2016: A 'curate's egg' of a year for capex spending by US telcos, and that's no yolk.
- Despite bullish earlier forecasts, capex spending this year now expected to be "modest"
- Analyst claims wireless and wireless spending will grow by just two per cent over 2016
- Capex spending in China to be down by 11 percent and by 7 per cent in Europe
- However, DOCSIS 3.1 seen as a viable and necessary capital expenditure
Despite the momentum behind SDN and NFV that is now powering the global telecoms industry along at a fair old clip, there are Jeremiah's out there warning that, despite the many bullish forecasts issued only a few months ago, 2016 might not be a bumper year of capital expenditure by US carriers after all. Some analysts are now saying that rather than a bonanza 12 months of budgetary blowout, any increase in capex spending will be 'modest'.
According to a research note newly issued by the US-headquartered analyst outfit Raymond James, "For 2016, our forecast calls for annual US capex spending growing by three per cent year-over-year, with telcos (wireline & wireless) up two per cent, cable TV up one per cent and web scale expenditures up 6 per cent." It adds, “We think that US telcos will continue to focus on expanding wireless capacity."
If that's not enough of a wet blanket, the note adds that the environment outside the US will be even more challenging with telco capex spending in China falling by 11 per cent and by 7 per cent in Europe.
Raymond James puts a lot of focus on the cable market and “the advent of DOCSIS 3.1, and the industry trend towards embracing hybrid architectures with the ultimate goal of transitioning to an all IP video distribution" and believes this emphasis "could increase capex allocations to networking.” The note says that US operators such as Comcast and Liberty Global will be among the early-movers with DOCSIS 3.1 technology.
DOCSIS, (the 'Data Over Cable Service Interface Specification), is an international telecoms standard that permits the addition of high-bandwidth data transfer to an existing cable TV system. It is used by many cable television operators to provide Internet access over their existing hybrid fibe-coax infrastructure.
Currently there is a big buzz around DOCSIS 3.1 and the potential effects it will have on cable networks for both the operators and their subscribers. Customers should get gigabit speed access both downstream and upstream and that should allow the downloading of 4K video and ultra-high definition movies at the fastest rates ever. IT is also claimed by minimising redundancy in the and putting an an end to network delays the online gaming experience will be transformed.
What's more, as DOCSIS 3.1 is an evolution of existing and proved DOCSIS technology, it provides a flexible migration route for cable operators as DOCSIS 3.1 modems will be able to coexist with older versions and build on top of the previously deployed capacity. The greater efficiency encapsulated in DOCSIS 3.1 also enables significant cost per bit reductions.
The term, "it's a bit of a curate's egg" comes from from a cartoon published way back in 1895 in the popular and influential humorous British magazine 'Punch'. Captioned as "True Humility", it pictures a timid and lowly young curate eating breakfast in the bishop's palace in the company of the bishop's wife and nubile daughters.
The bishop observing the young clergyman's valiant struggle to eat a reeking and rotten boiled egg remarks "I'm afraid you've got a bad egg, Mr Jones." The curate, desperate not to offend his eminent host and family replies, "Oh no, my Lord, I assure you that parts of it are excellent!"
The cartoon has long been taken as the pithy embodiment of British phlegm (probably quite literally if the pictured event really did take place) and a perverse national ability to perceive something good in even the worst of circumstances. Thus the phrase "a curate's egg' remains fairly common parlance in the UK to this very day. Punch was first published in 1841 and lasted until 2002. That's 161 years of jokes, puns, cartoons and satire. Not a bad run.