Is Big Band Networks Comcast's Hedge?

A growing question surrounding Comcast (CMCSA) involves how it will reach 200 HD channels in 2008. A year ago, this was a no-brainer; with its two announced Switched Digital Video [SDV] trials in Denver and Cherry Hill, it was reasonable to think that one of them would be successful in CMCSA deploying SDV, and on top of that, offering dozens of new HD channels via this new switched architecture.

However, more than 18 months after these trials have started, neither has achieved the desired level of operations that would allow their deployment, leaving CMCSA with one of three choices:

1. Give the vendors (Motorola (MOT) and Cisco (CSCO)) more time to fix the SDV platforms to enable their deployment. The problem with this approach is that there is no telling how long that would take – it could be a matter of weeks or several more months.
2. Go “All Digital”, which would easily free up 40-60 channels of analog for HD channels. The problem with this approach is that it is likely a 12-18 month effort (or longer depending on potential franchise agreement entanglements), costly (minimum of $150 per analog home), and then there is the fact that the Digital Terminal Adapter [DTA] does not yet exist. Note that this approach could table current SDV plans – thus impacting CMCSA’s EQAM deployments which would impact Arris (ARRS) and Harmonic (HLIT).
3. Deploy BigBand (BBND) SDV equipment. The main problem with this approach is that it would place increased reliance of CMCSA on this fledgling vendor. However, Time Warner (TWC), CableVision (CVC) and Cox have already deployed large systems using BBND’s SDV solution, so not only is BBND field proven, but of the three options available to CMCSA, BBND is frighteningly the only near term option available that would enable CMCSA to host a system with 200 or more HD channels yet this year.

So which is the hedge? At this point, BBND is looking more like the lead horse with DTA as a legitimate hedge. The question is, will BBND get the field trial it’s hoping for?

Disclosure: Author holds a long position in CMCSA