Like many technologies shaping the world around us, IPTV is evolving at different rates around the world. While it's still largely in the trial stages in Europe, it's a daily reality for millions of households across Asia. That doesn't mean it's a stable market, though, as IPTV is still experiencing growing pains. Primary among these is positioning IPTV to customers who are accustomed to their traditional analogue satellite or terrestrial services and haven't even been tempted to upgrade to digital yet. How can the market grow when people aren't aware of the benefits IPTV can offer them? Michael Abolins, Editor-in-Chief gathered four of the IPTV industry's leading figures to discuss this matter and more, and the resulting discussion provided raised some fascinating issues.
Bill Katherman - Vice President and Managing Director, Asia Pacific Region - Scientific Atlanta. In this position, Bill is responsible for region-wide sales, marketing, engineering and customer support from the company’s Shanghai location. He has served on the board of directors for the Cable and Satellite Broadcasters Association of Asia and is the Chairman of Scientific Atlanta Shanghai Company Ltd.
Jonathan Beavon - Director of Marketing, Broadband Internet Group - NDS. Jonathan Beavon works on the NDS Synamedia IP-TV and Video on Demand solution. He joined NDS in 1997 and prior to this worked in the semiconductor industry at Philips, Plessey and Hitachi. Jonathan has held a variety of engineering and international marketing roles and has worked extensively in Japan, Korea, Europe and the US and holds a degree in electronics.
Paul Berriman - Head of Strategic Market Development - PCCW. Paul Berriman was appointed as Senior Vice President of Strategy and Marketing of PCCW in July 2002 and became Head of Strategic Market Development in 2004. He currently leads a team of experts with industry experience and market vision to perform an important role in strategic market direction and the product/technology roadmaps of the company.
Geir Bjorndal - COO and Vice President, Sales and Marketing - Conax. Since 2003, Geir has led Conax’s sales and marketing activities in a period where Conax has established itself as an international player in the Conditional Access business. In January 2006, he also took over the role as Chief Operating Officer, responsible for managing the day-to-day activities of Conax.
Are consumers ready for the sophisticated features that IPTV promises to offer? Isn't there a chance that most will try once, before using IPTV in much the same manner as traditional television?
Jonathan Beavon: It is important that IPTV and on-demand services are designed well to avoid the 'once but never again' scenario. Many consumers already have access to advanced interactive services, on-demand content and DVR through existing digital TV platforms. They are already aware of the kind of features that IPTV promises to offer. Unfortunately, TV executives have been over-hyping the benefits of IPTV before any of the advanced services have been tested by consumers or even launched. Our experience shows that a gradual introduction of new technology brings the best results for both the consumer and the TV operator. A good benchmark for the introduction of new TV services is BSkyB. It has steadily introduced a stream of innovations since launching digital TV in 1998. After launch they introduced an interactive sports service with multiple camera angles, interactive advertising campaigns, an interactive news portal, an integrated digital video recorder, HD broadcasting, mobile TV, a broadband movie and sport service, DVR booking by mobile and this year they have announced their broadband access offer and plans for VoIP, IPTV and VOD.
Geir Bj¿rndal: To change a customer's existing habits traditionally takes a very long time and the challenge for an IPTV provider is to make an advanced offering based on the existing one. In most countries, TV is viewed as a lean back activity and advanced services have not been very successful. The way advanced services are offered will be to base them on the existing TV habits and to the add extra value. Therefore, a clever IPTV operator will base their business models on subscription television. Advanced services will be a supplement for the advanced consumer.
Paul Berriman: We have endeavoured to introduce sophisticated new features on a step-by-step basis. The launch product for our IPTV service was very simple in terms of available content and features compared to what we have now, and we have continued to educate the customer in the use of these new features as and when they are introduced. We now have a rich set of interactive with a pretty healthy take up rate of each.
We do not promote our NOW TV IPTV service as being IPTV, and it is probably true that most customers, especially those that have our TV-only service (IPTV with no internet access), see only a pay-TV service and are oblivious to the medium over which it is being delivered. They probably do not realise that it is being delivered over a broadband line. We emphasise the service, not the technology.Therefore it is also true that some will only use IPTV as traditional television. There is, however, a significant element of our customer base that has already demonstrated a willingness to use, and to continue to use, the sophisticated interactive service features that we offer. We expect this to grow even more over time.
Bill Katherman: The popularity of personal video recorders, or PVRs, has definitely illustrated that Asia-Pacific consumers are very much in the mode of picking and choosing what they want to watch - which is inherently one of the benefits of IPTV. Additionally, pay-TV has been available in the Asian market for 10-15 years, so consumers are aware of the functionality that can be offered. IPTV deployments are already taking off in Asia, which shows consumers are ready for this, and the market is ready as well.
Service providers may initially face the challenge of wooing Asian consumers who currently subscribe to cable or satellite services, but once consumers experience true two-way interactive television - the ability to control what they want to watch, when they want to watch it - the interest in 'on-demand' programming only grows. Linear-based programming, or scheduled television programming, is becoming a thing of the past as more and more consumers experience television on their own schedules for a personalised viewing experience.
As service providers attempt to deliver more content and services down existing infrastructures, is there a danger that service quality could be compromised?
Paul Berriman: We believe we have a truly scaleable infrastructure for IPTV delivery. We already have a rich set of sophisticated interactive services and we maintain a very high quality of service. There are some areas, such as unicast on-demand services (which we call 'NOW Select') where we have to carefully plan, monitor and build for QoS levels, but this is what a telco does as part of its core competence. We have done this for all of our services for many years.
Jonathan Beavon: There is definitely a danger that some IPTV architectures won't scale well because of over-reliance on non-scalable unicast architectures for both video and middleware systems. The introduction of HDTV channels will only exacerbate the problems in such designs. For an IPTV provider to compete with existing television services they must invest in network infrastructure and ensure they deliver a quality of service that is at least as good as cable, satellite or broadcast TV.
Bill Katherman: To compete successfully, service providers are going to have to offer more and more advanced interactive content and services. But in addition to expecting television programming on their own schedules, consumers are also growing accustomed to picture quality that few could imagine just a short time ago. Therefore, service providers cannot afford degradation in quality of service and will have to make further investments in their infrastructures. IPTV networks will need to support a rapidly expanding spectrum of advanced interactive services, such as video-on-demand, subscription VOD and network-based PVR. Additionally, high-definition television is growing in popularity. These advanced services require more bandwidth than traditional one-way TV and while IPTV is well positioned to deliver these new consumer expectations, the infrastructure must be in place to support commercial deployments.
Who do you see as an ideal IPTV customer?
Geir Bj¿rndal: All consumers are ideal, but as IPTV enables possibilities for on-demand services, the advanced user with preferences for on-demand services will be the ideal customer.
Bill Katherman: The answer to this question is two-fold. Firstly, the ideal IPTV consumer will have to have access to the infrastructure required to deliver the advanced interactive services. And, as mentioned, this infrastructure must possess the necessary bandwidth required for the services. The consumer will also have to have in-home consumer technology, such as an IPTV set-top box, to access and view the programming. Secondly, the ideal IPTV consumer has to be willing to pay for access to these advanced services. Asian households consistently value television entertainment services less than their North American or European peers. Research also shows that consumers in Asia have been reluctant to subscribe to advanced services if they must first purchase an expensive STB. As a result, service providers will see more success with IPTV deployments if they follow a model of first rolling out basic feature sets combined with a free or low-cost STB.
Paul Berriman: Anyone who watches premium TV content and uses the internet is an ideal IPTV customer, as they have at least a dual-play role for us with good opportunities for upsale to triple or quad-play. However, our research also shows that there are some segments of the market that are more likely to use more sophisticated interactive services than others. This includes homes with younger families and folks in the 30 to 50 age group.
Jonathan Beavon: Consumers won't be attracted by the IPTV technology alone. They will be attracted by a desirable choice of content. Some consumers will also be attracted by the convenience and control provided by IPTV, enabling them to take advantage of different ways of accessing and storing on-demand content. In the case of a poorly-implemented IPTV system, the ideal consumer is one who doesn't mind not watching TV as they wait for the STB to reboot after it crashes or after the system fails to respond due to scalability problems.
IPTV has been tipped within the industry news as the 'next big thing' for the last six months. When can consumers realistically expect IPTV services to become commercially available?
Bill Katherman: IPTV is already happening in a significant way today in the market in Hong Kong, which is leading the world in IPTV deployments with over 500,000 subscribers. Substantial IPTV movement is also taking place in Taiwan. The growth of IPTV would almost definitely be faster if service providers did not have to fight for each new subscriber, particularly the early adopters who have already signed up for pay-TV services from cable or satellite providers. Meanwhile, though IPTV deployments are taking place, IPTV deployments in Asia have some complex issues, including regulatory requirements; disparity in broadband access between countries, and sometimes between urban and rural areas; and the reluctance of consumers to pay for service or for devices in the home that will be necessary to access IPTV services. Each Asia-Pacific market has a different scenario that has to be considered, so the rate at which IPTV will be launched in each market will depend on the specific challenges that market faces.
Paul Berriman: You are asking the wrong commentator. Our IPTV service has already been in commercial service for almost 3 years and the results speak for themselves. We already have over 600,000 happy customers using our commercially successful (not just available) IPTV service called NOW TV with over 110 channels and other interactive services to choose from. I am afraid that in other markets the operators may be lagging much further behind. This is mainly due to a focus on confusing third party technology platform choices and having to wait for their committed, usually larger, vendors to deliver on a working version of those technologies. As far as we are concerned, growing our own IPTV technology in-house enabled us to get an early and fast start, under our own control, and very quickly reach the stage where we could take the technology platform for granted. Our network services subsidiary, Cascade, has done a marvelous job in that respect and I am pleased to see them repeating it in Thailand with TRUE Corporation's IPTV deployment (this time with CAU-equipped Huawei DSLAMS and MPEG4 STBs). Being able to take the platform for granted has meant that for the last three years we have been able to get on with the business of marketing the service, selling content and deploying new interactive services.
Geir Bjorndal: Traditional services such as VOD have already become operational with delivery over IP. There will not be a big boom, but there are reasons to believe that hybrid STBs with both a DVB chipset and IP front-end will become commercially available within a few months and that the first wave of IP services will be made available via this connection. In six months' time, IPTV services will still be rare and we will see mostly pilots and tests.
Jonathan Beavon: The 'next big thing' is H.264 and high-definition TV, which is finally arriving and will become available on IPTV systems from 2007. Microsoft's entry in to the IPTV market certainly made the media take notice of IPTV in the past year. However, IPTV has actually been steadily growing since the late 1990s and NDS has been delivering IPTV systems since 2001 in various countries spread across many continents. Microsoft's rumoured IPTV problems appear to be slowing market development as operators hesitate and plan for more bandwidth and larger-scale fiber-optic rollouts in 2007 and 2008.
How much of a strain will HD place on IPTV infrastructures, as it increasingly becomes the preferred broadcast medium?
Jonathan Beavon: Compared with standard definition, at about 2 to 3Mbps, HDTV will place huge strain on broadband networks. Current HD broadcasts are 8 to 12Mbps per stream but improvements in the encoding technology will bring this closer to 6Mbps in the coming years. Also, it is still unclear how large-scale HDTV deployments will be affected by packet loss, jitter and latency in unproven network roll-outs.
Paul Berriman: Even for PCCW, HD will require network development, but we see this as a natural development of our core business, that of building broadband networks. What does a telco do? Fundamentally, it builds bandwidth and bill people. I do admit that we can at least offer SDTV service to at least 93% of our lines in Hong Kong and HDTV service to a significant proportion of those lines. In this respect we are in a more privileged position than others with a less high density, 3D building environment. However, we do need to provide for line speeds in excess of 8Mbps (the upper limit of our current SD broadband service) and this will mean building fibre to buildings and street cabinets in order to accommodate the ADSL2+ and VDSL DSLAMS in locations much closer to the customer. This deep fibre strategy is the same as that needed by other operators, such as SBC and BT, and I can say that in order to remain competitive in all of our businesses, including broadband access and IPTV, we need to build faster broadband access networks anyway. The cost will therefore be shared across a number of our services, not just IPTV. It will also enable us to offer multiple STBs off one line, whereas we currently need to offer multiple lines for multiple STBs in the home. This increase in access bandwidth is the main area where HDTV and multiple TVs in the home will have an impact.
Bill Katherman: HD will most definitely put more strain on the IPTV infrastructure. While advanced video compression, such as MPEG-4 AVC/H.264, allows more channels to be delivered at bandwidth-saving low bitrates, even HD channels, the fact remains that HD content requires more bandwidth than standard-definition programming. Service providers will be facing considerable pressure to deliver the level and standard of content now being delivered by cable operators. Again, this means having a strong infrastructure in place. However, with the two-way nature of the IPTV network, service providers might be able to better monitor usage patterns and trends, and better plan network capacity to handle the additional strains that HD and other services place on the network.
Geir Bjorndal: Hard to say, but in the European market, HD services will be run in broadcast mode over a long period of time and will not create a large pressure on the networks.
What can the IPTV industry learn from broadband viewing services currently on offer from broadcasters like the BBC?
Jonathan Beavon: These services show that a choice or (free) high quality, on-demand content is very popular with users.The BBC's on-demand and streaming services are certainly useful for discovering models that might be attractive for users. However, the BBC, as a public service broadcaster, doesn't have the same commercial objectives as pay-TV or IPTV operators. It has been particularly interesting to see what content the BBC has had to exclude form its online services. This highlights digital rights issues that that will need to be solved for commercial IPTV operators.
Paul Berriman: We do not look at PCTV or internet TV as something comparable to IPTV over our own managed QoS network. The main differentiator is the QoS issue and, even if P2P technologies can enable a 'reasonable' or 'barely watchable' service over the internet, and even if these 'stuttervision' services get better as the Internet gets fatter so that a watchable SD picture is possible on a TV, then we will already have left that behind by moving forward to our HD service offerings. Our target market is the high quality home entertainment market, which is separate and distinct from the Internet PCTV market where, I might add, we have our own set of offerings which match those of the BBC on our Portal called NOW.COM.HK. This includes streaming TV and video clip services (also available with QoS from an 800Kbps QoS walled garden) as well as a music streaming service called MOOV.COM. We do not, therefore, look to the broadband services of folks like the BBC for service learnings in that respect. However, folks like the BBC, or, should I say, their 'sold off' assets such as BBC Technologies and BBC Broadcast (now called Red Bee Media), are world class in areas of content management, content repurposing (for example, for mobile TV) and interactive advertising. We can learn a lot from them in these areas.
Bill Katherman: As more broadband viewing services are offered we will see a change in consumer behaviour. Consumers will expect this same on-demand, personalised and selective experience across every platform. IPTV will need to be able to meet and deliver on these expectations. To achieve this, IPTV service providers will need to have an infrastructure in place to provide on-demand services across any platform. IPTV service providers will need to differentiate their services from cable and satellite. VOD, HD, PVR and other advanced interactive services will not be options, though they will be required in order to compete successfully. IPTV should enable service providers to easily pursue new opportunities. The flexibility, adaptability and robustness of the network will make IP the platform of choice for the delivery of advanced services across multiple devices for the introduction of cross-platform services. Integrated architectures for video, voice and data also means reduced capital and operational expenditures.
Geir Bjorndal: It is important for IPTV operators to understand that the money-maker in television is broadcast TV. They have to take the time to build a consumer base based on subscription services and then add on-demand services to complete the offering.
How can IPTV help the marketing industry deploy advertising more effectively?
Geir Bjorndal: IPTV can enable more targeted advertising, as it will open the possibility of addressing the individual customer with more specialised messages than today.
Jonathan Beavon: IPTV uses an always on, two-way connection and advertising will eventually be more personalised and targeted. However, greater personalisation will need be introduced gradually, as it will take time for advertisers to become comfortable with IPTV and on-demand business models. They need understand how these offerings could impact their current TV-based advertising revenues.
Bill Katherman: Since IPTV networks are true, two-way networks, service providers have access to more detailed viewing information than ever before. Service providers will be able to know what consumers are watching and then target their offerings and their advertising using this knowledge. Keeping within local privacy regulations, marketers and advertisers will be able to more accurately target viewers and measure returns on their advertising spending.
Paul Berriman: Our IPTV platform offers a number of features key to marketers becoming more effective in their advertising. This revolves around three main areas: viewership information and analysis, interactive advertising (and associated customer response and feedback) and focused targeting. Take viewership, for instance. We know when a channel is being watched, down to the second. This is a unique feature of our network-based conditional access (CAU) capability. This goes beyond normal IPTV. We can offer content providers daily viewership statistics to help them improve their content and ratings. In addition, we can tell advertisers how many customers were watching a channel when their advertisement was being shown. We do this already. With interactive advertising, the enlightened advertiser can tailor the content to solicit a response from the customer to request more information on the product by requesting mailers, interactive 'web' pages on screen or even by requesting longer on-demand promotional videos. We also do this already. Via our distributed CAU-equipped NEC DSLAM architecture we can be selective about what content is delivered to a customer. This is equally true for the channel content the customer is allowed to watch through subscription authentication as it is for the advertising we deliver in the channels. This enables us to help advertisers to be even more focused in their targeting of specific advertisements for their own different market segments.
How will IPTV work with other emerging broadcast mediums such as broadcast mobile (TV on mobile phones)?
Geir Bjorndal: As IP is a transport mechanism that can be used in most networks, an efficient cross-platform delivery can be made using IP. The use of client security devices on a cross-platform product can be ensured through open standards.
Bill Katherman: Once consumers become accustomed to more choice and control than they've ever had before, they'll expect the same functionality across all devices. IPTV provides the network foundation that makes this possible. With IPTV technology, voice, data and now television can be delivered through one IP broadband connection, giving consumers integrated video, voice and data, and content that can be shared across platforms. For example, IPTV enables users to send text messages or use instant messenger applications with their friends via the TV set. This access to a broad range of services over one broadband pipeline gives IPTV service providers a competitive advantage.
Paul Berriman: In addition to its NOW TV IPTV service, PCCW already has its NOW.COM.HK PCTV and MOOV music streaming portals on its Netvigator.com broadband internet service, as well as other content-related services, on its established next-generation fixed-line phone and 2G/3G mobile services (Sunday and PCCW Mobile respectively). These four platforms, including NOW TV, all have their own content and transactional services available to them in one form or another, be they music, financial information or movie clips. Our aim is to make, wherever practical and possible, all content and transactional services available across all platforms. We acknowledge that some content will need repurposing to fit the devices used and that many content providers will need to extend or include these other platforms in our rights agreements. This will take time. However, we already have some content available across these platforms. This includes a number of our TV channels, where we own the rights or have the mobile rights, on our PCCW Mobile TV platform. Some of the content is unicast, on-demand, and some is multicast using a proprietary Huawei 3G technology called Cell Multimedia Broadcast, which is a fore-runner of the standard 3G MBMS (Multimedia Broadcast Mobile Service).
Jonathan Beavon: Network convergence will start to enable broadband operators to share content and applications between their IPTV platform, mobile phones and PCs. Operators offer content to multiple receiving devices today but these systems are totally separate and non-converged. Convergence of these services will help operators offer useful applications and content across TV, PC and mobile phone platforms and will also potentially offer cost savings, as the investments in networks and delivery platforms are shared between the services.
How have content makers embraced the opportunities that IPTV has to offer?
Paul Berriman: It is fair to say that content providers were slow to understand the benefits and features of IPTV, but for PCCW that is in the past - over three years ago. Many of them are now IPTV-savvy and we continue to work with them aggressively on developing new services, both in Hong Kong and, in the case of Star Group, pursuing similar opportunities overseas. There are some areas, such as time shifting and personal video recording where we have further work to do in convincing content providers of the benefits and security of storing content on the network rather than on home HDD/DVD players, but in the main they have become very supportive. This is best demonstrated by our relationships with Star Group and HBO. Star TV channels have grown from zero to 17 channels over the last three years and many of them are now exclusive to NOW TV in Hong Kong until 2011. In the case of HBO we have grown from zero to five channels, all of them exclusive until 2014. This clearly demonstrates the view being formed by content providers that IPTV can become the preferred delivery platform for content and interactive services. Our next job is to educate the advertising community of the features and capabilities of interactive IPTV services. I am sure they would move to take up some of the options available to them in terms of viewership feedback, interactive advertising and targeted marketing if they understood the capabilities more fully and could objectively compare them with the benefits and returns from alternative advertising channels.
Jonathan Beavon: Content creators are recognising that both IPTV and internet distribution of content are going to bring new content licensing and content creation opportunities. This trend can be seen in some of the on-demand and download content deals that have been done in the last six months. We are seeing experimentation with different business models for on-demand packages and even different programming formats which are being tailored to different devices. The IPTV industry will experience continued experimentation in the next few years until the best business models are found.
Geir Bjorndal: Content providers see IPTV as a new opportunity to push tailored TV to consumer. IP opens up these possibilities, but it has traditionally been hard to see business in tailored solutions. Movie makers also see IP as an enabler for a more efficient delivery method for VOD and are considering changing the release window for movies in order to increase VOD sales.
Bill Katherman: Clearly, with the digital rights management IPTV provides, content providers see IPTV as being more secure. Content providers will choose to provide content to the systems where the operators can prove they can control and protect content. Unlike the analog domain, where cable operators once estimated that as much as 20 per cent of their revenues were lost to piracy, the digital domain is much more secure.
Conditional Access is of paramount importance to the IPTV industry. What is the best method of protecting content, is it hardware, software or both?
Paul Berriman: I believe our approach to conditional access is second to none. We have a network-based conditional access strategy that consists of a hardware card inserted in the DSLAM, which provides many features including STB authentication and MAC address verification, right to see (CA) management to allow channels to be selected and distributed to the customer, as well as providing viewership feedback and revenue assurance. This network CAU approach is unique to NOW TV and has been very well received by the content providers. From this point of view, we have zero piracy. If you are watching a live channel, you are paying. When it comes to the other aspect of DRM or conditional access, the right to copy, we perform this in software as an end-to-end digitally encrypted signal using dynamic key encryption from the head end to the STB. We expect this to be replaced in time by international DRM standards and, even now, we could accommodate other STB-based DRM/CA methods for copyright protection, such as NDS. However, our main interest is piracy protection and revenue assurance for the content as released to the customer from the DSLAM to the STB, and this is managed by our own network CA solution. Our trusted partner relationships with all of our content providers are testament to this approach.
Pierre Hunter: You need a combination of both. It depends on the nature of the business and the types of content that you are trying to protect. In the IPTV world, the trend is towards mainly software protection.
Jonathan Beavon: All digital rights and content protection systems are implemented using software programming of some kind. Better systems increase the security level by adding hardware elements to offer a more robust security solution. Software DRM, running on an open processor, is vulnerable to software debuggers. Even if it employs tamper-resistant software techniques, anything the processor can see, a debugger can also see, so the threshold of security is low. Even renewing the DRM software by download is vulnerable because the fixes can be examined and defeated in the same way. When various parts of the DRM are implemented in hardware, this improves the security of the DRM by making it more difficult and more expensive for hackers to overcome security and counter measures when compared to a purely software approach.
Bill Katherman: Undeniably, IPTV service providers must protect the content being delivered to consumers. The ideal security solution includes a combination of both hardware and software encryption. Scientific Atlanta's IPTV solution includes IPTV set-tops that enable service providers to select open, renewable security systems, including downloadable CAS and DRM. Studios are becoming more comfortable with the idea that content may be less prone to piracy in a closed, secure IP network than on other methods of distribution, such as cable, DVDs, etcetera.
Geir Bjorndal: The best method for the time being is hardware. This is more or less required in broadcast solutions, but might not be so essential in point-to-point deliveries. However, most operations will be a bundle of broadcast services and on-demand services. It is also a much better solution to re-use the strong broadcast HW technology for the point-to-point services than to establish a lower level of security on the on-demand services. So, to lift all IP services to existing broadcast security will be a better idea than to invest in separate IPTV systems to reduce cost.
By Mike Abolins