IPTV: Global, But Not Dominant

The stutter-step advancement of Internet protocol TV (IPTV) as a video delivery system to be reckoned with is gaining momentum as the technology proves itself and the business model unfolds, albeit with some lingering technology and business issues still to be resolved.

Interoperability questions, capital and operational expenses, and a dizzying number of software, hardware and equipment manufacturers shouldering their way into the IPTV space, considered both a curse and a blessing, are adding to IPTV’s growing pains.

Yet IPTV is making strides – in technology, operations and economics – and gaining momentum as a viable competitor, or complement, to traditional cable and satellite services. Growth Counting global IPTV subscribers is a notoriously difficult exercise. Light Reading’s Top Ten list from early 2008 included only those providers that provided them directly with numbers (some don’t) and gave providers a pass on any doubts over the data’s accuracy.

As noted in these pages in May, analysts’ predictions of IPTV subscriber growth are all over the map, ranging, for instance, from 34 million to 103 million for 2011.

While the predictions vary, the growth trend is unmistakably upward. Reviewing 2007, Parks Associates issued a report declaring that worldwide telco/IPTV services – defined as "landline-based, multichannel and on-demand video services provided by a telephone operator" – grew from 4.7 million households in 2006 to 14 million in 2007.

Consistent with Light Reading’s Top Ten list, Parks saw growth occurring primarily in Europe, then Asia.

When the IPTV definition is widened to include video over broadband, the numbers are staggering. According to ABI Research, total broadband video consumers in North America will total nearly 200 million by 2012, with $6 billion in revenue. Worldwide, those numbers are expected to reach 900 million and $16 billion respectively.

Typically, however, IPTV refers to video directed not to the PC or laptop or smartphone but to the dominant of the three screens: the TV set. It also encompasses the often disparate systems of technology that lie behind this video delivery.

"Many IPTV companies had to build from scratch and create their own platforms," said Cesar Batchelet, senior analyst for multichannel video at ABI Research. (See Turks and Caicos sidebar.)

If the IPTV category is undergoing an inflection point in its growth curve, it could be related to a move away from homegrown solutions. "Now, there are many more vendors that offer IPTV systems and turnkey solutions, middleware, servers and set-top boxes," continued Batchelet. "The lack of open standards is an issue, but many are developing their own eco-systems. The biggest constraints to IPTV are differentiating it from pay TV service and integrating new services. But IPTV is definitely gaining traction."

Notably, as indicated previously, the traction is outside North America. Batchelet pointed to the U.K., Europe and India as leaders and said the ability of IPTV to deliver converged services could be the competitive edge the telcos have been seeking against cable and satellite.

"They can deliver converged services, integrated Web content and blended services through their IP networks," Batchelet said.

Meanwhile, as the IPTV vendors are confronting technical challenges such as standards and user interfaces and monetization on the business side, the cable industry is kicking some IP-based network tires. "Cable is looking at IPTV as an alternative and add-on to their networks," said Batchelet.

Looking more closely, it might be fair to add. Previously, cable engineering executives typically gave DOCSIS IPTV bypass architecture (DIBA) a respectful and curious hearing, said Motorola Connected Home Solutions Director of Product Management Mike Cookish. But he added that this summer operators had become more engaged, even looking for next actions. Stop-and-go in Sacramento For now, North American cable’s IPTV activity is largely relegated to such conversations, small-scale trials and CableLabs demos (such as last year’s popular direct-to-edge approach to video over DOCSIS from Harmonic, discussed in these pages in November 2007.)

On the telco side, technologists generally exclude Verizon’s FiOS video service from the IPTV mix, describing it more as a cable overbuild solution, but include AT&T’s U-verse, which is expected to exceed 1 million subs by the end of 2008. The mix also includes SureWest in Sacramento, CA, whose Senior Vice President and CTO Bill DeMuth describes IPTV’s progress as stop-and-go.

"The integration of the multi-vendor environment has been most challenging," DeMuth said. "The key reason we went with IPTV was to not be tied into a proprietary system. But it’s been a struggle," he said.

The struggle, he maintains, is the result of a lack of integration processes with set-top boxes and middleware manufacturers. An example, he cited, was the lack of a clear, readable road map.

"We talk with set-top box manufacturers about a road map of functionality for set-tops, then talk with middleware providers who don’t see an alignment in the future. We struggle when we see that," DeMuth said.

One example, he noted, was the lack of a series-recording feature. "It forced us to add a service that actually wasn’t ready," he said. "A lot of it had to do with the mixed vendor environment and getting middleware, encryption and set-tops working together. And we still don’t see it."

What the mixed-vendor space is seeing, said David Alsobrook, director of marketing and product management for Cisco, is a more aggressive approach to the interoperability and business issues confronting IPTV service providers such as SureWest.

"They want to see more diagnostics and monetizing capabilities and improving the connectivity for improved capital and operational expenses. We’re working with IPTV middleware partners to make it easier to integrate," Alsobrook said.

They’d better, maintains Roy Kirsopp, general manager of IPTV set-top box provider Amino, which recently launched what it terms the market’s first 100 percent digital HD IPTV set-top.

"We’re not getting the technology as fast as we’d like," he said. "A network needs 25-30 Mbps to the home, and many networks struggle with that. And getting headends, encoders, servers, set-tops, middleware and content to all work together is tricky."

Tricky enough for companies such as Entone to develop a mini-headend in the home, an alternative to the set-top-in-every-room model.

"The average IPTV subscriber must have three or four set-tops. The math to that kills the business model," said Steve McKay, CEO of Entone.

Entone’s Hydra Video Gateway eliminates set-top boxes altogether and squeezes several set-tops into one device, McKay said. "Every telco says the set-top-for-every-TV model murders the business case. And installations require about six hours on average. That’s the problem that has to be fixed and a challenge for all of us. We have to be sure we’re integrated with all relevant eco-systems," McKay said.

And cable’s integration into the IPTV space? "We’d love to see cable IP to the home, but the cost advantages aren’t there. Cable has tens of millions of RF set-tops and next-generation servers. The telcos have an opportunity to differentiate themselves with IPTV," he added. Playing nice The stakes are rising, especially on correctly delivering high definition TV (HDTV) to the estimated 255 million homes worldwide that, according to a recent IMS Research report, will be watching HDTV by 2014.

"There are already a few IPTV operators offering features like HD in every room and time-shifting. The game is changing. Operators are talking to us more about personalized TV where and when customers want it," said Sue White, director of applications marketing for Alcatel-Lucent.

Whether HD will make or break a provider is an open question. "The multi-room HD model needs attention," White said. "HD itself is susceptible to errors on the screen, and there are blocks and artifacts on the screen. We can’t afford customers to complain. Technology is available to fix those errors, but very few companies offer them."

Maybe so, but a growing number of the IPTV supply-side companies are getting the message that cooperation counts.

"All of the operators must deploy the infrastructure for more applications, even beyond the quad-play," said AJ Audet, vice president of Juniper Networks’ cable segment. "Cable is also looking at IP video and how to deliver content over multiple screens and over DOCSIS 3.0 and WiMAX. We need to design networks to handle those multiple services."

Getting all the parties to play together in the IPTV sandbox "gets down to scaling and interoperability, with all the components working together," said Brian Baker, CEO of Widevine Technologies, a content protection company.

"We all recognize that to maintain subscribers, what’s needed is an equivalent or better experience with IP video, and that includes retail devices functioning on the network," Baker said.

Once those elements line up, IPTV could reach its early potential. "IPTV operators are differentiating themselves by multi-room delivery, customer service and broadband service, and exploiting the poor customer service reputation of cable," said ABI’s Batchelet. "Content is a new game for the telcos delivering IPTV, but the nuts and bolts for the service are there."

Craig Kuhl is a contributor to Communications Technology. Reach him at [email protected]. Sidebar 1: Turks and Caicos In a clear case of build not buy, Jeff Campbell, vice president of IPTV for WIV Cable TV, which operates a 750 MHz system on the Caribbean island of Providenciales in the Turks and Caicos, constructed his own IPTV network at the swank Nikki Beach Resort. (See photo, below.)

Campbell chose to leap past one-way digital to full IPTV, which involved designing and building his own 60-node, super-computer cluster that could handle SD MPEG-2 encoding.

"Other than satellite reception, we had to build the entire network from scratch, including encoding our signals, building an extensive Gigabit Ethernet switching infrastructure in the headend, building fiber-based transport out to the client, tying in the VOD servers and selecting and deploying set-top boxes and middleware. Encryption is a whole other discussion," Campbell explained.

The exercise had its challenges. "First, we had to identify real, deployable solutions that were immediately available. Many vendors talked a good story, but couldn’t deliver," Campbell said. "Second was getting our small team up to speed about IPTV, which is a massive field with a broad cross-section of disciplines. Third, trying to integrate middleware, customization, billing interfacing and other applications was a never-ending task."

Costs were an issue as well. "We were looking at $4,000 per channel for MPEG-2 SD encoders. That equated to $320,000. That’s a lot of money for a small operator. And we were concerned we would move to MPEG-4 within a year or two. So building our own cost us about $1,200 per channel. I call it ‘commodity engineering’ because I used off-the-shelf IT components," Campbell said.

Along the way, Campbell had to fire his first set-top box vendor. "No one had even physically used it before." And the lesson learned? "Know your vendor support teams very well."

Campbell is exploring the use of IPTV over DOCSIS, which could leverage his HFC network.

Meanwhile, his experience IPTV could be transferred to smaller cable operators and niche deployments in hotels, hospitals, MDUs and greenfields. The bottom line? "This is brain work and requires solid engineering talent and a lot of planning," Campbell said. Sidebar 2: Three-Screen Olympics In touting its work with NBC on the Beijing Olympics, Cisco Systems drew attention to broadcast coverage destined for TV sets and to video available both streamed and on-demand via IP-enabled end devices.

The ‘three-screens’ approach does not equate to IPTV, but leans heavily upon digital video and IP routing–a combination that cable’s VOD networks have leveraged now for several years.

In this case, making thousands of hours available to viewers resulted from the large quantities of digitally encoded video and a wide area network (WAN) described by Cisco’s Service Provider Group Chief Technical Officer Bob McIntyre as "a virtual 450 Mbps pipe between Beijing and the studios in Los Angles and New York."

"All of the video content from all the venues, even the multiple camera angles, will be shipped back to… the editors," said McIntyre in a podcast prior to games.

That step involves such tasks as adding statistics, information and closed captioning, and formatting for multiple screens.

Apart from a fast and secure WAN, a three-screens strategy also increasingly requires making that step as automated as possible. The real-time expectations for an event such as the Olympics are high.

"You can’t be late," McIntyre said.