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SPs Unleash Disruptive Forces In Drive to Reach Past Borders


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SPs Unleash Disruptive Forces In Drive to Reach Past Borders

  1. 1. Published July 2007 For More News from ScreenPlays click here>> Competitive Imperatives Shape Strategies SPs Unleash Disruptive Forces In Drive to Reach Past Borders By Fred dawson A s over-the-top video and voice services continue to roil the market, network service providers are beginning to adapt to the brands-without-borders mentality in ways that could disrupt traditionally collegial modes of operation within industry segments. For example, Comcast Corp.’s rapidly evolving national broad- band service strategy represents a challenge not only to cable in- dustry thinking about the use of IP technology but also to the notion that cable’s long-standing if largely unspoken non-compete policy Andrew Olson, SVP, can endure. Already, the scenario is one that calls up the term strategy and development, Comcast Interactive Me “coopetition,” acknowledged Andrew Olson, senior vice president for Comcast’s Interactive Media group, who spoke at the recent Cable IPTV conference in New York. “We are competing in some ways, but we are not competing in many other ways,” Olson said. As executives at the Cable IPTV conference debated the pros and cons of an IP-video- to-the-set-top strategy for cable, the long-term implications of the ever-widening market embrace of IP technology were never far from the discussion. Competition not only drives service providers to the IP platform; it drives them to make use of that platform on a nation- al scale, noted Ed Naef, vice president at CSMG Adventis, a division of the consulting firm TMNG Global. “Telcos investing in video want to leverage triple-play out of region as well as in,” Naef said. “It will be interesting to see how it plays out.” Naef’s observation prompted session moderator Peter Lambert, senior editor of Screen- Plays, to ask, “Are we talking about over-the-top triple play as a common strategy a year or two from now?” “I can’t think why not,” Naef said. “All the pieces are in place.” The other speakers on the panel, Colin Dixon, practice manager for IP media at The Diffusion Group, a consulting and research firm, and Jeff Walker, senior director for customer marketing and business devel- opment at Motorola’s Connected Home unit, agreed with this assessment. Page 1 Copyright 2008 Broadband Information Resources
  2. 2. For More News from ScreenPlays click here>> IPTV Advantage Indeed, noted Joe Matarese, senior vice president for advanced global technology at C-COR, who spoke on another Cable IPTV panel, the need to deliver services beyond tra- ditional network boundaries has already become an important driver to cable use of IPTV technology in some European countries. “There’s an advantage to using IPTV for cable operators and telephone companies that operate over mixed plant,” Matarese said. Citing recent acquisitions by Telefonica and ONO, legacy telephone and cable companies in Spain, respectively, he said IP offered them a way to operate over DSL and cable networks from a single video and communica- tions infrastructure. Similarly, Numericable, which has consolidated ownership of most cable companies in France, has begun a migration to IP video with rollout of a 100 megabit-per-second broadband service using bonded channel technology (see January issue p. 8). According to sources close to that effort, IP content components, including push and traditional VOD, to be offered on the cable plant will also serve customers over DSL lines beyond Numeri- cable’s cable footprint. While it remains to be seen to what extent network service providers will leverage over- the-top to extend triple-play reach beyond their broadband access footprints, the Web- based services model clearly provides a means of offering any type of service in IP mode without having to actually own or lease the access infrastructure. Indeed, AT&T and Verizon have long been in the business of over-the-top VoIP, and cable companies are looking into extending their voice brands in that fashion as well. In Comcast’s case, the over-the-top strategy announced so far involves making its new entertainment sites, and Ziddio, available to broadband users everywhere. Internet 3.0 Olson, describing the new opportunities surrounding what he called “Internet 3.0,” noted is in the top ten portals nationwide, registering over 90 million video streams and 2.5 billion page views per month. “We’re building a real business out of it,” he said. “It may generate hundreds of millions or even billions of dollars in revenue over time.” Olson made clear that, from the perspective of cable territories now served, Comcast sees an opportunity for “the cable company and the Internet company to come together” to support what he described as “pervasive connectivity.” This involves combining video, com- munications and data to reach customers wherever they are via computers, cell phones, TV sets or other devices, he said. Olson described possible service features that might be offered in this converged service environment. For example, a Comcast Cable subscriber accessing a Web site that pro- motes a specific TV program would be able to ask the Comcast system to send an instant message as a reminder when a live broadcast of the program is coming on. The message could also tell the subscriber when the episode might be accessible on VOD or the Internet. Page 2 Copyright 2008 Broadband Information Resources
  3. 3. For More News from ScreenPlays click here>> Or the Comcast system might be set up to provide permission to customers to record a show on DVD and take it with them for viewing away from home. The system would “know I recorded and watched it,” Olson said, “and it says, oh, by the way, you missed the last five episodes. Here’s where to get it.” Similarly, the system could make people aware of content of interest which they “wouldn’t be likely to find on their own,” he said. “There’s a whole host of technologies we can bring together so we’ll know what you like, who’s your friend and what they watch.” Taking this a step farther, Olson made clear the blended experience can be extended beyond the company’s network footprint. “We’re in a fairly unique position to enable unique experience across all these services,” he said. “No matter where you are these services are integrated wherever you get connected.” And, he stressed, Comcast Interactive Media isn’t “going to make you watch the Inter- net all day,” which was an apparent reference to the possibility that some of the Comcast broadband experience might be ported to the TV. Comcast Interactive Media president Amy Banse previously indicated that, if subscribers want access to Web content on the TV, Comcast will make it possible (July, p. 1). Indeed, elements of the Web-to-TV capability are already in play at Comcast, Verizon FiOS and AT&T. Comcast, in an arrangement with Facebook (March, p. 27), and Verizon, in a deal with (April, p. 8), are bringing select user-generated and other content from these sites to the TV as well as their broadband portals. In Comcast’s case the Facebook content will be available over VOD as part of its new venture. Verizon’s work with is part of a broader initiative aimed at delivering a wide range of Web video content to the TV. AT&T has been circumspect about its plans but has acknowledged such capabilities are in the works there as well (January, p. 1). All of these services rely on formatting and transcoding of content for the TV somewhere back in the network, either at the point of origin on the original distributor’s Web site or at the service provider’s portal or other network locations. In delivering this content over the TV distribution networks rather than over the broadband access networks, the parties to such ventures are supporting a new user experience on the TV that transcends the quality level available via best-effort broadband. But service providers also have the capability to create a higher quality experience on the broadband side, which could allow delivery of optimized IP content to the PC, TV and other devices without segmenting the TV stream from everything else. For example, in cable, operators could use DOCSIS 3.0 technology in conjunction with PacketCable Multi- Media QoS controls to deliver high-resolution IP video. For viewers choosing to access the stream from the TV, the new generation of high-power, broadband-enabled set-top boxes could perform whatever transcoding and formatting would be required. With or without Web video to the TV, converging of devices via IP technology is essen- tial, said John Ulm, fellow of the technical staff at Motorola’s Connected Home Solutions. “Session-based seamless mobility opens a whole world of converged services to consum- ers,” Ulm said. Page 3 Copyright 2008 Broadband Information Resources
  4. 4. For More News from ScreenPlays click here>> The combination of entertainment, personalization and socialization requires a blend- ing of services that can only be done via an IP-based control point, which could be a SIP (Session Initiation Protocol) client or, in cable’s case, an OCAP (OpenCable Applications Platform) set-top box in the home, Ulm added. Such blending can be accomplished without operating in all-IP mode across all clients, just as long as the control plane is handled via IP, Ulm noted. But he also stressed that the TV must be tied into the rest of the network so that TVs, PCs and mobile devices are all interconnected. Several speakers at the Cable IPTV conference stressed the importance of opening a migration path to the TV for IP video. “We think cable operators could have a great oppor- tunity to create more intimacy with their end customers, to engage with them, because IP opens the door to targeted advertising and new sources of revenue,” said Brigitte Mouchet, director for marketing communications and programs at Harmonic, Inc. “An IPTV infrastruc- ture benefits automatically from the advantages of switched multicast and switched unicast, and you can target any IP device.” Noting a major advantage is the ability to target TV service to the PC, Mouchet said the emerging DOCSIS 3.0 standard opens a cost-effective IPTV migration path to cable opera- tors when used in conjunction with a bypass design that minimizes use of processing re- sources at the Cable Modem Termination System. As previously reported (February, p. 1), as long as one of the bonded DOCSIS 3.0 channels passes through the CMTS the others can be properly synched with cable modems without going through the CMTS. By delivering such DOCSIS channels directly to the next-generation edge QAM (quadra- ture amplitude modulator) for bonding with the DOCSIS stream from the CMTS operators can bring the cost of IP video delivery down to what it costs to deliver video-on-demand channels today, Mouchet said. The Diffusion Group’s Colin Dixon noted the opening of an IP-to-TV path by either telcos or cable operators could be a major differentiator in favor of the provider that gets there first. “If cable decides to go for it, incumbency [as video providers] is going to win,” Dixon said. Dixon said the idea of giving consumers access to free Web content on their TVs as part of the service price is akin to the TV programming access users have always enjoyed over cable, where they get everything but pay-per-view and VOD for a set fee. This model is preferable to closed approaches such as TiVo’s and Apple’s, which require extra outlays by consumers, he noted. “The consumer wants open access and they want it free,” Dixon said. If cable operators chose to begin distributing broadband-enabled set-tops as replacements to legacy boxes as part of the normal replacement cycle, it would take the cable industry about six years to deploy broadband-enabled set-tops to 66 percent of subscribers, he added. Michael Collette, CEO of PhyFlex Networks, noted IP video “differentiates video as an application” and added the “great Rubicon” that has to be crossed to “get YouTube to the TV” is implementation of Web-friendly technology, such as Flash decoding, on set-tops. In response, Dixon said standards bodies are developing IP-to-TV transcoding standards that will support “rendering of the Web experience on ten-foot TV screens.” Page 4 Copyright 2008 Broadband Information Resources
  5. 5. For More News from ScreenPlays click here>> Indeed, while cable operators weigh the pros and cons of offering Web video to their cus- tomers’ TV sets, the growing number of consumer electronics and set-top manufacturers who are developing Web-to-TV functionalities in components consumers will be able to buy at retail is multiplying. As the market embraces such technology, Fancast and other Internet video from service providers, media companies and Web entities will gain access to the TV across all network boundaries. The strategic question hanging over service providers is not so much whether they’ll pursue exploitation of over-the-top strategies to create national presence for their brands. It’s how fast can they go and where it all stops when it comes to offering converged experi- ences from all-IP broadband portals. With such possibilities luring many providers into the vanguard, the likely strategy for the rest of the SP population will be recognition that a good offense is the best defense. ■ Page 5 Copyright 2008 Broadband Information Resources