The transaction, announced late last week, will bring together two of the largest cable operators in the US, creating a formidable presence in broadband, mobile and video.
The combined company, which will eventually adopt the Cox Communications name, will serve more than 30 million customers across 41 states and assume roughly $12 billion in Cox debt.
Despite the scale of the move, Charter and Cox appear unlikely to immediately harmonise their respective network upgrade paths.
Both Charter and Cox have kick-started upgrades: Charter is rolling out high-split upgrades and pushing ahead with its Distributed Access Architecture (DAA) and DOCSIS 4.0 plan, while Cox has already converted most of its network to Remote PHY and is leaning on Vecima’s virtual CMTS platform to extend capacity.
But according to Dell’Oro Group analyst Jeff Heynen, Charter and Cox are likely to stay their respective courses on network upgrades even if the merger goes ahead.
These architectural differences, Heynen suggested in a blog post, may persist for years if the deal clears regulatory review.
“Should the merger go through, Cox systems would be delivering similar downstream speeds as the upgraded Charter systems, but would likely have reduced upstream capacity,” Heynen wrote.
It’s not just upgrade choices, as the Dell’Oro analyst highlighted the pair leverage different technology choices when it comes to fibre deployments.
“Charter continues to use 10 Gbps DPoE (DOCSIS Provisioning over EPON) for both its RDOF-funded projects and its Greenfield fibre builds,” Heynen wrote.
“In contrast, Cox was an early adopter of both GPON and the newer XGS-PON technology. As a result, Cox has a significantly higher percentage of PON (Passive Optical Network) connections compared to Charter in terms of total homes and businesses served.”
Despite differing network strategies, both operators stand to benefit from increased scale in content distribution, mobile bundling and local advertising, as well as procurement efficiencies. Charter expects around $500 million in annualised cost synergies within three years.
But the deal is also set to reverberate across the vendor landscape. With both Charter and Cox leaning into virtualisation and modular node architectures, albeit via different vendors, equipment suppliers are bracing for tighter competition as the number of potential customers consolidates.
“The combination of two of the largest cable operators in the world ultimately reduces the number of opportunities for unique vendors, thereby furthering consolidation among those vendors,” Heynen wrote.
“Should this deal move forward, I fully expect there to be some consolidation among equipment vendors as they look to grow their share at the new combined company.”
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