The statistical properties of CTB and CSO distortion terms associated with the analog channels carried on Hybrid Fiber Coax (HFC) are presented. Both simulation and measurement results show that these distortion components falling on individual channels have amplitude Probability Density Function that is nearly Rayleigh distributed (having a Standard Deviation of 5.7 dB). It is shown that both CTB and CSO components have significant likelihood of having peak envelope power fluctuations that exceed their average (measured) power levels by more than 15 dB. The temporal statistical properties of these distortion components are also examined and evidence for peak envelope power fluctuations with characteristic times on the order of 100 microseconds is presented. The implications of these statistical properties for 256 QAM digital downstream channels on which such CTB and CSO components fall are discussed. It is shown that some currently prevailing link budget design practices do not provide sufficient margin for reliable 256 QAM operation, particularly in systems that are rich with Narrowcast combining of digital channels such as cable modem and Video on Demand (VOD) applications. Several mitigation strategies and improved design practices are subsequently reviewed. These involve physical layer choices for longer digital interleaver depth, establishing QAM frequency offset relative to the analog channel grid, improved CTB and CSO specifications for cable modems and digital set-top tuners and tighter aggregate noise floor specifications for head-end RF transmission gear.