Cable operators to spend $80b to expand bandwidth

A "bandwidth crunch" caused by the accelerating adoption of high-definition television, multiplayer gaming, and other data-intensive services will require cable operators to upgrade the capacity of their digital networks.

A new study from ABI Research gave this assessment even as it revealed that total revenue from this market is expected to exceed $24 billion in 2012 and will amount to $80 billion in total investment from 2007 through 2012.

"The looming bandwidth crunch, which is more pronounced in the United States than elsewhere due to its deeper penetration of digital cable, will present different problems to different operators, and each will need to find its own bandwidth upgrade formula," said principal broadband analyst Michael Arden.

The severity of the crunch, according to the New York-base research firm, will depend on factors such as the speed with which HDTV is adopted in particular markets, and the extent to which cable operators add extra HDTV channels.

"When designing an upgrade strategy," Arden said, "operators should consider how much competition they face in their markets. Where there is significant IPTV competition, the need to grow capacity is more urgent because IPTV automatically comes with greater bandwidth capabilities. Markets with high sales of HDTV sets and substantial numbers of digital cable subscribers may also justify a greater investment in capacity upgrades."

In practice, the study said, network upgrades will naturally start in the major urban centers and gradually spread to less densely-populated regions.

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