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September 11, 2005 |
By Danny Bradbury
DESPERATE HOUSEWIVES AND CSI CAN NOW ZIP TO YOU OVER BROADBAND INTERNET CONNECTIONS, AND THAT COMPLETELY CHANGES THE TV WORLD.
The television and telephone were both revolutionary gadgets of their day, delivering mass communication in a way that had not been done before. But the media were separate: telephone conversations travelled over a small grey wire, and television programs were eventually broadcast over a thick grey wire.
These worlds, however, are now meshing. Voice and video are being delivered by the same companies, down the same cable, and sometimes without a cable at all. And the Internet is tangling the two even more tightly.
For incumbent telcos, the route to your television is the same one they use to get to your PC and your phone: the broadband DSL connection. Television over Internet Protocol (IPTV) is a growing trend, pioneered by companies like MTS in Manitoba and Saskatchewan’s Sasktel, which has been sending television signals to houses via DSL connections for more than two years. Bell Canada has complemented its satellite service with DSL-based IPTV services to apartment blocks, and Telus is also trying a TV service.
HOME BATTLEGROUND
This is, of course, peeing in the pools of the cable companies, and IPTV is creating the same rivalry that telcos and cable companies have faced over telephone services, but it raises the stakes, said Mario Mota, vice-president of broadcast/media research at Decima, a market research company focusing on the broadcast and communications sectors.
“The battle between those two groups is a battle for the broadband home,” Mota said. “They want their customers to get every service from them, including cable, Internet, and telephony.” Bundling these three services together is known as triple play, and it can dramatically increase the average revenue per user (ARPU).
Using Internet technology to combine data, television and telephony services makes new services possible. Modern systems can flash a caller’s number on the television when the telephone rings, for example. But IPTV’s real killer app is true video on demand (VoD). Cable providers broadcasting the same signal to all homes have only been able to offer quasi-VoD services, in which programs are screened at regular and frequent intervals.
After paying for a movie, customers might have to wait half an hour for the next showing.
IPTV, however, offers an individual data stream to each household (think of it as a streaming Internet connection to a TV set), so shows can be provided on request.
Media companies such as Astral, which operates The Movie Network, are taking advantage of this. The company launched a subscription-based VoD service in June 2004 through networks including Rogers. It claims a 50 per cent reduction in customer turnover during the first six months of operation.
True VoD services such as Astral’s offer VCR-like controls for movies, enabling viewers to pause, rewind and fast forward movies. This is similar to the personal video recorders offered by satellite companies such as Bell Expressvu, which record shows on a set-top box and enable them to be watched later at the viewer’s leisure.
IPTV essentially puts the PVR system into the network, storing shows on the provider’s central computer and letting viewers control them from the home. However, there are some challenges. Whereas a hardware PVR sitting in a home can record anything on the television without breaking any legal barriers, networks are beholden to the content providers. Before storing content on the server to be replayed by customers, they must obtain the necessary usage rights.
In the U.K., companies are making headway in these negotiations with content providers, said Teresa Wise, a partner in media and entertainment at Accenture. The situation is less advanced in Canada, although both Sasktel and Shaw (which already offers a home-based PVR) are readying network-based PVRs.
HIGH-DEF HEADACHES
Content providers can cause other headaches for networks programming VoD services, said Peter Bissonnette. Bissonnette is president of Shaw Communications, a cable TV company which has its own true VoD service using proprietary non-IP technology.
“Some studios have this huge vision of the revenues we can drive through VoD that aren’t based on fact,” he said. A studio may expect $5 million of revenue from its content, whereas the network may only be able to deliver 20 per cent of that, he said.
“But they are holding the cards. We are constantly balancing economics.”
The underlying power struggle between the studios and the networks can manifest itself in bizarre ways. For example, highdefinition TV (HDTV) proved to be a flashpoint between Shaw and Sony. Because high-definition programming is currently relatively limited, Shaw decided to create dedicated high-definition channels, so customers wanting to view HD content would not have to keep flipping channels to find these shows. Sony argued Shaw was reprogramming content, while Bissonnette retorted the network was simply repositioning existing programs. At the time of writing, the Canadian Radio-television and Telecommunications Commission (CRTC), which regulates the industry, was mulling over the case, he said.
Both cable and DSL providers will be feeling the pressure as high-definition television gains in popularity. The higher quality of the data stream requires more network capacity, which is forcing DSL providers such as Sasktel to introduce even higherspeed DSL services. The company will move from its current 8Mbps service to a 22Mbps downstream in the future, but this requires a significant capital investment, because the distance between the local exchange and the home must be shortened from 2.5km to 1km. In the meantime, cable companies will have an easier time of it, said Decima’s Mota. “The telcos say they will do multiple streams of HDTV, but clearly that pipe isn’t as big as the cable pipe.”
With 4.4 million digital TV subscribers in Canada, there is plenty at stake in the battle for dominance. The market grew more aggressively last year, and as packet-based television emerges, the catalyst for further uptake will lie in new service innovations that can be bundled to create customer loyalty. In this sense, the business challenges are as significant as the technical ones.
TV OVER CELLULAR
While cable and DSL providers battle it out for dominance in the living room, mobile operators are starting to explore television over cellular networks. By the time you read this, Bell Mobility and Rogers Wireless should both have launched their mobile phone-based television services. They are working with Idetic, a U.S.-based company which runs the MobiTV cellular-oriented TV service.
Although details on the Rogers and Bell Services are sketchy, MobiTV’s channels include MSNBC, Discovery, TLC, the Weather Channel and NBC Mobile.
Rogers Wireless customers will also be able to watch Blue Jays content as part of the Major League Baseball Highlights offering.
Idetic is already working with Cingular in the U.S., which has achieved around 10 frames per second over its EDGE network, but that is less than half the frame rate of conventional television. The $10 per month subscription service can be used with an unlimited data package, so that viewers do not rack up large bills watching content charged by the kilobyte, said Cingular spokesperson Rich Blasi. The service is designed to appeal to viewers who wish to fill some spare minutes when on the road.
Not everyone is convinced. “The problem is the user experience first and foremost. How interesting is video to me on postage-stamp-sized screens?” asked Fred Bolza, a senior consultant at CapGemini Telecom Media & Entertainment in the U.K. He looks to history for lessons, recalling the original Sony Watchman portable TV device from the late ’80s.
“And how well did that do? TV is one of those things that you watch sitting down. I cannot see how the benefits of mobility translate to television.”
The difference between yesterday’s pocket TV and today’s is interactivity.
Although Cingular has not yet implemented interactive services, and they are unlikely to be included in the Canadian services at launch, interactive services will create the chance to increase ARPU, said Idetic’s chief marketing officer Dave Whetstone. Watchers will be able to book tickets for a baseball game while watching sports, or purchase ringtones or music while viewing a music video, and these are good roads to increased revenue, he said.
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