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Philip Hunter

is an acknowledged science and technology writer specializing in the business and delivery of audio video services over the last 12 years, writing regularly for Videonet, Broadcast Engineering, and Cable & Satellite International, while producing 4000 words of analysis each week for research website Rethink TV.

Philip also produces white papers and technical literature for a range of leading pay TV industry brands including Verimatrix, ATEME and Sea Change.

With a background in mathematics from Cambridge University, Philip has worked in several technical fields including medical statistics, aquatic systems engineering and database design as an industry analyst and journalist.

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(English) Could France, the birthplace of mass IPTV adoption, also be its resting place?

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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.

Quad play ad from France's incumbent Orange
IPTV is just one of many messages

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.

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(English) New horizons for CAS and DRM companies beyond security.

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It has always been a mystery to me why security vendors like Verimatrix always seem to punch above their weight in the pay-TV business. If you look at other value chains, beyond the content industry, stakeholders are credited with a relative importance directly proportional to their financial standing yet Verimatrix has even more mind-share than market-share.

During IBC this year, Steve Christian set me straight and gave me a glimpse into Verimatrix’ future, opening a world of possibilities for the Pay-TV security industry. It was a humbling “why on earth hadn’t I realized that before?” moment.

I was completing a small scouting project on cross-media content recommendation (expect a post soon on this) when we met last month, so I started by picking Steve’s brain on this topic.

A critical mass of users is required before an operator can map behaviour and usage patterns. You need lots of users to get a great service, but you need a great service to get any users. The end game is to understand the patterns of content consumption.

The problem is not only theoretical. Like all Telco’s, the one I worked for was very proud of owning precious customer data. Huge data mining projects on months-old data was the only use that data usually got. TiVo is an exception in collecting data used in almost real time.

Steve’s first point was that CAS and DRM vendors are already in the right place to transparently capture the critical real-time subscriber intelligence needed to deliver a recommendation service.

In their just-released white paper (Arming Digital TV Operators with Real-Time Subscriber Behavior and Usage Data), Verimatrix quaintly call this enabling Progress and Profit. C’mon Steve, these things always come in threes, so what’s it going to be: Profiling for Progress & Profit? Hmm not so quaint, because that’s where there’s still an unresolved issue: privacy. That’s the nice thing about white papers; you can skip the tricky bits.

If privacy does prove difficult, it could however be handled in a very transparent way. The whole recommendation concept requires transparency. People need to know why they are being recommended something to willingly make more personal information available.

The hard part to fix, in getting recommendation to work well, is collecting and understanding user data collected implicitly or explicitly.

Of course understanding the content metadata and classifying all the movie genres TV programs and whatever other content available, isn’t trivial either. This is no longer a real issue as there are now dozens of companies out there with variations on semantic analysis and other approaches with which to do this. Many of the algorithms are even available as open source. Suppliers range from TV specialists like TV Genius, bee TV or Orca to web-based solutions like hunch.com, with people like Jinni somewhere in between. Of course, if you want to build a solution from scratch there are also some pure-players in the algorithm side like Think Analytics.

But all these solutions amount to nothing if you can’t get access to significant user transactions. That is why Verimatrix can solve one of the hardest parts of the problem in a more timely way than many of the above-mentioned vendors.

I didn’t discuss with Steve whether Verimatrix would be looking to develop such features, but the company’s track record suggests they are more likely to partner with whoever is best in class in this area.

Once you able to intervene in, or just under the TV, there are at least two other key areas you can intervene on: Quality management and social networking.

The burden of managing the quality of experience with an ever-increasing range of devices, and with a broadening scope of features and services, is becoming difficult to bear for operators. Some standards like TR-069 have at last emerged for basic requirements like firmware upgrades, but no standardized solutions are available for managing more advanced issues such as monitoring the service delivered.

After many years of caution, focussed on the risk of devices creating a storm of traffic if they all had the same issue to report at the same time, even the big safety-conscious Telcos are looking to deploy agents into both their STB and their home gateways.

Whether using a standard like TR-135, or as-yet proprietary products from the likes of Agama, Mariner, Witbe or Cisco, operators actively engaging in monitoring will develop a dynamic view of how services are being delivered into people’s homes. These operators will find themselves in a position to initially deliver services with a higher quality of experience and eventually deliver even better services altogether.

But the main issues operators have encountered, with embedded monitoring has been software integration. Vendors promise trivial two-week integration efforts, but this has often dragged on to yearlong projects. Here again the CAS vendors come up with a trump card: they are already integrated with all the end devices, that is: connected TVs, STBs, Tablets, smart phones and of course PCs.

But another angle Steve Christian developed was that CAS vendors are already doing monitoring. They maintain and monitor the security of pay-content. Extending from traditional pay-content to other types of content is not necessarily a huge step to take. As anyone who’s dared to get their hands dirty with something like wireshark (this is a free network protocol analysis tool) will know, there is almost no technology barrier to getting to grips with quality metrics like packet loss or network jitter. The most important metric of all is service availability that security vendors are in a prime position to report on.

Working in an ecosystem is part of a security vendor’s daily routine. To improve the quality of experience of the end user, security vendors could easily partner, say, with an EPG meta-data provider like Rovi to ensure that the right data is available at the right place at the right time. They could also use one of the EPG quality specialists like EPGenius to add value to the EPG data by analysing it, correcting discrepancies and adding things like missing series links.

The third point Steve Christian mentioned was Social networking. We didn’t really get into any details here. We were running out of time, but also the business case isn’t so compelling. Verimatrix can enable better Social-TV implementation, but I don’t yet see any clear path to market. I do believe the Social TV will be a reality soon (see my blog here). It is not yet clear who will prevail. The most compelling demos are multi-screen with the TV as a basic video output device and a laptop, smart-phone or tablet to interact with. Fitting into that ecosystem will require agility.

My talk with Verimatrix happened just about when Toy Story3 was released, which I still haven’t seen. Steve’s passion reminded me a bit of Buzz Lightyear’s mantra “From infinity to beyond” except that his could maybe be “from Security to beyond”.

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(English) Maybe not all cord cutting is so bad for the industry after all?

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I just read David Mercer's blog called "Europe’s TV Viewers Cut the Cord: Free TV Alive And Well" on Strategy Analytics blog.
I wrote a comment on their site, then suddenly the comment feature disappeared.

After reading the European Commission’s latest household communications survey, David draws a bleak picture. European's all over the continent are saying how they are leaving cable-TV for digital terrestrial which is still making big inroads throughout Europe. Read his interesting piece here.

What I wrote as a comment was that maybe cable operators will end up leaner and meaner once they shed all those subscribers that only watched FTA on their service.
ARPU should go up and customer call centers can deliver better service and/or reduce costs.
The survey doesn't say if cable are losing their triple play or high ARPU customers which would really hurt the business.

I know that in France at least, PayTV via DTT has all but flopped.
Joe Bloggs, or Madame Michu as she's called here, considers that DTT is for free TV, Cable and Satellite for pay TV and IPTV is somewhere in between.

YouView's potential success will be more of a real test for the likes of Britain's cableco Virgin or satellite platform Sky, because the DTT platform Freeview is already prevalent in the UK. A successful YouView with monetized OTT, would constitute really scary cord cutting for pay-TV execs.

I agree with David that the landscape is changing, but maybe not as fast as he implies.
I'm sure Strategy Analytics could match some operator subscriber numbers with this declarative survey to add some credibility.

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(English) Rate Adaptive White paper

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Harmonic and Verimatrix White paper from 2010 explaining the technical background and history leading up to Rate Adaptive streaming. Business impact is also covered.

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(English) Cord cutting may be a real phenomenon, but French VoD shows why maybe it’ll be slow

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I have had the fortune to be living in France since before the Internet. I experienced the French triple-play phenomenon both as a customer and as a privileged industry insider.

One of the main promises IPTV made from thou outset was to bring a huge catalogue of on demand content, i.e. the VoD mantra we all believed in that would delinearise TV viewing in an eye-blink.

Orange was the only operator to go it alone and build a unified VoD environment from scratch, negotiating content directly – back in 2003 Hollywood studios were very condescending to operators and negotiators of the first hour often need to put their pride in their pockets.

Uncannily, Canal Plus forced Orange’s hand by acquiring their then VoD supplier (which is now called CanalPlay). With hindsight, although this was a good idea at the time, Canal Plus basically speared their main competitor into existence.

But early VoD take-up was excruciatingly disappointing and only France Telecom’s deep pockets managed to sustain the effort. Issues came from the technology and design (i.e. QoE and difficulty to navigate), and of course from the catalogue.

Now we’re almost eight years down the road. Orange still isn’t very transparent with the figures and the technology and navigation problems are still not all fixed. VoD obviously isn’t the paradigm shifting success once hoped for. However, at least it’s no longer a failure. Enough of Orange’s millions of IPTV subscribers consume VoD to keep the ball rolling and I believe actually turn a profit. The initial goal of reducing churn has been met.

But the other main players here in France, are even more opaque than Orange with real VoD ARPU. I can only surmise that, with the exception of adult content, this is because the figures are even less encouraging.

I have a simple explanation for this: The other major players like Free or Numericable have multiple VoD stores. They did not build their own deep catalogue and VoD brand, but instead gave their subscribers access to branded VoD stores like CanalPlay, M6 VoD etc. So if you are a customer of one of theses operators and want to watch a movie, you first need to decide where to go. To make things worse, prices aren’t identical; so you might even need to shop around. Believe me that’s not fun with a TV remote control.

The French content industry has awoken to this issue and discussions are underway so that some films at least, will be made available exclusively via one VoD provider who would then promote them more effectively. That might alleviate the pain, bit won't fix the core problem.

So where’s the link with cord cutting?

The parallel here is that if walled garden Pay-TV may be expensive and sometimes give a feeling of being penned in, cutting loose leaves you on your own to fend for yourself. Which service do you turn to for which type of content? A bit like which VoD store do you turn to when you’re a Free customer in France?

You might laugh at this thinking I've missed the point;  arguing that say a Boxee box or an AppleTV will enable this new provider to deliver an all-in-one experience. You might be right, but by the time they reached that comfort zone of a truly lean back experience, you’ll be paying a bill very similar to a PayTV one.

Pay-TV operators have time, if they act now - no need to run, just be realistic - to open up to enough OTT content, while still delivering that all important lean-back experience. They may see numbers erode a bit, so maybe for example Sky's natural point of equilibrium is bellow the 10 million subscriber  mark despite their beliefs.

I don’t know if Pay-TV will die in the end or if as News Corp’s Operating Chief would have it 'Cord-Cutting' is 'Flavour of the month. I do know that if Pay-TV operators play their cards right, many of us will still be paying our Pay-TV bills for a while yet.