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IPTV roundtable


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IPTV roundtable

  1. 1. IPTV roundtable IPTV roundtable Goran Nastic chaired CSI’s second roundtable on the subject of IPTV, where delegates discussed key issues facing the technology, including business models, over-the-top video, standardisation, QoS and how smaller players can source content and enter the market more easily. Graham Craddock - Alan Delaney, IPTV Stephen Farmer - Mike Furby - systems Simon Cothliff - New CEO Digital Head Business IPTV strategy & engineering manager, business development Ends Networks and Development Director, business Redback Networks manager, IPTV, ADB Integration Solutions, EMEA and APAC, development, Thomson Tandberg Television Motorola Home & Mike is responsible for Simon is responsible for Networks Mobility delivery of technical managing IPTV business Graham is responsible for In his role, Alan is sales advice and development at ADB. a wide range of head responsible for building Stephen leads Motorola's network design services His work includes solutions, including and maintaining the IPTV business, and is for regional accounts. identifying and securing advanced video encoding company's relationship responsible for the He also consults on business from new and and compression, video with telcos, operators development of key mobile network design emerging markets for processing, network and content owners in strategies and customer and the integration of the delivery of IPTV and management and testing order to further the initiatives in the region. mobile solutions on-demand content. solutions for both fixed deployment and Stephen joined between Ericsson and Prior to joining ADB, and mobile networks. adoption of IPTV. Motorola in January Redback. Simon worked with Prior to Thomson, Alan joined from 2007. He previously Prior to Redback, Mike Tandberg. Prior to this, Graham worked for Pace Micro where he held a role managing worked at Ericsson UK, his background was in Tandberg Television spent five years as IPTV the IPTV business at where he was management consulting Asia-Pacific. Prior to product manager. Scientific Atlanta, and responsible for major where he served clients Tandberg, he worked at He holds an MSc in his background includes aspects in the design of from the entertainment NTL for the creation of Computer Science and four years at Pace mobile core network and media industry on the first digital terrestrial Applications from Micro, and five years transport, specifically all strategy and research. receiver and at NDS. Queen's University, working at BT. layer 2 services, over Simon holds a degree Graham holds a Belfast and a BA in Stephen has a Masters MPLS networks. in Business and Masters in Electronic European Business in Electronic Engineering Mike received his Economics and a Engineering from Studies from the from Aston University PhD from Southampton postgraduate education Southampton University. University of Ulster. and an MBA. University. in Corporate Strategy. page thirty two Cable & Satellite International sept-oct 2008
  2. 2. IPTV roundtable Chairman (Goran Nastic): At last year's up to 24Mbps to the home, which will be a the scale of that bandwidth is quite different roundtable, a combination of business key change to enable things like HDTV, than traditional telco infrastructure providers models, content and ecosystems was seen to assuming users are close enough to the have been offering so far. So what that be delaying IPTV rollouts. Have things exchange of course. means is that we need to focus on how we changed at all? can ease that pain point. Simon Cothliff: I think IPTV still remains There's a clear transition after about three Alan Delaney: Looking at where IPTV has very much a defensive play as far as most years of running an operation where the come in the last year or two, it has telcos are concerned. If one looks at the key cost factor for an operator changes developed tremendously. If you talked to the IPTV business model overall then there is from being the DSLAM aspect and the CPE cable guys a couple of years ago they did no question that it can work and the to a core network issue. This is happening not take IPTV seriously, whereas now it's numbers can sparkle. However, I always as the subscriber growth is increasing and impacting some of their revenue and taking encourage operators to think not only about personalised services like VoD become the subscribers away. The silicon, set-top boxes how they deal with the denominator, ie, cost most bandwidth demanding application. and middleware have all matured, and so of ownership, but how they deal with the Most of the operators started off as a have deployments; France Telecom (FT) is numerator, ie, revenue. This is the best way direct cable lookalike offering linear TV not approaching 1.5m customers, for example. for telcos to deal with the competitive requiring that much specific bandwidth for The continued growth we are seeing is a requirement to introduce ever more onerous each consumer but as you add on these sign that the technology is maturing and levels of personally allocated bandwidth. personalised services then bandwidth in the also that the business models are robust How do they add more services that core is becoming stretched and that's what enough for operators to be able to seriously increase revenue? This is where things like we need to help through various compete in the market. ad supported revenue models from the compression techniques and using hybrid It's still very much '1.0' in terms of the sensible and controlled integration of Web systems to solve the problem. There are initial TV solution that's being offered - 2.0 content and social networking, challenges ahead, but it's looking rosy. there's a lot more to come in terms of two- personalisation, interactive advertising, way and personalisation and advances. But video on demand (VoD), home networking Steve Farmer: One of the best ways of in terms of getting the core subscribers it's and certainly HD can really help. They start trying to encapsulate the state of IPTV is definitely at a point where they can say it's to make a difference and offer a real consumers buying it. There are 7-9m IPTV a serious platform that can now stand on its advantage for IPTV over cable and satellite. subscribers in Europe right now, depending own two feet and compete in the market. Now, as a counterbalance to this, what on the estimates. When you look back at we are also seeing, of course, is that the Motorola's history we bought a company Mike Furby: From my point of view, it's satellite guys are now looking at the market called Kreatel that has been making STBs about infrastructure. Countries like France and thinking they also need a return path since 1999. We acquired them two years are a lot more advanced than the UK in so they are now looking at hybrid networks ago and in March last year announced the terms of the infrastructure to homes, and hybrid boxes as a way of opening new one millionth IPTV box shipment. So that's businesses and so forth. As we begin to revenue streams. So there's a continuous nine years to get to 1m. Now in September see IPTV services rolled out in the UK we'll competitive dynamic within the industry. 2007 we announced the two millionth box begin to see some pressures to copper to and in May 2008 we announced 4m. That's the home and potentially having to start to Graham Cradock: There are still a lot of a very noticeable hockey stick that's provide more QoS-enabled type of players that have yet to make a full service reflecting that the market has arrived. infrastructure to make sure services can be offering into the IPTV market. Purely linear Going forward there are two things that delivered in a quality users can expect. TV has been in place for some time now will drive growth: one is the ability to supply From the end-users’ point of view, they and operators are starting to introduce new high bandwidth and more services, and the won't know if it's a fibre connection or what services that lead to a lot of pressure on other is consumer demand, as people benefits such a connection will give them, bandwidth, especially if it's HD. In fact, as a become more aware of the difference all they will care about is whether their TV lot of those services are personalised, it between interactivity versus a linear service works. We are starting to see things means we are delivering bespoke broadcast, that will have a viral effect similar like BT 21CN rolling out, ADSL2+ enabling bandwidth essentially to those users, and to the PVR phenomenon, where nobody Cable & Satellite International sept-oct 2008 page thirty three
  3. 3. IPTV roundtable “There's a clear transition after about Graham Cradock: Another one to put in three years of running an operation parallel with FT would be PCCW in Hong Kong. Almost an identical approach: the where the key cost factor for an marketplace has an incumbent payTV operator changes from being the operator, albeit a fairly basic one in the DSLAM aspect and the CPE to a core form of the cable company there. But what PCCW, FT and all these major incumbent network issue.” telcos always bring is an immediate scale so they have an ability to access a large could describe what it did before it arrived 5m subs with a standard box before number of customers. As PCCW built up but when it did it changed people's lives. deciding to do something more difficult like subs they were able to bring in exclusive The same will change with IPTV when PVR, HD and multi-room. The rough figures partnerships with the likes of ESPN and people begin to understand the proposition. I've seen for IPTV would be 10-15% of the StarTV. That improved relationship with broadband subs base so they need to get content providers was only driven by a Chairman: The numbers in Europe are the basics right, they need to increase the growth in the subs count. equivalent to BSkyB's base in the UK, broadband base and need to be able to Today new entrants can see more of a although growing admittedly. But one segment that audience to derive IPTV 'big bang' opportunity because both FT and problem is that the ARPU isn't there because revenue. PCCW were fairly slow in bringing on new the IPTV element is offered as a free service You can't go to the studios today and and different services but today there are as part of a bundle. Wasn't video supposed say 'I want to give you some money, not ways to get there a little more quickly. One to the premium component? How soon too much and I want to get some would be a case like Reliance in India before IPTV starts seeing larger revenues? fantastic unique content'. Content is a where they are able to run on multiple low-margin business, you need a lot of networks - a hybrid satellite and an IPTV Steve Farmer: One of the key things is subscribers. It's difficult as they are solution - in order to target multiple parts of that a telco is entering a mature TV market growing to get a strongly differentiated the customer base. Another way is a Big and the ability to deliver the more advanced offering so they are growing organically. Bang approach on the services, such as IPTV services is not here yet so they have FT this year has nearly 1.5m subs and Smart Telecom in Ireland, which within a to find a way of competing with a 'me-too they are going to spend a few hundred period of three months deployed from plus' offering in a mature market. Therefore million euros on content so once you get scratch multi-channel TV, VoD and first prices are a part of that in this land grab to the large subs base you can start to stage telephony integration with things like mode. Bundling in itself is good for the generate additional revenues and sell caller ID on screen. consumer but not for operators because it's slots for advertising, but until you get to Increasingly as we move forward I don't all about price reductions. It reduces churn that point you have to understand your think new entrants are interested in long but at the expense of overall revenue. But if subscriber, your network and your and protracted trials, which was the way of you find a way of VAS and pulling those proposition and how you compete with the past. To some extent, it is still a services together cross-platform then you everybody else. IPTV tends to do well in defensive play but the new entrants and can start to generate more revenue. areas that are less cabled up. smaller players need not to go out in a full The strategy seems to be to get So it's an evolution and the advantage of attack and be able to offer these additional broadband penetration up there, which then having the two-way network and the ability services very quickly. becomes a platform on which to sell IPTV to have a one-to-one relationship is that services. Get the basic me-too services out when you get a sufficiently large subs base Chairman: How do the smaller players do there and then start to roll out VAS that will you can then start offering a lot more this? Especially with things like acquiring create profitability. innovative services. Like Steve said, over content if they don't have the scale? the next coupe of years we'll see people Alan Delaney: I think if you look at starting to offer something fundamentally Mike Furby: I think whoever's trying to people that have done this in the past, like different that satellite and cable will struggle offer content has to offer something that BSkyB, they did the basics well, got to 4- a little bit more to compete with. people want to buy. The big example we page thirty four Cable & Satellite International sept-oct 2008
  4. 4. IPTV roundtable have in history is Sky, which really only took “The rough figures I've seen for IPTV off when they acquired the rights to the would be 10-15% of the broadband Premier League. That really was the start of subs base so they need to get the TV that people were prepared a lot of money for. What we have at the moment is basics right, they need to increase fixed-line operators like Orange and BT the broadband base and need to be trying to catch up. able to segment that audience to When it comes to small operators entering, I'm not sure how they will do this. derive IPTV revenue.” It's difficult for them to enter and shop for information, communication and And to go back to the question about differentiate themselves when there are entertainment. If one takes an evidence- how you enter this business, most small such big incumbents out there. based look at the numbers, there is no players are entering with a small number doubt that TV helps to reduce churn, of broadband subs in the first place so Steve Farmer: I think there's an Telefonica being a good example. their target market is small to begin with. alternative. Exclusive content is one Another very recent one is Telecom AT&T is clearly not in the same category approach, but differentiation with Austria. Here is an operator which maybe as those we just discussed. personalisation is another. We have falls into the category of operator you are One of the things we've been trying to something we do with AT&T, which talking about, Goran. These guys are do to help the industry in this area is essentially allows you to provide a attracting about 1,000 new customers a through our services division, Technicolor, personalised bundle of services at the week to their AONTV service and recognise which is able to pull together content, act individual level. What this platform enables the importance of niche content and as a content preparation and sourcing you to do is really personalise what people working with local content producers. I have function - a wholesaler of content if you see, so I switch on the TV and I see stuff observed first hand the first-mover like. Using that model, we can convert the that's relevant to me. It's a bit like walking advantages it has got from combining big negotiation and upfront costs of into a supermarket and everything that you HDTV services with this local content. In dealing with content providers directly, we want to buy is there on the first aisle and fact, with a technical reach below two can take that problem away and turn it there are marketing offers that are really million of its three million addressable into a pay-as-you-grow model whereby relevant to you alongside it. market, the biggest challenge it faces is on you are paying based upon your It's things like being able to create a the compression and network side to grow subscribers, which on day one is zero. service bundle that isn't just sports or the availability of these services. On the other side, and I agree with movies, but PPV movies and channels of The thing with IPTV is that everybody has Simon's point about playing with OTT, it your football club, combined with mobile their own stream and what operators have is to make sure smaller operators can phone minutes, promotions of videos that seen is they can deliver a lot of very have an open platform so they can are relevant because they are related to my localised content. franchise out parts of their middleware. purchase history or my friends' Integrating internet TV is another form of Smaller regional players may wish in recommendations. It's linking tangible with differentiation available to some of the some instances to trade off the visibility virtual goods; for example, AT&T would put incumbents. I've seen evidence with some of their own brand name to accommodate a code on the back of a football ticket so very major operators with whom we are packaging of well known channels or when you get home you can type it and working on groundbreaking projects, where brands into their offer, in order to attract watch the highlights for free. they are looking to collaborate and more subscribers. Similarly, if they wanted integrate internet TV and other Web 2.0 a Web-based iPlayer type solution that Simon Cothliff: I would agree with only offerings into their service offerings and attached to that then that would be a some of what has been said. We have even create ad-driven portals. good value add because it would keep several customers who will report positive people within their operational domain. EBITDA on their operations in 2008. Some Graham Cradock: The area I disagree And when you then bring in the upsell of them did not see TV as a stand-alone on is that any form of personalisation, opportunities, such as telephony, then I profit generator, but as part of a one-stop such as advertising, depends on scale. think that's a very good package for Cable & Satellite International sept-oct 2008 page thirty five
  5. 5. IPTV roundtable smaller operators, enabling them to start on elsewhere, the more stickiness you MPEG-2 and MPEG-4. The next logical step very quickly. create the better. Even though users viewed would be to either produce or manipulate To give one example of this: the TVB pay 11 billion YouTube videos in one month video below 1Mbps and display it on a big vision service in Hong Kong struggled for a alone just in the USA, the average viewing TV in decent resolution. long time to launch their own IPTV service time was only 2.8 minutes, which is less I think the key to broadcasters opening and in the end they found the best route to than an advertising slot today, so you're the door to Internet TV is making sure the market was to access the 700,000+ subs struggling to do that. environment into which it is introduced is on the PCCW network. The key thing for But if you look at what people like BSkyB TV 'quality approved'. This means getting equipment providers is to make sure that do they've had a P2P service, where the PC approval for security and the quality of the software infrastructure that is delivering service mirrors your TV service. It's content. I can certainly foresee a new those portals and enabling the consumer inherently less secure (it doesn't have the market in aggregated web content experience allows this kind of multiple NDS CA in there), but you can for example emerging. I think, to reference two great portal approach. offer a complimentary service when you are novels, that the brave new world will be on the road. one where all internet content is equal, but Simon Cothliff: I agree with Graham's some is more equal than the rest. point but with one proviso. You can Steve Farmer: It is a threat and the 145 integrate data and those services into TV billion downloads in 2007 is the reason - a Mike Furby: There are a couple of things but it can't be dominant. It's still a TV telco pays for the network to deliver that we've touched on here, mainly the fact that service and it's important to remember that but gets no money from it. So almost all the the operators are not yet making money video is the central element of this. operators we talk to ask if it's relevant to even though they are delivering a service. put internet TV on the TV set and if so how So there is a debate to be had on how to Chairman: The surveys I've seen reinforce they monetise. And if people's expectation build the network, is it in the STB or do you the view that video is still king and show that is that it's for free then you can't charge for have to distribute content closer to the consumers are most interested in video- it but you have to make investments in the subscribers? We see that VoD will probably related aspects of a service. The question is network and the STB to deliver it. So it be the big bandwidth driver. How do you how telcos, and other operators, monetise could be the case that it becomes a me-too do that: do you distribute it; do you build a OTTTV rather than just see it as a threat? service they have to deliver because people dumb network and centralise it; do you use are attracted to it and it becomes part of something like deep packet inspection Alan Delaney: I think it has to be part of the service bundle. (DPI) to get some kind of service a broader portfolio you're offering. It's like Having said that, there are ways to awareness and charge for that? All these trying to offer just IPTV today as a stand- interface to YouTube and create your own questions have to be answered now alone service from scratch, which is very advertising model around that. That's one because networks are being built now and difficult to do. But if you have a broad of the ways operators are looking at; saying could be obsolete within a couple of years range of portfolios and you can segment 'let's just try and replicate that advertising- if we don't build them to scale correctly. and go after the audience for HD, VoD, based model but on a TV set'. Talking about OTTTV, there are two forms mobile, PC, then it becomes easier. Even it takes. There's live TV you can watch or a the CEO of Google says he's struggling to Simon Cothliff: Well, 145 billionn catch-up service like the iPlayer. The make money out of his acquisition of downloads in one year is a big number, but difference with these is they are persistent YouTube, which is the clear market leader in that can mean a big opportunity, as well as streams compared to YouTube. That's a big online video. a big threat. You wouldn't need to work that change addressing a different type of The operators certainly wouldn't be market too hard in order to generate a audience. Our customers are becoming looking to derive a lot of revenue because revenue stream, if it is possible. Maybe the very aware that their backhaul is being you are going to end up spamming your opportunity for operators is to enhance saturated by this traffic and they don't know audience in trying to make some money third party internet-based content and bring what to do with it. out of click-throughs on the OTT type it into a lean forward proposition. On the services. But if you embrace it and offer it STB side, we can enable the display of Steve Farmer: There's a crunch point as a complimentary service to what's going many different video formats beyond about to arrive that will have an economic page thirty six Cable & Satellite International sept-oct 2008
  6. 6. IPTV roundtable impact; supply and demand will drive “It will be interesting to see if it is too experimentation with new charging little too late to affect the big Tier 1s mechanisms. Ultimately they can't carry on which have essentially all deployed the doing it for free or the networks will start to choke up. same solution.” Chairman: That's the problem, why would roadmap etc. That's why Ericsson are which are driving greater convergence anyone try to improve the QoS if they can't helping to drive the Open IPTV Forum, to between home and operator networks, such monetise it? ensure an operator won't get locked into a as the DLNA and the Open IPTV Forum. service and can go and do an RFQ for a Simon Cothliff: I suppose if anyone can second source for an STB or VoD pump Simon Cothliff: I add my voice to that. We monetise it it's the telcos, given the and not get locked in like cable incumbents, can do clever things with home networking infrastructure, call centres and billing which OCAP and tru2way is trying to get using UPnP and DLNA, but there needs to systems they have. The question is whether them out of. be some sort of unified approach and it will make commercial sense to do so. standardisation for DRM and security. There will either be a scenario where Graham Cradock: Free in France has consumers will pay for premium web adopted an open source approach. They Chairman: Will the standardisation efforts content and service providers, OTT own the portal for regular linear TV, then mentioned at this table drive down the providers and the associated ecosystems they have outsourced portals for multiple STB BOM (bill of materials)? will partner and thrive through added value vendors on VoD, so French channel TF1 services. Altenatively, content will be has its own VoD portal on top of the Simon Cothliff: Of course the BOM will accessed all over the place and no one will platform. There's a pure OTT portal. There's fall in time, but the value of the STB expect to pay for it. also the ability, in an open source sense, to supplier is not just in the hardware it's in download onto my PC a Linux player which the level of driver integration. We've had Alan Delaney: The US Net neutrality I can completely customise and it's examples where services like network PVR debate, which hasn't really made its way to accessible from the STB to give me visibility have not been able to be delivered because Europe yet, is an interesting one. Do you to any content that's on my PC. As in many of the existing middleware platform just treat everything as equal or protect the operator cases, picture quality still needs to limitations, but we've been able to do clever industry to allow them to offer their services be optimised. things to enable that. The IPTV STB supplier ahead of everybody else and effectively put I agree with Alan on open solutions, but it needs to be able to develop added value a competitor's offering into a second rate will be interesting to see if it is too little too solutions from push VoD and P2P service over their network? late to affect the big Tier 1s which have distribution of content, through to stored Operators are getting into the content essentially all deployed the same solution. and cached and community-based web space and near-live content puts a different We have to think about what's happening applications and innovative EPG design. load on the network that wasn't there next, which will be more about the different before, so operators' business model applications and personalisation - and Chairman: How much easier would the evolution of buying content is impacting on making sure those can be deployed on Tier integration be if we had standardisation? network infrastructure, where they now have 1, 2 and 3 hybrid systems - and so on. I'm to provision for near-broadcast. sure there will be questions whether the Simon Cothliff: The STB industry like large Tier 1s wrapped around Microsoft's other hardware industries works on the Chairman: Let’s finish with standards... platform can go out into the wider supplier basis of return on investment. If there was base and get a new VoD pump or an agreed standard for middleware, for Alan Delaney: There are some application to run on top of that. example, then the lead-times and propositions in the marketplace that are It will be interesting to see what happens integration times would be a lot shorter. more open than others. Some operators next and whether the open approach will However, standardisation can have that buy into these will be constrained in be able to start to drive towards that. For disadvantages leading to over-fragmentation not being able to customise the UI, our part, we are supporting organisations of the user environment. CSI Cable & Satellite International sept-oct 2008 page thirty seven