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transcript
Hybrids
page thirty www.cable-satellite.com Cable & Satellite International jan-feb 2007
Telco TV vs hybrid services
In early December 2006, analyst firm
In-Stat released a report that
investigated the way in which advances
in technology had been driving the telco
TV market. Specifically, In-Stat reported
that a large number of head ends had
been built in 2005 and 2006 to support
increasing telco TV deployments. It also
said the wide availability of H.264
compression equipment in 2006 had
prompted telcos that were waiting, to
move forward with deployment plans
(see Chart below).
The analysts concluded that technology
advances will further fuel the telco
TV head end boom and that much
of the near-term upgrade revenue
will come from telcos that are adding
HD channels to their existing SD channel.
This is excellent news for the telco
TV industry: one of the historic key
gating factors for telco TV has been
the inability to provide in mass
numbers HD services. In fact, the
cable and satellite companies which
compete with the telcos make a great
point of this.
Telco-based TV with HD is an
absolutely formidable prospect offering
top quality broadcasting with great
degrees of interaction, plus added
services over Internet Protocol (IP),
which is the base of services that
are revolutionising the communications
and entertainment industries such
as voice over IP (VoIP) and IPTV.
Analysts say that the key for suppliers
is not to offer IPTV per se, but offer
IP-based services.
Cable and satellite platforms are
excellent for delivering high-quality
broadcasts to many people. Yet, cable
firms struggle with telcos for ubiquity,
while satellite services - though
ubiquitous - traditionally didn't have
the interactivity built in. The last few
months have hence seen a dash by
satellite and cable firms to offer some
form of IP back path, but, as expected,
this has added a degree of expense
to the service as the interactivity needs
an essential piece of equipment to work:
the hybrid set top box. And to stem the
advance of telco TV, the hybrid is sorely
needed to make its way to market.
Analysis of the markets bears this
out. In July 2006, The Diffusion Group
predicted that global IPTV subscriptions
would jump from two million to 34 million
between 2005 and 2010, reflecting a
compound annual growth rate (CAGR)
of 60%. The Diffusion Group predicted
that North America would experience
the most rapid rate of growth during
this time period with a CAGR of 78%,
Cable and satellite operators need hybrid devices andservices to take the fight back to IPTV. But with bothmarkets in their nascent stage, business models androllout patterns remain in a state of flux. Hybrids aredesigned to give the best of both worlds, and thisincludes telcos too. Joe O'Halloran reports
"To stem the advance of telco TV, the hybrid is sorely needed to get outthere to market."
Hybrids
page thirty two www.cable-satellite.com Cable & Satellite International jan-feb 2007
followed by Europe, the Middle East
and Africa (EMEA), with a CAGR of 61%,
and Asia-Pacific with a CAGR of 41%.
Earlier this year market analyst firm
Gartner predicted that the number of
households subscribing to TV via IP in
Western Europe will reach 3.3 million
by the end of 2006 and 16.7 million
by 2010. However, despite the seemingly
encouraging growth in users, Gartner
advised IPTV suppliers to replace
MPEG2-based set top boxes (STBs)
in order to maximise the number of
households which could receive IPTV
services, and to allow for future services,
in particular HDTV.
Multiple definitions of hybridIndeed, some of these STBs will be
a hybrid. It's interesting to see what
industry figures regard as a basic
definition of what a hybrid is and
why it is used.
“Telecommunications companies
are moving quickly into television
broadcasting in an effort to win the
race to a compelling triple or quad
play proposition. Many are choosing
hybrid boxes as a way of delivering
both media through broadcast schedules
(such as digital Freeview and cable)
as well a differentiated, on-demand
content such as sport, film and education
via packet-based IPTV,” says John
Coldicutt, director, Account & Regional
Marketing, EMEA & Latin America
of Amdocs.
Companies such as Philips are in an
excellent position to comment on the
growth of hybrids given its extensive
STB portfolio for players of all kinds.
Rudy Roth, product strategy manager
and business innovation manager for
Philips home networks, says a hybrid
is “an addition to an IP-only box,
connected to manage networks, providing
network content to the customer via a
MAN network. When talking about hybrids,
[they add] an IP component on the
network [so that it can] provide traditional
broadcast TV via other networks.”
To David Holt, leader, IPTV Networks
EMEA of Nortel, it's a device that “picks
up a cable or satellite feed, but also
services delivered on-demand and
broadband services so you have
the best of both worlds. With hybrids,
it is important to understand that the
boxes have the ability to connect to
DVB and communication streams.
All that is happening is that providers
are finding ways to provide content
for real-time multi-media communications.”
Nick Fielibert, CTO and chief architect
for Europe of Scientific Atlanta, offers this
definition: “For the telco market, a hybrid
is a box that combines DVB and [feeds]
such as Freeview and the streaming
content from the network. With satellite
or cable [hybrids], there are pure
broadcast IP or video IP or video from
streams, as well as an Ethernet port on
the STB. The reason why [particularly
satellite] operators look at hybrids is that
IP can give the advantages of on-demand
where the customer brings content
to the home only when required.”
Technical and business modelchallengesThere are, however, technical issues that
need to be addressed. Experts say that
there are severe technical problems and
network problems in trying to deliver
a high quality broadband multicast service
through IPTV - the networks can't support
a unicast. Hybrids, to back up Holt, are
designed to give the best of both worlds:
you have a broadcast link and huge
capability in delivering broadband content,
backed up with broadband delivery of
on-demand content.
Looking at who will be supplying the
hybrids - that is, the cable or the satellite
company - there will inevitably be
markedly different roll out patterns
for hybrids across Europe, given the
relative penetration rates of especially
cable through the territory. Adds Holt:
“In different countries, there will be very
different levels of competition. We're in
the very early stages of a new (hybrid)
market and the IPTV rollout is in its very
early stages. The speed at which new
services provide a competitive framework
will drive the speed of rollout.”
Holt also suggests that there are a
number of key devices that the operator
could make: Do they go pure play
or hybrid play, and will the hybrid,
to an extent, depend upon the business
model in use? The business models
in hardware are different from those
in the content arena and, again, those
used historically in the telco arena.
"We're in the very early stages of a new (hybrid) market and the IPTVrollout is in its very early stages. The speed at which new servicesprovide a competitive framework will drive the speed of rollout."
Hybrids
page thirty four www.cable-satellite.com Cable & Satellite International jan-feb 2007
There seems a long way to go in
developing these new business models
to a positive economic sense. They are
different from the content arena and there
is still a long way to go in developing
new models. There is also the issue of
increases in bills of materials (BOM).
Operators will have to factor in the
increase in prices that the new hybrid
will demand, even if all that is added
to the box is an Ethernet port.
For cable and satellite providers, hybrids
are really the least expensive bit of the
chain that they have to manage if they
want to compete effectively with the
telcos and offer highly interactive and
personalised services. Cable firms have
to make huge investments in an IP core
network and satellite firms are seeing the
most viable solution acquiring someone
with an existing IP network, such as what
Sky did in 2006. Conversely, a carrier with
a DSL infrastructure may actually want to
offer a satellite feed using a hybrid device.
There seem to be an underlying principle
for hybrids to be used for delivering
services to customers. These services
have to work in a harmonious rather than
a disparate manner, and presented in a
unified and meaningful manner (by means
of the EPG). Some are saying that we are
in the realms of the network-aware device,
with end users having total control of
not just the entertainment services, but
also the ad-on services such as VoIP
through the EPG.
“Many [firms] are choosing hybrid
boxes as a way of delivering both media
through broadcast schedules (such as
digital Freeview and cable) as well a
differentiated, on-demand content such
as sport, film and education via packet-
based IPTV. There are great opportunities
for this approach, but to gain mass-market
adoption, the systems need to be simple
to use, offer great choice and superior
value,” adds Amdocs' Coldicutt.
In delivering services, however, the
issues are certainly not all about hardware
alone and what receiving and transmitting
electronics components go into the
box- there is a huge part to play in
terms of firmware and middleware.
Nigel Smith, VP broadband Internet
at NDS, believes that the real deal
about hybrids is not just what goes
into the box, but how to make the
services be delivered efficiently
and securely.
According to Smith, “Hybrids will be
a massive market for NDS as broadcasters
move towards adding content onto their
service, for example, Sky and Easynet
and the addition of a broadband service.
At the moment, services are relatively
discreet but one would expect the
services to converge and offer content
over the broadband network to the TV.
Software manufacturers are in a good
place and hybrids will form the major
market for IPTV. It isn’t all about the
technology because broadcasters have
content relationships and rights and
know how to package and market the
services; that can't be underestimated.”
“Hybrid” may become obsolete by 2010Looking into the future, Mark Rooney,
head of IPTV at Pace, believes that
well over half of all STBs will be hybrids
by 2010. He postulates: “Will the term
cease to be meaningful by then if that's
what boxes do? When we move towards
2008, we will get to the point where
the new boxes are incorporating
previous hybrids' technology. Broadband
speed and the increasing rate of digital
switchover will drive take-up even further.”
So the day of the hybrids will be among
us, even though the key question remains
unanswered. Namely, will it be telcos,
cable companies or satellite firms supplying
them for customers? The key element is
that end users will have a variety of high
quality entertainment, communications
and information services from one box.
With hybrids, operators have the
opportunity to surprise and delight
customers through advanced features.
These include recording programs that
they frequently watch or may be interested
in (based on their profile), as well as
targeted and localised advertising.
They could also be used to make video
available over laptop and mobile devices,
and being able to interact with the system
using a mobile phone for program guides
and recording. As Rooney says, the term
may itself become irrelevant, so who cares
where it comes from? CSI
"For cable and satellite providers,hybrids are really the least expensive bit of the chain that theyhave to manage if they want tocompete effectively with the telcosand offer highly interactive andpersonalised services."
Key tips for telcos
In order to gain adoption, and compete
effectively against the more mature
cable and satellite companies, telcos
must get the whole customer
experience right, as they may not get
a second chance to make a first
impression, advises John Calidicutt
of Amdocs. "Customer experience", he
says, refers to getting it right across all
customer lifecycle processes:
Ordering and Delivery - are orders
accurate and delivered on time?
Have they invested sufficiently in
their supply chain infrastructure?
Activation - are customers getting the
premium content based on their
subscription and additional pay-per-view
services? TV is immediate,
and TV-on-demand is no exception.
Billing - are customers able to check
their bill in real-time, across all their
products, on any device?
Customer service - are agents able
to effectively deal with customer
queries on how to use the hybrid
boxes, solve problems over the phone,
despatch engineers where possible, set
expectations and track progress…?
Advertising - is advertising relevant
for the customers? How can a telco
make more money from advertisers
by learning which content is most
appropriate for each user/household?
Good customer analytics and marketing
(with a feedback loop)
are critical.
Content management - ensure that
telcos have the right commercial
arrangements with media companies,
and are able to share revenues
accurately and quickly, thus maintaining
these vital relationships.