The consumer has spoken and the message is clear: the most compelling service offering is one that can be delivered with extraordinary quality to any device, in any place, at any time. Basically this means cloud-based services delivered over an all-IP infrastructure.
There are other compelling reasons why incumbent cable television (CATV) operators would benefit from a move to an all-IP service delivery platform, that is, the opportunity to simultaneously delight the customer and also deliver quantifiable business benefits in the form of network efficiencies and reduced operating costs.
However, certain challenges impede an abrupt move to an all-IP infrastructure. The costs are high, the content rights are complex, and the regulatory environment is uncertain. There are also the legacy platforms that must be maintained during the transition.
The bottom line is that incumbent CATV operators need to simultaneously meet consumer expectations that have been forever changed by over-the-top (OTT) media and proliferation of IP-connected devices, while at the same time honoring content licensing deals, regulatory requirements and shareholder expectations that are not necessarily pointing in the same direction.
The Future Is Here
Netflix now has more video subscribers than Comcast.
The anytime, anyplace, any device vision of television consumption is not as futuristic as it once seemed. On the surface, the statistics would suggest that the move to OTT and associated “cord cutting” is a major and irreversible trend. Consider, for example, that Netflix now has more video subscribers than Comcast. (See chart on right.) A closer look, however, reveals a less alarming picture.
Whereas Internet video is here to stay and will eventually describe all television, traditional linear television is still the dominant form of video consumption. Pay TV operators hold the lion’s share of ARPU levels, and approximately 90 percent of U.S. households still subscribe to a pay TV service, with only modest declines in those numbers in recent years.
Despite this encouraging data, pay TV operators cannot rest. Consumers and competitors alike are pushing on-demand access to all video programming from any device, and young consumers spend more time viewing television on mobile devices. At the least, operators will need to keep pace, whereas the real opportunity is to lead the way and create the next generation of video service providers in the process.
Ultimately the consumer benefits defined above cannot be achieved without an all IP-infrastructure, making this a mandatory transition for today’s operators. However, there are other motivating factors related to improved capital efficiency and reduced operating costs. An end-to-end IP infra- structure provides improved bandwidth utilization, a unified network that reduces operating costs, and an open architecture that accelerates the introduction of advanced services.
An all-IP infrastructure additionally helps to reduce capital and operating costs in the form of improved service scalability, elimination of proprietary hardware, greater vendor selection, and a move to the ultimate objective: getting consumers to pay for their own customer premise equipment (CPE).
The Path Is Uncertain
With so much clarity about the benefits of a migration to IP, it may seem that operators would be clamoring to move immediately to an all-IP infrastructure that enables a universal cloud TV service. However, as the old saying goes, “If something seems too good to be true, it almost certainly is.”
There are three primary challenges that face any incumbent CATV operator moving to an all-IP infrastructure:
- Capital costs
- Content licensing
- Laws and regulations.
Most operators have a wide variety of long-term content licensing agreements that may or may not contemplate IP transmission.
Unlike telcos and IPTV operators, incumbent CATV operators have typically spent many years investing in proprietary coaxial and HFC networks, proprietary DRM systems, and legacy set-top boxes that would have to be replaced to support an end-to-end IP video distribution.
Most operators have a wide variety of long-term content licensing agreements that may or may not contemplate IP transmission. Content costs are rising and IP streaming negotiations are tough. This suggests we are many years away from having all content available over the Internet. DRM platforms also fall short of meeting protection requirements across all devices, especially for securing live and early-window content.
Laws and Regulations
The legal and regulatory frameworks for broadcast television are being tested and are uncertain. The future of retransmission rights is still being determined, and the interpretation of fair use laws are constantly reopened as new service models emerge.
With so many costs, complexities and even shifting legal and regulatory frameworks involved, there is no direct path to the cloud TV future.
The transition of a typical incumbent CATV operator to all-IP is estimated to take approximately 10 years. Beyond the challenges presented earlier is the fact that most incumbent CATV operators are saddled with ongoing operations and capital costs tied to their legacy platforms. Even if cost was not an issue and all content rights for cloud TV were available, several factors would prevent a direct transition to an all-IP, cloud-based service platform. They include:
- The need to sustain the current service during any migration period means ongoing operations and capital costs tied to legacy headend equipment, which restricts availability of capital for introducing an all-IP infrastructure.
- MPEG-2 TV transport squeezes bandwidth available for IP pay TV, which requires significant capacity for delivering content in unicast mode by virtue of the high level of on-demand viewing associated with connected devices.
- There are tens of millions of legacy set-top boxes in the field that do not support IP services. The cost and operations complexities of replacing all boxes in the field cannot likely justify an abrupt transition to IP.
The center of gravity, then, for the optimal migration strategy is in the subscriber’s home. A prudent approach is to deploy a CPE-based transition solution that allows CATV operators to provide compelling multiscreen services on their existing networks today, with devices that are compatible with the IP networks of tomorrow.
The hybrid media gateway offers the following key features:
Successful operators will chart a migration path firmly focused on the end point while systematically navigating the roadblocks along the way.
A practical challenge to incumbent CATV operators looking to extend IP within the home is the physical wiring. Connecting the home with reliable IP has always meant stringing Ethernet cabling from room to room. However, with the introduction of video-grade wireless and the advancement of IP over coax technologies like MoCA (Multimedia over Coax Alliance), this is no longer the case. By integrating home networking capabilities into the hybrid media gateway, the time and cost of in-home installations are drastically reduced. With integrated networking capabilities, there is no longer a need for external networking equipment, thereby reducing power consumption, removing additional points of failure and simplifying installation, thereby further reducing the cost per customer.
Once the connected home is established, all IP-enabled devices within the home can have access to rich pay TV services, including PPV and VOD, enabling more potential points of purchase throughout the home.
The ability to share tuners is also an important feature of the hybrid media gateway. This functionality allows for the termination of the QAM network at the gateway by extending the video service throughout the home over the IP network. Lower-cost IP devices can be used at viewing locations throughout the home. These devices can request access and control of the gateway’s tuners. The gateway then applies DTCP protection and content is streamed in its native MPEG format via IP to the ancillary devices.
This configuration has many important benefits. It enables a cost-effective whole-home digital video recorder (WHDVR) service by enabling tuners in the gateway to schedule recordings to a single hard drive. Secondly, in a legacy encryption environment, just a single CableCARD is needed per home rather than per device as is required with traditional cable set-top boxes. Lastly, it brings secondary viewing locations into the full service experience that with traditional set-top boxes could be enjoyed only at the main TV.
A key feature of the hybrid gateway is its ability to power the multiscreen experience. The gateway provides a means to stream content either from the hard disk or live feed to mobile phones and tablets through the use of its built-in transcoders. These transcoders work in conjunction with a built-in software-based adaptive bit rate server, providing a smooth video experience even at the farthest reaches of the home network. This same experience can be extended outside the home as well as over cellular networks or wireless access points. Ultimately, to the end user, this technology is completely transparent and the experience is the same as what they’ve come to expect from OTT video.
Built-in transcoding has several key advantages. It saves the operator from having to purchase and maintain expensive HLS and associated encryption equipment in the headend. It also provides the benefits of a network PVR service without the complicated legal issues that have prevented its widespread deployment.
According to NPD, by 2015 there will be 202 million Internet-capable devices in U.S. homes. Having a hybrid gateway with integrated transcoders enables operators to support a Bring Your Own Device (BYOD) platform that allows them to take advantage of consumer-owned connected devices in subscribers’ homes—such as smart TVs, PCs, game consoles and tablets. This results in less operator-subsidized equipment within the home.
Supporting both open software encryption and CableCARD, the hybrid media gateway provides a method of terminating legacy encryption at the gateway while providing protection throughout the home via DTCP. It also provides a means of transitioning future models where software encryption can be extended over the home network to IP terminals throughout the home. Such a strategy avoids the rights issues by working within the existing usage policies of legacy pay TV distribution contracts.
In other words, as long as the service is being delivered over the MPEG transport system to a point of interface with devices in the home, there’s no need for additional rights to permit distribution to multiple types of devices as long as all the protection requirements are met to prevent in-the-clear access over the home network.
Accelerating the IP Transition
Because the hybrid media gateway is compatible with both legacy architecture and the cloud architecture of the future, it is the most cost-effective strategy for operators to provide an immediate means of powering a true TV Everywhere experience, while positioning them for a migration to an IP network that supports cloud services.
It’s impossible to say exactly when the conditions will be ripe for operators’ transition to a cloud-based operational environment. When it comes to a transformation in how pay TV rights are defined, the situation depends on forces beyond the control of individual operators. But it’s clear that, given the advantages of moving to an all-IP architecture, operators will want to make the transition as soon as it’s practical to do so. Meanwhile, the multiscreen service and other capabilities embodied in a well designed gateway platform provide operators the tools they need now to deliver the video entertainment experience consumers are looking for.
Bill Hughes is product manager at Entone, based in Cupertino, Calif.