC infrastructure for at least several more years, despite claims they are bringing their own middle mile fiber networks closer to customers than ever. Cable operators now serve an average of 400 homes from each cable node. Some cable companies like Comcast plan to cut the number of customers sharing a node to around 100-125 homes, which means fewer customers will share the same broadband connection. But in the end, that will make cable comparable at best to a fiber to the neighborhood network, still hampered to some degree by the presence of legacy coaxial copper cable. The industry believes most consumers will never see the limitations, and for those that do, a limited fiber buildout with a steep installation fee may keep costs (and demand) down to those who need the fastest possible speeds and are willing to pay to get them.

That philosophy may still cost cable companies customers if a fiber competitor doesn’t have to compromise speed and performance and can afford to charge less.

The top 10 U.S. cable companies currently account for 60% of the residential broadband market and 86% of all broadband net additions in the first quarter of 2015, says Leichtman Research Group.

Moffett predicts cable broadband will only capture 40% of share in markets where it faces a fiber to the home competitor (Google, EPB, Greenlight, Verizon FiOS), 55% in markets served by a fiber to the neighborhood competitor (U-verse, Prism), and 60% where the competition only sells DSL (most Frontier, Windstream service areas). Nationwide, AT&T’s newest gigabit fiber commitment could cost the cable industry 2.4% of the whole residential broadband market, Moffett said.

Phil McKinney, president and CEO of CableLabs, believes DOCSIS 3.1 — the next standard for cable broadband — can easily stand toe to toe with fiber to the home providers.

McKinney

“I think it [HFC] has tremendous life, and we are going to be riding it all day long,” Werner said. DOCSIS 3.1 “is definitely going to be our go-to animal. Due to ubiquity, we can go out and virtually serve all of our [customers] very quickly.”

Cable companies claim their speed increases reach all of their customers in a given area at the same time without playing games with “fiberhoods” or waiting for incremental service upgrades common with Google Fiber or AT&T’s U-verse. Customers, the industry says, also appreciate DOCSIS upgrades bring no service disruption and nobody has to come to the home to install or upgrade service.

“The cable industry has more fiber in the ground than each fiber provider in the world,” McKinney argues. “If you look at total fiber strand miles, there’s more fiber under management and under control of the [cable] operators than anybody else combined.”

That may be true, but Moffett thinks it is only natural shareholders may eventually punish the stocks of cable operators that will face competition from AT&T’s U-verse with GigaPower. There is precedent. Cablevision serves customers in New York, Connecticut, and New Jersey and faces fierce competition from Verizon FiOS in most of its service areas. That competition has been brutal, occasionally made worse in periodic price wars. What may be protecting cable stocks so far is the fact AT&T competition will only affect, at most, 32% of the impacted cable operators’ service areas.

AT&T’s gigabit network has also proved itself to be more press release than performance, with very limited availability in the cities where it claims to be available. Verizon FiOS, in contrast, is widely available in most of Cablevision’s service area.

Still, Comcast is hoping it can hang on to premium customers who demand the very fastest speeds and performance with targeted fiber.

“Gigabit Pro is really for those customers who have got extreme needs,” said Tony Werner, Comcast’s executive vice president and chief technology officer.

Midcontinent Communications customers will be able to get gigabit broadband speeds… by the end of 2017.

Midco is waiting for DOCSIS 3.1 to support the fastest broadband speeds instead of dedicating more bandwidth to support 1,000Mbps service under the current DOCSIS 3.0 standard.

The company has started to deploy Cisco’s cBR-8, a new Converged Cable Access Platform that will fully support DOCSIS 3.1 – a more efficient cable broadband standard expected to be deployed by larger cable operators like Comcast beginning next year. The new standard will support speeds up to 10/1Gbps, but most cable systems are expected to offer only a fraction of those speeds.

Midco’s 300,000+ customers in Minnesota, North & South Dakota and Wisconsin already receive speeds up to 200Mbps, and the faster the service offered, the more data used.

“Cisco’s cBR-8 aligns with our strategy and vision to deliver Gigabit-speed Internet experiences that will change the quality of life and spur business innovation in the communities we serve,” said Midcontinent vice president of technology Jon Pederson. “With our customers’ bandwidth consumption doubling every 15 months, we need the right technology in place to support our network demands now and in the future. The unique DOCSIS and Remote PHY capabilities of the cBR-8 will help us meet our commitments for the Midcontinent Gigabit Initiative.”

Midcontinent publishes a promotional and retail price list fully disclosing their pricing, a rarity among cable operators. Midco’s broadband tiers have no usage caps.