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Back from my first Anga

My feelings from the Anga cable congress can be summed up by my reaction to Cologne’s main landmark.

A surrealist sight hits the visitor exiting the main Cologne train station. The gargantuan cathedral called the ‘Dome’ seems to rear up from the past; which is how I perceive the cable industry that Anga represents. The Dome is surrounded by modern, more ugly buildings, that seem to be slowly encroaching upon it’s lebensraum just like the Internet or DTT threaten Cable. The train station itself, with its underground lines, represents different hybrid ways of transporting things; I wonder if it’s undermining or on the contrary underpinning the great old cathedral’s foundations. From the outside it’s as if the majestic building, symbol of the cable industry, were dying. It’s blackened at places and has almost permanent scaffolding that seems to hold it up.

A different story emerges when you are inside. One’s jaw drops with the shear size. Wikipedia just told me that it was once the tallest building in the world. The vertical proportions of the arches stretch upwards as if some divine hand had pulled malleable stone upwards. Then you look closer and realise that no, this is the work of hundreds of humble stonecutters over centuries. All the carefully crafted slabs stack up in powerful columns, just like the innumerable insignificant single-valley cable plants, in nearby Switzerland, add up to a powerful force. The strength of this force will keep enemies at bay for the foreseeable future.

OK I'll leave the poetry there; now for some reporting:

A first surprise on my first visit to Anga is that it's marketed as a cable event when IPTV, FTTx, Satellite, hybrid and more abound. OK so there are a bunch of booths with nothing more than little bits of cable on display, but no-one ever stops on those anyway and one sees one or two even at IPTV World forum. The organisers must be doing something right though because at least one company I met, Zappware, were on the waiting list and didn’t get a booth.

Wondering around for two days wasn’t enough for my sense of direction to kick in so I kept on getting lost in the huge hall's two sections. There were an order of magnitude less booths than say at IBC, but almost all of them were mid sized. I used the Korea “Green IT” pavilion at one end as a landmark. It was a mistake because each time I passed it I felt a little worse about how clueless-marketers are trying to jump on the green bandwagon and have all but broken it before it has even left the station. The only green thing in that pavilion was the word.

On the positive side, the TivO demo on the Conax booth rocked. It was by far the most convincing illustration an industry oxymoron: walled garden OTT, where operators give access to all the content that is readily available out there, while reassuringly (?) never letting the subscriber out of their sight. The business models and content deals are not yet clear as earlier failures from the likes of Joost show, but the end-user proposition is now overwhelmingly compelling. It’s beautiful. I want it now in my home now!

The OpenTV 3D demo was the first, modest but effective, effort of using 3D in the interface itself, not just the video, which I’ve seen. 3D will not be revolutionizing mainstream interfaces soon, but I definitely got the feeling of peeking into the future.

I saw three interesting companies from my hobbyhorse Quality of Experience area. Ineoquest where present with a big booth clearly hoping to push their IP and head end leadership further into the cable market. Skyline’s Dataminer product was on prominent display. It’s an interesting way to commoditize the likes of Ineoquest by putting the effort on a central piece of software, which other quality systems then report to. Another outsider in the Quality area was the German supplier Axiros. From a background of managing zillions of legacy boxes, their approach is now built on the TR69 protocol. Axiros offer a new product that sits between the device management systems (ACS) and the devices themselves (STBs) so that more meaningful info can be taken from each device. Axiros performs some of the QoE monitoring functions themselves this way.

I got a private demo from German STB maker Winbox. They had a really simple “why-didn’t-I-think-of-that” ideas and an effective demo for simple « push » playlist. A VoD server pushes short content like trailers to device’s local storage (HD or Flash memory) so a personalised preview or barker channel is available. If not a killer app, this could at least be a killer VoD-ARPU generator...

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STBs: from CAPEX to Cash-in

Un TV Connectée powered by Awox
A connected TV powered by Awox

For the last six years, I've been going around trade shows hearing and saying that the big bad wolf in IPTV economics is the STB, which typically represents up to 70% of total capital expenditure, or CAPEX in Telco-speak.

As OTT and social media are accelerating the arrival of a new technical and business environment, my premise is that the huge threat is becoming just as big an opportunity. This year's IPTV World Forum gave me more food for thought when I spoke to Awox, which has a foot in the operator set-top box market and also a smaller one in off-the-shelf devices.

The problem

Let me go back first to the initial problem I've had to surmount several times from within operator deployments.

Typically we are talking about a total cost of ownership for a single set-top box (packaged with remote cables and CAS, delivered, installed and maintained) of, say, 150€. If we have a million subscribers the math is simple. We need a spare 10% of boxes for repairs and to ship to new subscribers so the capital required would be 165M€, all for one happy operator to pay for.

All major Telco deployments have had to cross this difficult chasm. To make things worse, IP based boxes were initially very much more expensive than satellite or cable ones. In finance terms, a way of easing the pain is to remember that contrary to head-ends, STBs are a marginal cost, which means you only pay for boxes as you deploy them to customers who hopefully are, in turn, paying for a service.

Why did all of the early operators and many coming to market today want to do something so financially bizarre as own the STB?

The first reasons were security and control.

From the outset, operators needed to obey stringent security rules set out by rights holders to be given access to their content. Before considering interactive services, an operator must at least deliver plain vanilla pay-TV. For that they must have access to the premium content that people want to watch. Therefore they must adhere to the strictest security constraints imposed by content owners. A few years ago it seemed only natural that to get into such a business, one could only play by the rules. So like cable and satellite operators, who have always owned the STB and the smartcard therein, early IPTV operators did the same and most are still doing so.

But ten years on from the launch of the first IPTV commercial trials, a consensus is appearing (there is a good Farncombe white paper on this subject here). Operators only need to own a smartcard for broadcast networks that do not have an inherent return path like satellite or digital terrestrial. For IP networks, where each STB can establish an individual link with a security server, software-based security is sufficient. A smartcard is no longer required and thus, this first reason is vanishing.

Telco’s and especially incumbents have long had a phobia about letting anything that they don’t control onto their networks. They usually have a team of security gurus who have to give a blessing before any new device can be deployed. Looking back a few decades, PTT's have always jealously guarded their PSTN networks from non-vetted devices, even plain vanilla telephones. As a teenager in the early eighties in Europe (Paris & London), I remember the thrill of plugging an illegally 'smuggled' phone from the USA. The phone was made of transparent plastic with coloured LEDs. What a thrill when at the time BT, DT or FT only supplied cream or brown handsets. In the deregulated 2010 landscape, all operators have so little control over the last mile of their networks that it seems silly to pretend that owning the STB still makes a difference, and even incumbents that own the last mile are lost when it comes to managing the home network.

Awox has experienced this gradual change first hand. They got through France Telecom’s red tape with their Internet Live-radio devices currently available to Orange subscribers in France.

Service operators have always worried about stickiness. In today's Internet world, where the competition is only a mouse-click away, it’s no surprise to Awox that many Telcos have gone for a “walled garden" approach. Indeed Awox have been through those trials and tribulations with Orange already, helping the operator offer OTT services from within their walled garden. But operators still pertain that owning the STB is part of the secret to owning the subscriber, or at least locking him or her in.

Until recently, the lack of standards has meant that operators have had to develop a new portal for most new devices. This has provided yet another argument for those proponents of a tightly controlled device policy, which again ends up meaning that operators want to own the STB.

In the early days decision-makers considered that technology was the hard nut to crack. Getting digital video through IP networks and keeping the service up and running turned out indeed to be really hard. But technological difficulties were overcome in the end and the make-or-break issue for IPTV turned out to be content and features. It's been a while since anyone has risked the tired old "content is king" slogan, but it was dominant for a long time. If that 165M€ could have been spent on content rather than STBs there might well be even more competition from IPTV operators today.

Let's leave the past there. What has changed so that 2010 might be different?

Costs can come down:

As a device vendor Awox sees itself helping move the STB away from its current CAPEX-devouring Achilles heel position, in particular through the use of standards.

Throughout the whole tech industry, standards have been the best way to lower costs. Linux Vs Windows is such an example. Awox is one of the IPTV ecosystem's DLNA champions. Olivier Carmona, the CMO, pointed out that this is particularly true for advanced home networking, for example. You can commoditize many components so that in a fully DLNA home network, for example, a low-end hard disk simply plugged into an STB becomes a ridiculously cheap NAS. Looking further down the road, Awox have contributed DTCP/IP SYNC & DTCP/IP SOURCE to the spec so that DLNA systems will be able to distribute premium content within the home. It's no longer science fiction for that same 30€ hard disk to enable PVR functionality from a DLNA enabled Pay TV service. This is yet another initiative that goes against traditional STB middleware vendors.

Other reasons:

  • Content owners were badly bruised from the MP3 music phenomenon - I almost wrote debacle there. However, the story is still unfolding and some musicians are living well. Musicians, like the big film studios, have now acknowledged that they must innovate. They will already agree to release content into new distribution channels and even consider entirely new business models.
  • Users have got used to the Internet as a source of content, even if they don't yet get premium TV from that source. They expect ready access to what is considered as free, like YouTube.
  • New initiatives to deliver premium content are still searching for their business models. Some, like Hulu, are bound to find some kind of stability in 2010. In the same vein, many TV stations are eager for a chance to reach out directly to the world's hundreds of millions of broadband subscribers.
  • In this area, the never-ending success of Apple has shown that people, beyond early adopters, will pay if the product, including digital content, is truly desirable.
  • Until now, TV-based widgets have been a gimmick. Indeed, if you want stock quotes in your living room you will either use your laptop, smart-phone or some tablet. But finally, demos at the 2009 IBC (more at CES, then NAB this year) are showing some really useful widgets. The secret ingredient seems to be the interactions with content itself, which NDS's Oona concept illustrates well.
  • Early adopters have shown that they are prepared to pay for a physical device - as long as it is desirable. Take-up of expensive devices like the Sling-box is good evidence. Some pundits predict the latest Tivo box will reinvent TV yet again in 2010.
  • The advent of home networks has led users to expect some control over what goes into their sitting rooms. DLNA championed by Awox will accelerate this further. Empowering users with a wider and constantly renewed choice of devices makes them happy. The marketing message is that the pain of paying is replaced by the power of choice.
  • Operators are scrambling to deliver sexy new 2.0 features. Big companies are rarely successful at this kind of catch-up game. I eagerly await some real figures from Verizon's much-touted Fios Twitter and Facebook implementations to see if we have reached a turning point (I heard at IPTV World Forum in March that only 10% of the user base knew about the social media features).

There are two ways of looking at the OTT box market. Some are saying that the huge variety of devices, ranging from FetchTV to Myka or Roku through Apple TV, have not yet made a huge impact. I think the glass is half full: there is such a strong a vibrant offer out there, as well as a real demand, I have no doubt that it's just a question of time - in quarters, not years - before one meets the other and we see one of the OTT services turn their huge mind-share into an equivalent market-share and then ARPU. TiVo has already shown what success can look like, albeit at a modest scale. If a box were to be operator endorsed, that could only help and the TiVo reincarnation in the UK market with Virgin backing could create a de facto standard.

Google's entry into the TV space is only a question of time. Apple, too, will eventually get it right and both giants will get a slice of the sitting room pie. Again the only sensible way forward for operators is openness, as Martin Peronnet, CEO of Monaco Telecom, pointed out during IPTV World Forum. He pointed to the way the iPhone's Appstore has diverted ARPU from operators and said, "never again".

With their internal processes, operators are never quick enough to get the time-to-market right on their own. Many big operators are publishing specifications of network API's. This is, for example, the case with the Orange Telco 2.0 initiative described by Stephan Hadinger during the last World Broadband Forum. The end game is for end users to always have the best of breed, sexiest new devices that they want enough to pay for. A lightweight certification process could guarantee that basic services all work. Any new over-the-top services would be the vendor's responsibility.

Getting rid of a huge financial burden is rewarding enough. But that 165M€ of cost discussed already could become extra revenue instead. Indeed, why would you want a better, newer device if you were not going to use it more often? Even if much of the content revenue goes to over-the-top suppliers, those extra hours will always enable some marginal revenue opportunities. Nothing stops operators jumping on to any success story as it emerges and delivering their own service, either OTT or in a walled garden. OTT services are bound to flow through different parts of the home network, where Awox' staunch DLNA support makes all the more sense.

In the model of my premise, if some technology turns out to be a dead-end, that would be the subscriber's issue. Leading-edge technology customers expect this to happen from time to time. No one sued their vendor over Betamax or HD-DVDs after all.

Sleek new devices are coming to market anyway. Operators must become better at encouraging their customers to use devices over which they still have some influence because they will not retain control for much longer.

Olivier Carmona commented that "Operators don't want the living room and it's content related revenues hijacked by an OTT supplier. Getting the sleekest, newest devices available into subscriber's sitting rooms seems a good proactive strategy". Beyond the technology, that I agree is cool, the true innovation is in the new relationship operators can have with their subscribers.

The whole industry claims the ability to link broadcast content with the interactive experience from the web. With an open standards DLNA approach, Awox believes that it is important to make only the link that best suits the user, the moment, the content and the available hardware.

Operators should consider launching new devices or peripherals to existing devices, that customers go out and buy in the stores; after all it will take them at least two years to make a decision ;o)

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Churn: the only real reason operators embark on monitoring projects

In the best of all possible worlds, OPEX control should be motivation enough to set-up a complete quality monitoring solution around an IPTV project.

In the projects I have seen, this is the case, but OPEX control alone leads only to skin-deep monitoring without affecting core customer-care processes.

Competition from other service operators and the ensuing churn is the call to action deep enough to review core processes.

To fix the quality issue you need the technical teams to work with customer support and marketing teams.

As I posted recently (here), a changing content landscape with new stakeholders will vastly increase the needs for monitoring. So in the end monitoring is indeed a blue ocean market, but one that needs customers operating in blood-red seas.

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IPTV World Forum reports on Videonet

IPTV World Forum blogs are on videonet.

Overall there was a great attendance, with lots of people coming to Olympia to do business. The booths were decent although I didn't spot many exciting innovations this year and as usual the conference was of varying quality, from gems to blatant sales pitches.

The 2010 conference taught me that Canvas is a purely British thing for now, and a few companies companies stood out for me:

  • Netgem for their ability to do fancy stuff with run-of-the-mill chipsets,
  • Echostar for finally winning a deserved award for Sling-loaded
  • BeeSmart for their interesting freebee initiative,
  • Intel for getting Sodaville up and running, most impressive with Amino.

But overall it was a good show on my subjective scale.

Day 1 blog post is here

Day 2 blog post is here

Day 3 blog post is here.

Also some in depth analysis of some of the issues I became aware of at the show to follow.

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I am going to EUROITV2010

After what feels like hundreds of IPTV shows - well probably it was only dozens - I feel an urge to replenish my intellect with some really new Ideas.

I was whining to Arian Koster, a friend from KPN, about how commercial all the shows have become as IPTV is now mainstream. He told me of an academic show where speakers still have to compete on merit rather than budget. So unless there's a strong reason that stops me, I intend to go to the show he recommended after he went last year. It's here: http://www.euroitv2010.org/. Maybe I'm naive, but I feel reassured that you still can't register. The organizers seem focussed on the content of the show for now.

Please drop me a line if you have any feedback from the show.

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Social X 2010

I’ve been called an IPTV veteran, which makes me feel a bit outdated. People must unfortunately be right because the biggest surprise when I first arrived at the Social X event in London on Tuesday was how much younger people were, with trendier clothes and many more women than at your typical “veteran’s” IPTV event. (the X in Social X is for Media, TV, Mobile, Enterprise or anything else you fancy). Also, apart from a few Nokia-laden Scandinavians, non-iPhone users were very hard to spot. In fact it almost felt like an Apple convention, with dozens of MacBooks (all pros so there must be money in Social X for now) for maybe just 3 or 4 PC’s sighted in all.

I first spoke to TV Genius. In my initial daze about how different it felt, I was wondering what a content recommendation company was doing here (or maybe I’d got it wrong and was already at IPTV World Forum) until it dawned on me that the very first really powerful feature to come out of any social X network is …  wait for it … recommendation. Well Social recommendation at least. Doh.

TV Genius is a 30-person company with a B2B model, offering search and recommendation services on sites like theGuardian.co.uk and in some IPTV deployments. I was surprised to hear that the extra content added around TV listing is still only more video content. I was expecting more OTT features like actors bios from Wikipedia or something. TV Genius told me that this is due to their clients’ requirements; their technology could apparently do it all. So far all implementations including the latest with Fetch TV have a walled-garden feel to them.

TV Genius, like its competitors, uses a mix of approaches and technologies. If full anonymity is required then you can only use an approach based on the content itself. TV Genius then use a map built from anonymous user activity. The lines and bubbles on the walls of their booth are meant to convey this map. Explicit profiles can be supported, but this seems less relevant in the TV space than on the web. Many of the technologies under the hood like collaborative filtering grew up with the Internet over a decade ago. I’d be running a bit scared if Amazon were to enter this market directly.

I popped into the Cloud Computing conference to get a flavour of what this new buzzword is all about. Just enter those three words into Google and you’ll see what I mean. Eachen Fletcher from Sporting Index gave one of those refreshing talks where he had nothing to sell, just experience to share.

Is this just a little step forward draped in oozes of hype or something real?  Like with the whole social X thing the jury is also out on this one. But gosh, I feel even more of veteran in this IT environment. I remember back in the late eighties when object orientation was going to revolutionize IT. Sure it happened, but quietly, the hype just dissipated into the ether. At the same time HTML came to enable exciting web features then Java for the apps. When it turned out to be a mess of non-maintainable spaghetti code to get anything at all sophisticated up and running, XML came along with its style sheets to separate presentation from content. Around then Larry Ellison took on Microsoft with his net computer concept, and lost. The feeling I got is that cloud computing is another episode in this same drama. Much of Ellison’s vision may just have been off by a decade or so because the web wasn’t yet ubiquitous. If I were an IT manager in 2010 I’d have a team focussing on cloud computing, especially while it’s financially trendy to shift CAPEX to OPEX. That’s the biggest benefit of cloud computing, i.e. spending a lot less to start with even if the bill, 10 years on, ends up much bigger.

Back to Social X, Tom McDonnell is the man to talk to for some straight answers here. He started testing games while still at school in Liverpool. He looks young enough for that to have been yesterday so he must qualify. But after listening to him I do believe him that it was over decade ago. He’s a techie who has kept a customer-centric approach like the CTO of a content company or the CMO of a tech one.

He met up with the cofounder of his current company Monterosa while working on BBC’s ‘Test the nation’. They left in 2003 to build the web part of the program. Since then they have specialized in real-time elements to make the TV experience more enjoyable. I suppose that’s one of his definitions of Social TV (see Agit8or’s blog and comments for more or Tom’s own definition here).

When I questioned Tom about how hard Social TV is to implement in an open i.e. OTT environment, he lamented the absence of an open standard, albeit one that simply identifies shows uniquely.

McDonnell is sceptical about obscuring the main TV screen with anything widgety, especially when a good show is on. He points out that Social TV is usually personal even when it’s around a family TV show. For the time being Monterosa therefore sees Social TV as being a multi-screen experience so you can be uniquely identified and have some privacy.

Tom agreed with me that many platform operators will try to retain control through technology and that a conflict of interest could arise with TV stations. That’s why some big Telco TV operators are trying to do business directly with the production companies that own the big shows.

In the afternoon, the panel I chaired was on the challenges faced by existing TV platforms to embrace social TV. Actually, we only had Cable platforms around the table with lively speakers from UPC and Virgin so I tried to stand in a bit for the DSL crowd. The supplier NDS and the industry body GVF made up the rest of the panel.

Despite my insistence, it turns out that the tech challenges are quite hard to pinpoint. The Appstore ecosystem captured a lot of attention with questions and comments from the audience too. That at least does have a little technology issue to it, i.e. you need an application environment rather than just a web one. NDS pointed out another: we will not be able to build Social TV with Apple’s approach to third party apps. Full multitasking will be required so you never lose an instant of the live program even if there is a surge of tweets … Apart from that it does seem plain sailing from a technology standpoint.

I agree with Agit8ors comments on the surprising lack of Canvas talk at the conference. I tried baiting my NDS speaker with the fact that they are linked to Sky, a would-be Canvas-killer, but to no avail; he just smiled back politely.

I took the panel through one of the traditional crystal ball sessions. NDS sees non-content-aware widgets dying out this year. Recommendation and specifically social recommendation (i.e. recreating the water-cooler moment) is Virgin’s bet in the short term for mass-market adoption. GVF sees more user generated content pushing social X forwards whereas UPC will be happy if the Red-button just gets a bit sexier and Flash(ier) this year.

An interesting question came in from twitter on whether Social TV would remain market specific or if we’d see some international communities emerging. Nobody agreed on this one and UPC saw it as a non-issue as most programming is market specific; the Anglo-British Virgin Media unsurprisingly concurred. I pointed out that if Social X takes off significantly this could blur some boundaries and globalize the market a bit more. Writing this now I find it a depressing prospect.

I wonder if is significant that the only meeting I’d set-up in advance, with Sofanatics, a company that is a Social TV pure player, didn’t materialise because of missed tweets. Sofanatics create virtual rooms for fans to aggregate and cheer on their teams. I later found a tweet saying they had 26,000 visitors and 2000 registered users during their winter Olympics push for the hockey semi-final between Finland and the US. Visitors came from 92 countries. I caught up with Toni Laturi from the Finnish Company, who cheered me up on globalisation at least. He said, “What we learned is that the viewers really wanted to share their emotions and passion online. One guy even promised to pay his TV fee because of the service :). Expats were very involved, although that could also be due to the difficult times of the games in the middle of the night for most of us”. It looks like Sofanatics should share their data with UPC, who don’t see Social TV crossing borders.

I left this conference with new ideas. Firstly, I won’t let the hype around Social X hide the underlying paradigm shift from me anymore. I came to the conference from an IPTV perspective, narrow-mindedly expecting Social TV on the big screen. Well no longer. Tom McDonnel convinced me that, in 2010 at least, Social TV will be a multi-screen experience i.e. laptop or iPad on your knee or Smartphone in your hand. One of the conference speakers also pointed out that the TV hardware lifecycle just couldn’t match the required pace of change of bleeding-edge technology. Maybe that’s where my lingering doubt about the technology block comes from, because all the people I spoke to were adamant that technology isn’t the issue for social TV like it was for IPTV a few years ago.

My feeling like an old fart among all the youngsters was compounded by a sense of déjà-vu. Social X conferences in 2010 feel just like IPTV conferences did in 2005. Being part of a secret elite ‘in the know’. We gambled then that we were onto something big and even if IPTV still has a long way to go it looks like we were right. What a coincidence, Ian who runs the show, also started the IPTV World Series in 2005 and is one of the rare people to have made some money out of being right with IPTV. See ya next week to rant and hopefully rave a bit about that too.