New approaches to development can bring TV innovation from operator speed to web speed with the right systems integration
An eBook by Ben Schwarz with additional writing from Philip Hunter
Agility and “web speed” have become rallying calls for pay TV operators in the multiscreen era where the rate at which services must evolve and new features appear has increased by an order of magnitude. Bringing on new customer-facing features within weeks was confined in the past to greenfield deployments but is now becoming essential even for operators encumbered by legacy. Innovations in software development, systems integration, operations and testing cycles are changing this, along with a new approach to systems integration.
A major milestone in the checkered history of mobile broadcast has been reached with a demonstration at the US Super Bowl, one of the country’s biggest and most iconic sporting events. For years mobile broadcast has stuttered, let down by poor business models, the cost of infrastructure and lack of support on consumer devices. While all of these remain hurdles, the latest version of the technology, LTE Broadcast, does really look as if at last it is going to prevail over them. It is ironic that the first LTE Broadcast transmission over a commercial LTE network by Australian operator Telstra in October 2013 almost coincided with the closure of the one of the last services based on the earlier DVB-H technology that was once widely viewed as opening the era of mobile broadcast. The fact that did not happen was not really a reflection of DVB-H itself but more the costs associated with its deployment and fact that devices did not support it.
While talk of successful business models and monetization is still premature, two big related factors have changed in favour of mobile broadcast. These are the arrival of tablets and larger smartphones as attractive and capable viewing devices, which in turn is driving up mobile data traffic at almost exponential rates. Much of that traffic soaking up backhaul bandwidth and RAN (Radio Access Network) spectrum is unicast video. Yet a lot of that at certain peak times is live streaming video that is consumed by many people at a given time. If it could be multicast, then only one instance of that video would need to be transmitted across a given backhaul link and RAN cell. The potential for cost saving as well as improved QoS is immense.
Events like Super Bowl are precisely what we mean here, since there are large numbers of people in one place, many of whom would love to snack relevant video on their mobile handsets such as action replays, or associated data like player stats. Verizon’s Super Bowl experiment is not full scale as it does not involve general user handsets. It will not yet indicate what impact the technology has on end to end network performance and congestion. But it is a good proof of concept that will be followed by larger experiments when wider handset support is available.
In fact the Verizon Wireless live demo, running over five days at Bryant Park in New York, involves streaming of live NFL (National Football League) content to dedicated tablets in the facility called "Verizon Power House" set up in Bryant Park using LTE Broadcast technology provided by chip maker Sequans. The tablets are running Sequans' eMBMS-capable Mont Blanc LTE platform and issued to visitors try out the LTE streaming prior to and during the event.
While this was going on, European operators such as EE and Orange France have been carrying out small-scale trials of LTE Broadcast technology, having in the past tried out DVB-H. They now believe, like Verizon, that the initial motivation for LTE Broadcast will be to optimize capacity and improve service quality for customers in crowded areas. But as Verizon has noted, availability of mobile broadcast in such crowded areas will at the very least help gain and retain customers, with business opportunities such as location based advertising quickly following.
The other key thing is that LTE Broadcast has unwavering support from key industry players like Ericsson and Alcatel-Lucent, as well as those like Qualcomm that got their fingers burned earlier on with mobile broadcast. We are now looking at handset availability and the first operational services sometime in 2015.
70’s – France’s young president elect Giscard d’Estaing comes to office and realizing that the French Telephone system is years behind those of other countries. Huge investment is ploughed into the state owned PTT. During the decade, France moved from an antiquated system to a state-of-the-art Signaling System 7 (SS7) Telephone network.
When I came to France as a boy in 1974 it took months for our family to get our first phone line installed – that was already a vast improvement over the previous decade’s standard 2-year waiting list. By our second move in 1977 it was just a few days, which seemed a bit like science fiction at the time and vastly impressed family and friends back home in the UK.
Before most people had heard of the Internet or IP, we were busy in France discovering online services with the Minitel system which saw it usage boom in the 80s and early 90s. The leading edge was taken off French Telecoms as there was then much hesitation of how to best react to the emerging Internet in the 90’s, embrace it or try to impose that national Mintel standard? By the time it became clear that the Web would replace the Minitel, other countries got to catch-up with the network savvy French and the European ISP business from the mid-90’s seemed relatively balanced although we were all trailing behind the US.
A combination of a sound regulatory approach and French business acumen the French Telco sector back on track in the second half of the 90’s.
Competition was introduced effectively without bringing the incumbent to its knees. Compared to the UK where BT was almost killed off by Thatcher or Germany where DT’s stranglehold on access networks is still to be fully broken, the French seemed to have got a pretty good balance.
So when Free, a new entrant in the ISP business built from a Mintel empire (ILIAD) aggressively launched their first triple-play offer in 2003, France Telecom was able to reciprocate and the other challengers like 9-Cegetel and Club Internet were also able to follow suite.
The French Telecoms subscribers saw the most incredible decade until about 2010 with always more services for a fixed price of about 30€. But Iliad/Free surreptitiously broke the 29,99€ rule it had forced on the industry, by removing a few standard features that became add-ons (like €1,99 for TV service). This improved ARPU and although detailed figures are hard to come by, it is no secret that ILIAD/Free make significant profit from their ADSL ISP-Business (a 40% margin is often cited).
This profit and a favourable regulatory approach (Free bought the 4th mobile 3G operator licence at a discount in 2009 paying just 240 M€ where the other 3 operators had paid 619M in 2000) meant that Free was able to launch a very aggressive mobile offering in January 2012. The success was immediate with about a million clients by the end of that month alone.
Despite being a free market economy, most French commentators agree that the 1000 layoffs competitor SFR announced in 2013 can be clearly attributed to Free’s price “dumping”. As an independent consultant based in Paris and focussed on new services, I’ve seen I’ve seen many operator projects canned this year due to innovation budgets being cut at Orange, Bouygues Telecom and SFR. French 4G is at least a 2-year behind what US operators have already deployed.
So what’s going wrong?
Too much of anything – even a good thing – can be bad. After proving that a balanced approach to (de)regulation really does work, France seems to have lost its unique touch.
The three incumbent Mobile operators were hoping that 4G would help fight off the low-cost battering from Free. But Free has entered the 4G market with a bang, announcing that 4G services would be provided at the same price as with 3G. All operators have had to follow suit ruining the basic tenet of Telco strategy, where superior services requiring significant Capex can bring in extra revenues. The only way forward seems to be lowering costs.
This situation of all-out war has led Bouygues Telecom to announce seriously low-cost ISP services to be detailed in January 2014, with as-much-as-you-can-eat triple-play offerings going for 15€ per month (compared to Free’s current 30-37€).
The price war has got out of hand to the extent that the French government has become involved in the industry-wide slanging match, although it’s not at all clear what it can actually do except maybe give the regulator some more power. If the situation keeps on escalating, subscriber glee will be short-lived in 2014 as one of the 4 operators is bound to go bust and maybe two other merge.
But if subscribers have so far only won out from this situation, shareholder prospects are less clear.
The situation is almost reversed if you look just at the last 6 months
If last years theme was OTT (after a Multi-Screen show in 2010), how are we going to put 2012 into a nice neat box?
I'll gamble on the 2012 theme being something like "IPTV is dead long live OTT!"
I doubt the never-ending rumor mill on AppleTV will have an impact yet in 2012, so Apple Google & Microsoft will wait for 2013 to be main themes...
Back to the present: see you here in a few weeks to find out if I was right for 2012 at least.
2012 is set to be a very full and well attended event judging by the number of people I know that will be there. The conference tracks have become so dense that you need a day to study the program before deciding where to go. I'll just play it by ear on the day. The number of companies to see on the exhibition floor is so big anyway, that I might not be able to attend much.
IPTV has grown into a big show so there are getting to be more parties and extra add-on events.
I’ll be going to the Verimatrix "English Breakfast" on the first day which has a mini-conference on advanced video deployment (but at least I admit it it’s the English sausages that attract me).
Mariner Partner are a Canadian IPTV quality-monitoring specialist. They have a drinks party just after the first day, this year I won’t need to gate-crash as I was actually invited.
The Red Bull event later in the evening will probably be packed as usual and I’ve only got one of the tickets that are valid “until capacity is reached”, so maybe not…
On day two Irdeto is hosting a morning OTT strategy event. But I probably won’t make that one, not least because they didn’t invite me )-:
Of course day two wraps up with the glitzy prizes, this year at the London Film Museum. I went to the first 3 events as a judge, but there’s no way I will fork out £300 needed when you don’t have an invite.
I’m sure there are many more events but that’s what I’ve spotted so far.
From the list of speakers and potential prize-winners, it is clear that there will be plenty of Operators in London.
I’ll be looking to catch up with some news from Malaysia Telecom that are one of the first Huawei IPTV customers outside of China.
There’s a wrath of interesting people from Orange so I’ll be looking to get the latest form some ex-colleagues there. Also from France, I’ll try to catch up with Bouygues Telecom, which has had an amazing success story as a mobile challenger getting towards a million subs in three years. Swisscom is one of the European Telcos that is still happy with the Microsoft’s IPTV solution so I’ll tray and get some of the story there.
Paul Berriman, the veteran CTO of PCCW who launched one of the worlds first IPTV deployments in Hong Kong will be there too and it's a while since I've caught up with him.
From the trade floor my selection of vendors whose product demos I want to see include:
Whoever has cool Android boxes to show (Echostar who impressed in last year don't seem to be present).
Then Harmonic & Envivio to try and really understand how they differ.
Rovi, to actually see the demos of what I’ve been talking about for a while.
Then there is Siemens, where I want to see how their video flicking solution has fared in the market.
Zappware is a middleware alternative to NDS & Nagra. As I missed the later two at IBC I’ll try to see those demos that everyone was raving about in 2011.
Red Bee have acquired TV Genius since last year so I’ll try and find out how that’s going. There is also a new kid on the block from what I gather with Shazam moving into TV recommendation also.
I haven’t been to see Cisco in a while and they seem to have their house in order with Videoscape now so I’ll try and get an update on that too.
Ineoquest were talking a lot about ABR for OTT last year, before any of the other monitoring companies and I’d like to learn if they’ve had any success with that (as usual I, then you, will have to read between the lines because they won’t actually say directly).
I need an update on the chip maker's roadmap and ambitions in the STB space so I’ll be visiting one or more of Intel, Sigma Designs & / or STM.
I suppose you can’t blog on an event like this without talking to some of the connected TV app developers like WizzTivi.
The OTT market is already showing some results in the diaspora market so I’ll also catch up with Live Asia TV if possible.
Finally I’m due for an update on what SoftAtHome are doing.
I have some catching up, discovering to do with people that will be there without a booth. I hope to meet MediaMelon a US based CDN supplier specialized in OTT and my friends from 3 Vision, thebrainbehind, MediaTVCom, OnCubed, AppMarket.tv, etc.
Now I need to go to sleep for a couple of days, to charge up the batteries so I will actually be able to get through at least some of that ... report coming soon.
During a business lunch in 2002 I had my first real conversation with my boss’s boss’s boss in France Telecom. Joining the table late, I found the discussion already heated. Jean-Jacques Damlamian, the longest standing board member the company has ever had was then the acting CTO (I say acting because there was no such title, JJD as he was known internally is now retired). He was adamant: « We have just made the biggest mistake in the telecoms industry’s history, since Graham Bell. » France Telecom had launched its first commercial ADSL packages for private subscribers just a few years previously. Damlamian was referring to the fact that these packages were limited only in speed, and unlimited in volume of data. Already it was becoming clear some users’ requirements were thousands of times higher than the average user. France Telecom was budgeting millions of Capital expenditure for just a handful of subscribers.
Last week, David Amzallag, Amdocs’ new CTO explained to me how he believes his company’s vision might contribute to getting the industry out of the fatal trap it set for itself over a decade ago. I met him in the run up to the 2011 Broadband Forum in Paris.
David just left from a 4-year stint as BT’s chief scientist. Those years spent on capacity planning, convinced him that even if networks get smarter and grow in capacity as fast as possible, current usage trends will outstrip our best efforts, leading to major bottlenecks and frustrated subscribers. David went as far as to say that T1s and T2 are in serious trouble as their bread and butter gets commoditized.
MPLS, one of those technologies supposed to make capacity management much more flexible, has delivered only part of the promises so far; capacity is running out anyway, however flexibly it’s managed. Amdocs see a metered future.
So based on the assumption that demand is going to exceed capacity, Amdocs commissioned a study on the future of data pricing from Heavy Reading. Amdocs’s core business is where Operations Support Systems (OSS) and Billing Systems (BSS) meet customer experience so they have a vested interest in the outcome. Reassuringly, the study concludes that operators believe users are willing to pay more for more and are willing to accept some kind of flexibility (Over 80% of interviewed operators said that their future plans include data plan shared between several devices e.g. tablet & smartphone. Also, over 65% said their future plans include data plans shared between several family members). Heavy Reading appropriately interviewed operators, because they are Amdocs’ customers. The research would carry more weight if it also included the opinions of real subscribers.
Amdocs don’t believe the problem will be solved with sponsored connectivity, where, for example, Facebook pay the ISP a few dollars to carry their traffic. David went on to say that the only way forward is for the network’s Operational Support Systems (OSS) to be better linked to the business issues.
He described several use cases with an overall data quota for the whole family across many devices. Parents might be prepared to pay a premium to be assured that during their single daily leisure hour, bandwidth was guaranteed. Children could swap their leftover bandwidth allowance amongst themselves. For the more tech savvy families, the hard-core gamer might even give up some bandwidth in exchange for better latency that the bandwidth hungry movie-buff sibling doesn’t need. Towards the end of the month, if the operator sends a warning message that data limits will be probably be exceeded, the family could decide either to extend existing plans for a premium or enforce lower usage until next month. Thus maybe watching a few older movies from the home NAS instead of streaming from the cloud.
For other customer segments like single adults, Amdocs sees people wanting to fulfil unique needs at specific times through different devices. Subscribers will be prepared to pay for this and data plans will need to be so flexible that David says the real name of the game will be personalization. He used the expression of “Quality of Service On Demand” and “dynamic customer profiling” to describe such cases.
These quota based premium packages could co-exist with unlimited ones, but Amzallag insists the latter would suffer much lower bandwidth. He said that net neutrality wouldn’t be completely gone as prioritization isn’t based on packet contents but on whether the customer is paying a premium or not. Of course the Net Neutrality activists would disagree saying that the corollary of prioritization is de-prioritization, which means blocking if congestion is too bad.
Other detractors can forcefully argue that there will be no turning back from “as much as I can eat” data plans. But the Amdocs vision addresses that pretty squarely saying unlimited data can co-exist with quota based plans. My remaining doubt is a central one. Do subscribers want this? The "Global Tribes" consumer research, conducted by Coleman Parkes, that Amdocs published earlier this year, addresses the question "are consumers prepared to pay more for more?" For most segments and markets it concludes reassuring that yes they are. However, having myself witnessed first hand how incredibly different markets around the world are; I avoid using patterns from one market to make deductions for another. UK and US customers are clearly being weaned away from unlimited plans. My gut feeling is that subscribers in the rest of Europe and places like Russia that benefit from fierce ISP competition might be harder to transition away from unlimited plans. Despite its recent problems, the Netflix model has proven it can fly; limited data packages could shoot the model straight out of the sky.
The context of the data plan debate will probably evolve rapidly as the boundary between the fixed-line and the mobile broadband markets gets fuzzier all the time. Quota based plans have been becoming the norm on mobile broadband. My daughter left home for a tiny 1-roomed flat in Paris last month and in looking for an ISP on a very tight budget, we concluded that using a mobile broadband subscription might be best – she only uses Facebook and email regularly and will keep away from streaming for now (which could incite illicit downloading when she’s back home, but that’s another story...) So I look forward to talking again with David maybe at next year’s Broadband World Forum, to see how things have panned out.
After writing this I found out on twitter that fierce competition on the iPhone 4S launch is pushing the big US operators back towards unlimited ... looks like the market may not be ready after all. Exciting yoyo times.
Operators seem to all copy each other in any given market; in France it is blatant.
Since Free created the 29,99€ “as much as you can eat” price-point in 2001, adding TV in 2003 content has been one of the main messages behind most ad campaigns for triple-play bundles. At least this was true until this year.
Two years ago, Bouygues Telecom came out with one of the world’s first quad play offers priced at 44,90€ per month 2 years ago, but they still only have a small TV footprint.
After a long battle, Orange, the incumbent here, gained regulatory authorization to also launch quad-play this summer.
SFR, part owned by Vodafone, is ready to launch a quad play offer, but so far has just added a VoIP to mobile option to its existing triple play and is still waiting to see how things pan out.
It has become more and more evident that Orange is moving out of content in the big exclusive way it had been pushing since 2004. In September 2010, all of Orange's 5 exclusive cinema/series channels and its Sports channel were officially put up for sale. We still don't know the outcome.
So now, as if in unison, the 3 major operators have dropped content and TV related messages from their 2010 multi-play ad campaigns.
SFR is focusing on customer service with a free Hotline. Free has also focused on a message about getting more and more service for always the same price as well as a second message about how much more (geeky) fun Free is.
Whereas Orange used to aggressively promote its own content and interactive TV features, they now only mention TV as one of many features.
The immediate conclusion to draw is that IPTV has become a commodity here. Most other mass-market commodities like water and electricity are delivered by monopolies despite the government’s best efforts to create a competitive environment. Could that mean that IPTV is one of those water-like “natural monopolies”?
But wondering about delivering say water or electricity to a household, are there any conceivable situations under which they are delivered at a loss? The answer is clearly no.
The land-grab rush for IPTV is now over and it seems we’re entering a cost control period. The official reason Orange’s new CEO Stéphane Richard gave for pulling out of exclusive living room cinema and sports, is that his company was loosing 150M€ a year on each.
What will a period of cost cutting do to IPTV? The future is all of a sudden looking a lot less clear for IPTV in France. Anyone who has actually built an IPTV business model knows that to make it float, a little creativity is required. Cost-cutters are not creative people!
It’s a moot point as to whether or not turning back is an option. Is it possible to pose the un-thinkable question for many in the industry: “could a triple-play provider, simply pull out of TV?”
One small reason for hope has a little sting in the tail.
French fibre rollout has been stopping and starting for almost five years. About a million homes are now passed. Yet only 10% of those homes are taking up a fibre service. It seems the culprit is a sluggish commercial approach from the operators. Indeed, I know there is fibre in my street in the west of Paris, but I have had no luck finding somewhere to subscribe. French operators are milking the DSL cash cow and more significantly, they haven’t yet figured how to sell fibre more expensively than DSL except to a few geeks.
The sting here is that instead of becoming the great USP to justify higher prices, the TV component for triple-play is now perceived as an expensive commodity operators have to provide, but haven’t been able to get any money from. Fibre was supposed to change all that with multiple full HD channels galore, but the wind seams to no longer be powering the sails of that dream.
We are in the age of OTT with devices available over-the-shelf that people can pick-up in the high street. France is still the most innovative IPTV market place. Despite the global 3D flop, which I saw coming before the summer (see here), the first-ever commercial 3D IPTV service was just announced in France by Dorcel for adult on demand content.
Clever operators will be those that stop trying to do it all themselves, recognize their weaknesses and concentrate on their strengths. This means building an ecosystem of suppliers where the end customer is no longer someone representing just ARPU or churn, but a stakeholder with a say in the ecosystem. It’s her living room everyone is fighting over, so give her a say. If she wants to add say an Apple-TV to her cable subscription, then make sure you help her do that. If she asks you for a hybrid box that has all the home networking features bar coffee-making, make sure you have a partner to provide one. If she only wants access to FTA channels, have a deal ready with the cheapest zapper box maker for your market.
It’s is not official yet, but my clear vision is that IPTV, as a walled garden service delivered by Telcos into the living room, is indeed dying a slow death here in France. But long live TV over IP in its many new forms. As it’s getting to be quite a jungle out there with the likes of Google entering the fray, an ISP, satellite operators or phone company close to home might be just the person needed to help cope in this brave new TV world.
[UPDATE March 11 2011] After a really interesting debate on this topic on LinkedIn, good news from the IP&TV World Forum organizers (Gavin Whitechurch). We have a slot to discuss this over breakfast in person at Olympia, Thursday 24th March 8AM. Hope you can make it.