What is "CPE" in this context? It's probably not "Common Platform Enumeration" (my top results for "cpe linux") or "Customer-Premises Equipment." ("cpe networking")
Customer premises equipment.
People who use this term are in telco.
I think it's your second one (used to be called the "modem" in the modem→router→ pc setups of yore).
Googling "cpe vs router" shows websites comparing "Customer Premises Equipment" with routers. I don't think it fits though.