More Related Stories

White Paper: Page (1) of 2 - 10/26/05

email article print page

Triple Play, IPTV & VoD The Route To Market For UK ISPs

Mass Market Telco TV Using Hybrid Free-To-Air/IPTV Services

By Alexander Cameron

There are more than 300 ISPs of varying sizes in the UK, from VISP resellers to tier 1 backbone carriers most resell BT Wholesales core DSL product, basing their service costs on the deals they can offer on BT Central backhaul, network bandwidth and external connectivity arrangements. They share a common destiny in that it is not longer acceptable that their networks are ?best effort but they are evolving into QoS-enabled multi-service architectures, incorporating partitioned virtual channels of voice, video and data traffic.

Bandwidth is rapidly becoming commoditized with high-speed copper technologies such as ADSL2+ and VDSL catalysing the roll-out of value-added services such as HDTV. The speed of the connection matters less and less as time goes on whats becoming more and more important every day is what the connection is used for. The cornerstone of all these services is the broadband connectivity that empowers each one of them.

The crowded television market is also changing at an unprecedented pace thanks to the surge in interest for IP-based delivery. The future of the market is no longer solely the big boys domain the future lies in aggregated niche audiences gathered and owned by ISPs and telcos. Digital distribution is enabling ?long tail economic models that make niche back-catalogue library assets more profitable than premium content. Content owners are slowly retiring the idea of audience figures in the millions and getting used to the idea of fractions of highly-targeted demographic groups in the thousands and tens of thousands.

The drive towards ?telco TV has been led by large US telecoms companies wanting to compete against cable carriers stealing telephony revenues through their triple play packages. But this scenario is considerably more relevant in most other parts of the world other than the UK, where the market share of the four main platforms (Sky Digital, NTL, Telewest & Freeview) is far more established and the technology more mature. There are precious few opportunities for ISPs to compete and differentiate what they offer as what already exists in a saturated market. Indeed its ironic that the vast majority of UK technology companies trading in the IPTV space have never had their products deployed in their country of operation.

Most companies researching video-centric technology have spent so much time in perpetual loops second-guessing themselves that they have not been able to look past the basic models of deployment to help understand the possibilities the technology empowers. In laymans terms, theyre so worried about viability that they havent used their imagination to think of compelling applications and their constituent parts. 

So as the inevitable march towards the triple-play panacea continues unabated, 2 viable routes to market in the British entertainment market have been identified to date create and monopolise your own IPTV service platform or add value to an existing one. The former is a path that awaits the most fearless (HomeChoice, Bulldog, KIT), whereas the majority seem to be tilting in favour of the latter (BT, Eclipse). In practice, this means adding a powerful interactive back-channel to either Freeview, or its new cousin, FreeSat. What is also an interesting angle is that the pass-through approach for DSL TV used by satellite operators in Europe (e.g. CanalSat and TPS service with France Telecom ?MaLigne.TV) does not seem to have the same interest in the UK, despite its apparent effectiveness and natural habitat as a competitive weapon against cable rivals.

Many ISPs are rightly sceptical of IPTV technology, the networks ability to run TV services, and indeed even the business models the existing precedents currently run on. Some simply do not have the resources to countenance even going so far as to provide the simplest of voice services. But in such a fiercely competitive and fast-moving industry, its important to keep up with the Joneses or you get left behind very quickly, and in telecoms terms that tends to be weeks rather than months or years. Equally important is the need to differentiate products and services from rivals. So our business question is how do we get these companies to market with TV services now and insure them against the need to deploy more advanced services in future?

Operators wanting to build their own platforms are more than capable of finding their own way, but they are a percentage of the top ten UK carriers, predominantly owning their own infrastructure (such as LLU networks). That leaves the other huge segment of the market over 90% of the industry that is still researching viability and flirting with the idea of expanding their commercial reach if the necessary resources are conveniently available.

The business that best fits these potential vendors is the add-value platform model i.e. providing the broadband back-channel as it can be standardised, differentiated and also be marketed in the most flexible way. The two trends that can be immediately exploited are the growth in Free-to-Air (FTA) television (Freeview, FreeSat, or collectively known as ?Freeband) and the demand for Sky Plus-like DVR/PVR devices.

This approach can be described as multi-value, as it is built on the premise that a marriage of the technology systems adds value to both individually and the end product collectively. For all their financial and commercial clout, BSkyB can arguably do little to rival the potential of Freeview combined with a DVD/VoD rental partner offering tens of thousands of video titles.

If our objective is to empower ISPs to grab triple play market share as their larger rivals also do, their best option is to look at TV in the wider context of the digital home network, or the residential IP ecosystem. In the current conditions, it will be some time until all services are transitioned onto exclusive IP-based delivery, and until then a hybrid model needs to be used to grow their subscriber base.

In todays market, the triple-play monthly bundle price ceiling (i.e. the point at which the cost of the service outweighs the value the customer perceives they are getting and becomes a churn incentive) is approximately £45-50. The good news is that it is generally accepted that the demand for value-added broadband services is clearly growing, and the vast majority of customers look to their service providers to act both as a guide, and as the intermediary that can make the technology available to them.

The simplest way for ISPs in the UK to deploy mass market TV services at this moment is to offer a branded Free-to-Air television PVR receiver (based on either Freeview or FreeSat) that has built-in Ethernet capability to provide a broadband back-channel return path. Such a device can accomplish exactly what these companies are looking to achieve so called brand mindshare and customer retention. Such devices are already plentiful in electronic shops, use the same (ugly) internal software and can be sourced as base components extremely cheaply in Asian markets.

It is increasingly thought that the simplest solution for enabling broadband network connectivity in a set-top box without complex re-wiring is via HomePlug-style technology (broadband over power cabling). The recently ratified HomePlug AV specification guarantees up to 200Mbit/s (twice the speed of traditional LANs) throughput over a houses existing electricity cabling, which is enough for more than 10 high-definition TV channels.