Cable and Satellite International

I survived IBC…

17/09/09

Well, IBC is over for another year and despite being one of the best shows in the industry calendar it is also one of the most intensive, gruelling and tiring. Like us, many people are at the RAI for almost a whole week and someone remarked to me that they really should sell ‘I survived IBC’ T-shirts.

The event stood up well in terms of footfall compared to US events like NAB, with only a 7% drop in attendees, which was only slightly perceptible on the show floor that was for the most part nicely busy.

Hybrid/over-the-top and 3D were the stand-out themes, and a full review will appear in the November-December issue of CSI.

Speaking set-tops (and convergence)

I recently had a long chat with the CEO of set-top box maker ADB, Francois Pogodalla, who made some interesting observations about the STB market and the wider TV industry. Some of the highlights are below, and the full text will appear in the September-October issue of CSI.

- ADB has adopted what he calls a proprietary implementation of open standards. The company tries to build efficient and vertically integrated platforms; it has its own drivers, middleware, applications etc, but bases them on open standards so that operators don’t end up getting locked in a proprietary technology, which in the past has shown its limitations.

- Fragmentation of the STB sector is dictated by the structure of the payTV market and the operators themselves who require differentiation. Software can help manage a “mass-customisation” model, where a lot of the core technology can be made reusable or common across different markets and regions.

- This fragmentation is not necessarily a bad thing and is more an opportunity than a threat, especially for smaller players. An industry where two players own 80% of the market generally does not provide for a lot of scope for opportunities.

- There is a question mark over how much bringing internet/OTT capability to the TV set in the living room can generate additional revenue for operators versus pure churn reduction or service attractiveness. It’s not clear that giving this access will result in higher ARPU.

- The advent of digital, and new and powerful technologies, have made the TV industry lose sight of the basics of television. In some cases, the user experience is worse than it was in the old analogue days. The remote control is still something that is hard to substitute, replace or change as a navigation experience.

- The company’s focus at IBC this year, even more so than before, is on the TV experience and how it can improve this experience for the consumer and operator. Francois promised some potentially really interesting features but that’s as much as I’m allowed to share until the show itself.

- The STB will not disappear any time soon because the basic principle of technology industry is the continued integration. This has allowed the STB to be where it is at this point in time, allowing the IC industry to integrate more functions so that manufacturers can focus on advances.

- The US open cable mandate is finally an opening for companies such as ADB to crack the local market there, which is still characterised by the Cisco/Motorola duopoly. The company’s strategy for the cable market has been aligned with this and tru2way adoption as OCAP is not so dissimilar to MHP.

- ADB is investigating 3D as the technology moves into the home, but the usage model is yet to be defined.

UK payTV stays strong as PVRs and online blossom

06/08/09

Some more evidence came out today that communications and entertainment services remain relatively recession proof. If you believe surveys, Ofcom data shows that around half of UK consumers would sooner cut back on eating out, DIY and holidays than give up communications services.

When asked which items consumers were likely to cut back on in these tough times, 47 per cent would choose to cut back on going out for dinner, 41 per cent on DIY and 41 per cent on holidays. This compares with only 19 per cent who would cut back on mobile phone spend, 16 per cent on TV subscriptions and 10 per cent on broadband.

Ofcom’s research also shows that PVR  usage and ownership is coming along nicely, with more than a quarter of UK homes (27 per cent) having a DVR as of the end of March, - an increase of 29 per cent since September 2008. Around 9m DVRs have been sold in the UK, with the majority being Sky+ boxes (over 5m).

In these homes, 15 per cent of TV viewing was timeshifted in 2008. Around a fifth (19 per cent) of viewing in Sky+ homes is timeshifted, more than for subscribers to Virgin Media’s V+ service who timeshifted 12 per cent of viewing. Some 9 per cent of viewing in Freeview DVR homes was time-shifted programmes.

As broadband speeds increase and services become more widespread, TV viewers are also catching-up on programmes online. Nearly a quarter of households (23 per cent) were watching catch-up TV online in 2008 compared to 17 per cent in 2007. Adults between 15-24 are most likely to watch catch-up TV online (33 per cent).

Online catch-up TV has been driven significantly by the BBC iPlayer. Some 15 per cent of internet users (5.2m) now watch the BBC’s iPlayer service, double the figure this time last year. ITV’s catch-up service was next at 3.3 per cent.

Has DVB-C2 missed the boat?

I am currently in the early phases of research regarding DVB-C2, the next generation cable standard that promises enhanced coding and modulation technologies for cable systems. The specification, which underwent DVB approval in April, in theory offers compelling advancements, including a headline figure of 30% spectrum efficiency for present and future services. This is achieved through the use of the COFDM modulation scheme, which by the sounds of things was not incorporated as a result of a unanimous decision. Other improvements see the technology supporting any packetised and continuous input format, as well as Generic Stream Encapsulation and a more robust Forward Error Correction (FEC) scheme. In this respect, C2 borrows from the other DVB family standards, namely DVB-T2 and DVB-S2. And there are yet more new tricks besides the ones mentioned here.

Yet, for all the brain power that has gone into it, most in the industry seem to be a little dismissive of DVB-C2, calling it nothing more than an “interesting scientific experiment”. The argument is that C2’s increase in capacity is in itself not enough incentive to replace existing legacy or newer MPEG-4 set-top boxes out in the market. Had C2 appeared at the same time as HD and MPEG-4 in Europe then maybe it wouldn’t have missed the boat. Moreover, the felling is that C2 is swimming against the tide as the world moves towards unicast delivery and on-demand content.

Conspicuously, there was hardly any talk of C2 at the Cable Congress in Berlin earlier this year, with only the executives from Kabel Deutschland giving it the odd, brief mention. It seems to be low on the priority list of cable CTOs, who are much more concerned with the likes of VoD and DOCSIS 3.0. Indeed, it is not clear how much alignment was made with the DOCSIS 3.0 standard.

Ultimately, it seems there is little relevance or opportunity for C2 outside perhaps the German market, where there is little segmentation taking place of the cable networks. (The CATV operators that have publicly are virtually all German.)

I would be interested to hear more thoughts about this so feel free to get in touch with me if there is something that you would like to share. It is said that this has pushed the limits so far to the boundary there may never be a DVB-C3. So it certainly would be a shame that something as technically clever as this never saw the commercial light of day. But what is the timeline for products and will operators be willing to pay the higher price of edgeQAMs and other equipment in exchange for reaping the benefits on offer with C2? Indeed, is there a future for C2 at all? These and other questions will be answered in the May-June issue of CSI.

Comparing IPTV figures

30/03/09

Two separate sets of IPTV subscriber numbers came out in the past week to coincide with the IPTV World Forum. The first was released by Informa (who are also organisers of the show) and the second by the Broadband Forum industry group using data compiled by analysts at Point Topic.

The stats were pretty much in line with each other and paint a promising picture for the still maturing industry. Globally, there are now over 20m IPTV subscribers - 21.7m at the end of Q4 2008 to be precise, which is an increase of 63% over YE2007, according to Broadband Forum/Point Topic. Informa obtained its data from 90 networks amounting to 19.98m, while estimates for a further 20 networks take its total to 20.12m. IPTV is now commercially deployed in nearly 60 countries.

France is by far the largest single IPTV market with 10.2 million subscribers, accounting for over half the European total and about a quarter of all worldwide subscriptions.

By all accounts, the industry is likely to experience similar growth going forward. Infonetics Research forecasts about 45m subs by the end of this year, while ABI expects around 90m subscribers by 2013. It will be interesting to see how these predictions hold up.

A quick word on the Forum itself, which will be reviewed in detail in the May-June issue of CSI. For an event that is billed as the IPTV industry’s de facto showpiece, the organisers may want to consider moving it from the antiquated venue of London Olympia to perhaps where the action is, ie France. Sadly, London doesn’t boast too many venues to host a major international exhibition. Moreover, an otherwise valuable few days were marred by a lack of free WiFi access - even in the press “room” – which is pretty inexcusable these days, especially for a telecoms show.

Astra shows off Euro HD growth

24/03/09

Astra today released figures to a group of journalists and analysts highlighting HD growth in Europe, both on its own platform and on the continent as a whole.

There are now 122 million homes in Astra’s reach, representing almost half of the total 247m European households. The UK, France and Ukraine have seen the biggest growth for Astra itself (although Poland and Italy to name a couple of other fast growers are dominated by the company’s competition).

Terrestrial accounts for the majority of TV homes with almost 92m, while cable and satellite have an equal split with 72m each. IPTV trails with 7m subscribers.

Every other home in Europe is by now also digital, although a large gap exists between western and eastern Europe. In the west, digital penetration is typically over 60% while rates of below 20% are not uncommon in the east.

According to Astra, satellite has been much quicker to digitise its infrastructure and is three times more digital than cable (89% vs 27%), where three quarters are still analogue due to the cost of network upgrades. Satellite is the leading digital infrastructure with a share of 52%. Germany is the only country in Europe where analogue remains steadfast and indeed the country occupies the last place in the region as a hole in terms of digitisation – some 5m households are analogue.

Astra also mentioned that 1.9m homes are viewing HDTV. It carries nearly 70 HD commercial channels and it expects to meet its target of 100+ channels by 2010 despite the economic situation. The UK leads with 32 channels broadcasting in high definition, followed by France with 18. Overall, the whole European HDTV market is dominated by payTV offerings and this is unlikely to change.

The operator added it was evaluating the potential of 3DTV – it is already in talks with TV channels about technical trials- and is looking at a common industry standard to speed adoption. It thinks that a 3D transmission shouldn’t cost over the moon, needing some 10-20% extra bandwidth capacity.

 

 

 

 

Pace bullish on pay-TV, but threats loom on horizon

03/03/09

Having posted record full-year results, Pace has significantly upgraded expectations for 2009 and is targeting increased share of the global set-top box market. The company shipped 13m boxes, nearly 6m of which came from the acquisition of Philips’ STB business in April 2008, with revenues of £745.5m.

Looking ahead, CEO Neil Gaydon believes the DSO and demand for HD/PVR will drive the global pay-TV market to over 200m units in 2009. The consensus is that Pace will ship 15-16m boxes this year. And while Gaydon doesn’t believe the pay-TV market to be recession proof, he does think it’s proving to be more resilient compared to other sectors.

According to Neil, the structure of the STB industry stops it from moving towards consolidation, which can be both a strength and a weakness for the vendors. “Every operator has a bespoke product with their own choice of middleware and CA and how it works in a private network that necessitates a specific box. This compares to a typical hardware business where you need to be No 1 or 2 to dictate global pricing. Operators want to roll out new services without waiting for standardisation.”

He noted this is why Pace has been able to deliver 20 different HD PVRs that have been launched to almost as many customers and markets.

The strategy it put in place several years ago on focusing on leading operators that have the content (ie, cable and satellite) has clearly paid off, but Neil is perhaps a little too quick to dismiss the threat posed by the new batch of integrated TVs and over-the-top services.

OTT and similar services might be attractive to some but he doesn’t see it as a mass-market proposition beyond appealing to a niche. “With digital Britain calling for 2Mbps that’s barely enough for SD to be broadcast with QoS let alone HDTV. I recently talked to a small customer with a small geographic footprint and they said just to deliver SD over broadband to major conurbations and build back-end infrastructure would cost 600m+ Euros, so they leased a satellite where they could offer HD to whole market at a cost of 48m Euros.”

“I remember fielding questions four or five years ago that it was all a battle for the living room - STBs vs PCs and game consoles - and the STB and pay-TV operators absolutely won that round and we believe for the converged home they are best placed to deliver services throughout the home because of the content they own,” he says.

There is of course logic to Neil’s arguments about ROI and technology. Nevertheless, the pace of innovation will likely mean that Round 2 could be a lot more closely fought than some might like to think.

Trade shows fill the pinch

19/02/09

Last week I reported how recessionary times aren’t automatically bad news for all companies and services. It helps stimulate certain business models and, as people spend more time indoors, businesses like fast food chains (KFC is creating thousands of new jobs as it opens new stores to cater for higher demand) tend to profit.

But for most, the harsh reality is that a slowdown is very real and jobs are being lost. Industry trade shows are among those suffering a negative impact as staff and travel budgets are cut across the board. Like many of my peers in the press, I didn’t go to the Mobile World Congress (what used to be 3GSM) this year and a contact I spoke to who just returned from Barcelona tells me that attendee numbers may have been down by as much as 15-20%. At least taxi queues, a perennial problem at the Fira, weren’t so much of an issue this time round.

MWC, of course, is not the only event feeling the pinch in these times. CES had empty flights to and from the UK in January and it seems like the same will happen with NAB in April. Even discount hotel rates don’t look to be enough to tempt visitors from the UK (and undoubtedly elsewhere) and several large vendors, conscious of the fact that numbers will drop, are organising virtual booth meetings for press and customers. One local paper suggests that less than 100,000 will make their way to Vegas this year for NAB.

We will see how IBC and other shows fare in the second half of the year. I’ve always thought there are way too many shows in the ICT sector to be sustainable and some of the smaller ones, valuable though they are, will invariable have to give.

Downturn may be good for VoD

12/02/09

CSI held the latest in its series of roundtables last week, this one focusing on all things video-on-demand.

Amid discussion of all pertinent issues relating to VoD, one thing that stood out was the suggestion that the current economic downturn may actually help stimulate certain on-demand business models, namely ad-funded ones. Industry execs like bringing up the argument that payTV does rather well in times of hardship because people stay in more watching more television, and whether you subscribe to this theory or see it as just wishful thinking there are figures out there that support both views.

(Incidentally, Dutch cableco UPC Nederland reported record numbers of users for its VoD service recently, with almost 34 million streams requested in 2008, which by my quick calculations works out at around three or four per VoD subscriber per month, about average compared to what I have seen publically released from other platforms.)

Two major issues cropped up that operators have to bear in mind: scaling the content proposition; and the UI. As VoD consumption increases, and it will continue to do so irrespective of the economy, service providers must ensure that the OpEx costs of running the VoD platform do not go up in line with the amount of content.

Moreover, as this content moves into the tens of thousands of hours of video, the need for more intuitive search functionality is a huge area going forward. Moving across just the EPG is bad enough at the best of times, but extending this across multiple platforms (hard drives, broadcast, NAS storage etc) will need a long hard look and a major overhaul.

Our next roundtable will look at another hot topic, targeted advertising, and takes place in early April. Coverage will appear both in the magazine and online. It promises to be another lively debate.

Yet another mobile TV trial

04/02/09

Will 2009 be the year of mobile TV? I’ve heard the question thrown about since the technology appeared in a serious shape and form some half a decade ago in 2003/04. What we have had in the interim is at best a dozen or so commercial DVB-H/FLO etc network launches, none of which have really set the world at light. And now, in a year with no major international sports events, it makes this even more unlikely. Technology is almost certainly not the issue. Even the semi-successful Korean and Japanese systems have seen concerns voiced around advertising figures and the wider business model.

Details have emerged of the latest mobile broadcast TV trial, this time in Sydney. Market observers will remember Sydney already playing host to one such experiment, involving 3 Australia and the Ericsson backed MBMS technology, positioned as a kind of cheaper, progressive step towards a full broadcast mobile TV network. There has been no further news on this front since that trial took place in 2007.

In this pilot, residents of Sydney with selected DVB-H handsets – and there’s not a huge variety of these on the market either - are currently viewing live broadcast television, coordinated by the Ai Group’s Australian Digital Suppliers Industry Forum (ADSIF) and includes telco Optus, Nokia, Nokia Siemens Networks, LG Electronics, Broadcast Australia and Australian Digital Testing. The trial is due to run until the end of February 2009.

The purpose of the trial is to demonstrate issues that should really have been resolved years ago but which the industry is no closer to doing so. I remain “sceptically optimistic” on mobile TV; I think it is fundamentally a combination that should work – and figures of mobile video streaming point to some latent demand - but hasn’t for reasons that are too long to go into detail here. Given the right (free-to-air) content, phone choice and, critically, cooperation between broadcasters and mobile operators these services can succeed.

Executives have admitted that it really is time to move beyond the trial phase and into some real deployments. Current activity is simply unsustainable and there won’t be too many survivors left if significant strides aren’t made in the next 18 months. Indeed, some companies have already quietly abandoned their mobile broadcast operations. Hopefully things will start to kick off in 2009, but with the credit crunch on top of all the old issues I wouldn’t hold my breath though…