Infrastructure bill presents 'monumental and transformative' phase for DZS, CEO says
Although the broadband element of the $1 trillion US infrastructure bill does not set superfast minimum speed requirements, it will help to accelerate the upgrade of copper-based network infrastructure to fiber, Charlie Vogt, CEO of network gear and software company DZS, said.
The bill, which earmarks $65 billion for broadband in unserved and underserved areas at affordable price points along with service discounts for qualified consumers, sets a minimum speed requirement of just 100Mbit/s downstream and 20Mbit/s upstream. While that's well within the reach of today's widely deployed DOCSIS 3.0 and future DOCSIS 4.0 networks, it will require fiber upgrades in older copper-based telco plant, Vogt said.
"We certainly don't think that's enough," he said of the minimum speeds targeted by the bill. "It certainly is an uplift, but I think the most important theme there is to be able to deliver 100-Meg down and 20-meg up, you need to deliver fiber-based services."
But the bill, paired with other government-backed projects such as the Rural Digital Opportunity Fund (RDOF), presents "a monumental and transformative kind of phase" for suppliers such as DZS, Vogt said, noting that there are more than ten US states that stand out as the most in need of the bill's funds.
The bill, passed by the US Senate earlier this month, still needs the blessing of the US House of Representatives.
Much is to be done before it's known how infrastructure funds will be meted out. But Vogt's expectation is that about $4 billion to $5 billion could be in play for the kind of systems and solutions that DZS provides.
"If that ends up being a five-year kind of deployment cycle, it's meaningful," Vogt said, noting that it could equate to $800 million of $1 billion of incremental annual funding to accelerate deployments that would otherwise have taken much longer to complete.
Vogt, who took the reins of Dasan Zhone Solutions last August and promptly rebranded the company as DZS, noted that he's already held discussion with at least one RDOF recipient that intends to participate in the broadband piece of the infrastructure bill and possibly step up network upgrades in certain areas.
"What this really does, in my opinion, is it helps to cover that gap in the ROI [return on investment] for a lot of service providers that otherwise would've provided it, but it was just cost-prohibitive."
And the opportunities in front of the broadband tech industry aren't limited to the US. Vogt estimates there's about $100 billion of stimulus funding in play between just what's happening in the US, Germany and the UK.
With RDOF now on the front burner, the infrastructure bill getting closer to the finish line, and nagging supply chain constraints, DZS has been making moves to help shore up its distribution and supply capabilities. The most recent one is a strategic sourcing partnership with Colorado-based Digicomm International.
"We need more stocking distributors," said Vogt, who signed a different deal with Digicomm focused on cable amplifiers in 2020 when he was CEO of ATX Networks. "With the supply chain as constrained as it is, having large-scale stocking distributors that have DZS product on the shelf is a huge value-add for us."
Although many tier 1 network operators are buying, integrating and staging products to be deployed over periods spanning months, smaller operators don't necessarily have the scale and capabilities to stay that far ahead of the curve and tend to need more just-in-time options.
"There's a lot of smaller operators that don't have the wherewithal and the systems to forecast as accurately as they'd like," Vogt said.
Pondering cable's PON future
The deal also gives Digicomm a way to complement and diversify its traditional focus on cable operators and products for hybrid fiber/coax (HFC) with optical transport and mobile transport gear. Vogt said the optical pieces of the new deal illustrates another growing trend – the need for more optical transport equipment as cable operators beef up the capabilities and performance of their DOCSIS 3.1 networks or start thinking about future DOCSIS 4.0 network upgrades.
But it also feeds into another trend that is seeing cable operators deploy PON not only into greenfields but also analyze whether to sidestep DOCSIS 4.0 and instead upgrade existing HFC plant to fiber-to-the-premises/PON.
Vogt notes that cable operators are not all on the same page about where they will take the network next.
"I do think there is a growing number of MSOs that are looking at PON as a more economical way they'll leverage that technology, at least in the early innings for greenfield," Vogt said, noting that DZS is deploying PON with at least two cable operators today. "I personally think, having been on both sides, that there's a really good argument that PON will end up playing a meaningful role with a lot of the cable operators at the end of the day."
— Jeff Baumgartner, Senior Editor, Light Reading
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