t is not difficult to be overwhelmed by all the new technology being developed. After all, advances in cable and telecommunication technology have made content available in living room game consoles,
smartphones, tablets and personal computers.
The rapidly changing technology is bound to force cable MSOs to fundamentally alter their business operations models when it comes to customer premise equipment (CPE) repairs. This is because cable MSOs have traditionally had a significant portion of their cable warehouse management and annual budgets dedicated to CPE repair.
A change will occur because new technology becomes obsolete almost as soon if not before it even hits the market. It does not seem logical that cable MSOs continue to repair obsolete technology.
Old Cable Warehouse CPE management
For old time cable customers, our cable box was only changed if it stopped working or needed constant repair. Cable technicians would come to your house and usually switch out problem CPE. CPE was then transported back to the cable warehouse, tested, repaired and tested again and then returned into service.
Cable warehouses have a section dedicated to the testing and repair of CPE. For smaller cable MSOs this function might be outsourced and has enabled the CPE repair businesses to thrive. In either case, CPE repair is a significant portion of the cable MSO operating budget enabling.
In the past when CPE such as a particular set-top box was discontinued it would be exchanged for a newer model on a technicians visit. However, if the model was still active the CPE would be sent to the repair area of the cable facility.
New Cable Warehouse CPE Management
Now, switching out CPE is more common now as subscribers have demanded HD ready set-top boxes to view content. However, changes in content delivery systems such as a Xbox gaming console or iPad combined with technology advances (HD) result in fewer CPE units needing repair.
As a result, cable MSOs will soon find out that it is no longer economically viable to repair CPE and that like a Smartphone or PC it is easier to just replace them. How will cable MSOs and outsourced repair vendors react? Some possible solutions are:
- Cable MSO will increase the percentage of repair work outsourced to 3rd party vendors. This is good news (albeit short-term) for 3rd party vendors. Outside vendors will ultimately have to adjust their business models as CPE repair work will not be a growth area.
- Resources previously spent on CPE repair can be used to increase the technical levels of field staff. This is necessary as field technicians and sales people will require additional training to keep pace with subscriber’s needs and home/business configurations.
- Cable warehouse management replaces repair areas with a greater variety of CPE to reflect different subscriber demands. In other words, cable MSOs will need to carry CPE stock other than their traditional set-top boxes.
- CPE disposal methods will increase in importance. Cable MSOs will need to adjust to developing electronic disposal guidelines and developing regulation. This will open opportunity for 3rd party vendors to replace repair based operations.
It is not just cable warehouse operations that will be affected. In order to execute a successful change the budget process will also need to be adjusted. New CPE will need to be purchased more often setting the stage for a significant change in capital expenditures and the way in which CPE is depreciated.
In addition, new CPE naturally attracts theft. Anti-theft measures such as serialized reconciliations and vendor oversight will need to be improved.
CPE Warehouse Management that Won’t Change
A change in CPE repairs will not affect core business operations as long as cable MSOs continue to supply CPE to subscribers. This means that for the foreseeable future cable warehouse management should still be focused on:
- Improving warehouse logistics through the use of a cable hub and spoke distribution system.
- Managing 3rd party vendors or contractor to ensure quality service as well as reduce CPE theft.
- Improving cable warehouse management through the use of automated systems and serialized reconciliations.
No one knows for sure which technology will arrive next and which product will be dominant in the marketplace. The future of CPE management is certainly up in the air. What we do know is that change is coming and the best cable MSOs will be prepared.