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September 2009 | Volume 12 / Number 9
Feature Story

The Future of IPTV

By: Erin E. Harrison

Bucking downward trends in the economy through aggressive deployments, IT market researchers predict that Internet protocol television – or “IPTV” – will grow more than 50 percent this year. According to international research firm Parks Associates (News - Alert), the number of subscribers worldwide to telco/IPTV services will approach 40 million by year-end 2009.

IPTV is a system where a digital television service is delivered using Internet Protocol over a network infrastructure, which may include delivery by a broadband connection. A general definition of IPTV (News - Alert) is television content that, instead of being delivered through traditional broadcast and cable formats, is received by the viewer through the technologies used for computer networks.

The global recession has been a stumbling block in this market, yet strong growth in telco/IPTV services is predicted – partly due to aggressive provider deployments, according to the firm’s recent whitepaper, “IPTV and the Digital Home.” The most successful rollouts will incorporate multiple services, such as home networking, convergence in entertainment and communications features, and unique interactive services such as quality on-demand programming, industry experts say.

Parks Associates reports the number of telco/IPTV households worldwide grew by nearly 80 percent in 2008 to exceed 20 million. It is forecasted that the growth rate will exceed 50 percent in 2009. Japan is seeing greater deployments, however, the United States is projected to see a larger movement toward IPTV deployments, industry experts say, as more residences transition from cable to wireless.

“In Asian markets, such as Japan and Taiwan, IPTV is pushing home networking like you would never believe,” said David Thompson, product marketing director of Taiwan-based Zyxel, which also has a headquarters in Anaheim, Calif. “In North America it is now very common for most homes to have a wireless router, so you can get WiFi (News - Alert) throughout the home, you can carry a laptop or a new netbook around the house, but very few people are actually doing anything other than some basic video functionality over WiFi.”

“Demand for IPTV continues to grow and is continuing to build up, even with the slowdown with the economy the first two quarters, it’s starting to pick back up or at least hold steady through this economy,” Thompson continued. He said that the IPTV server market is expected to triple in the next four years.

Zyxel is a leading provider of broadband access solutions for service providers, as well as for businesses and home users and offers triple play, quality of service, network security and network management services.

Marc Savoie, vice president of product management at Mariner – a New Brunswick, Canada-based provider of IP video solutions and consulting services – said that on the cable side, there are great strides being made to increase the amount of interactivity across both cable and IPTV.

“IPTV to date has been focused on getting up to par with the cable operators, so offering broadcast television the PVR services, high definition services and payloads,” Savoie said. “I think you find now that telco IPTV operators are now pretty much at par with their cable companies. Now, you’re seeing a lot more telcos leverage the fact that they bought this IPTV platform that allows them to do interactive services.”

Through its “lifecycle” services, Mariner develops technologies for the IPTV industry. Savoie said that – especially in North America – the “cash cow” of voice has been eroding for telcos for about a decade and voice over IP, like IPTV, has enabled cable operators to take the whole bundle away from the telcos.

“Where we think the gauche is it costs more for the telcos to operate that environment then the cable companies and satellite companies as well so right now they’re at a disadvantage on the operational expenses so it just costs more to operate that per customer,” he said. “So it’s hard to compete when you’re rolling more trucks because it’s costing you more money to roll those trucks, every time a customer calls in it’s costing you more money. The cable operators have fine-tuned that and have been able to because they had a 10-year head start to benchmark and establish best practice on the cable operations, telcos had to pretty much do a step-function in the last five years to become TV operators.”

Patrick Moreno, product manager for IPTV at Zxyel, said that telecom companies are starting to gain greater traction in the IPTV market, but it’s been an uphill battle.

“The market has obviously been evolving in the last few years and it’s always been dominated by the MSOs operating their packages with the television and Internet and now the telcos are starting to come up and they have that technology to be able to deliver the IPTV type of service,” Moreno said. “New trends are developing where users actually have more control and they can select any kind of content they want and have it on demand when they want it. You see this now recently with cable and satellite offering interactive widgets and tools to allow you to get the weather and sports scores make it more attractive to customers.”

For Savoie, the competition for customers yields a catch-22.

“Every time you touch a customer you have just reduced your ability to make that customer profitable for you,” he said. “So every single truck roll that gets there pushes out the profitability for that customer by several months, so that’s where we went and productized some of our thinking and requirements gathering into a suite of products called xVu TV Care that goes after the operational expenses with laser-like focus on reducing those costs.”

“It’s a huge capital and resource intense endeavor to update your access network. But we’re seeing quite a bit of success of telcos doing this over DSL and you’re starting to get some great technology that’s able to mask some of the issues that you’re seeing in access networks such as Microsoft (News - Alert), which has built into their platform a packet repair technology that allows them to repair small packet loss that occurs in that bottleneck of the DSL network. Cisco (News - Alert) is another company that has come to the table with a product called the VQE platform which does Packet repair for the access networks, so you are starting to see vendors come to the table with some technology that it goes after optimizing that last mile, so stretching out the capacity of that DSL link. Despite being bandwidth-limited, there are all sorts of technology that’s enough to deliver HD services reliably to most households.”

According to Tier-1 global IP network services provider NTT America (News - Alert), while demand for IPTV is increasing, the number of IPv4 addresses is decreasing.

According to the American Registry for Internet Numbers, the availability of IPv4 addresses is down to 15 percent with the number decreasing every month. It is estimated that by mid-2012 the pool of IPv4 addresses will run out, creating a sense of urgency for the adoption and implementation of IPv6. IPv6 solves the address crunch problem by offering a vastly expanded usable addresses space. IPv6 also offers a significant number of benefits for the development of new IP based applications, such as IPTV.

Cody Christman (News - Alert), director of product engineering for NTT America, explains that Japan is seeing the greatest proliferation of IPTV deployments using IPv6 service.

The company’s Japanese subsidiary, NTT-Plala, offers Hikari-TV, the first large scale, commercially successful IPTV over IPv6 service. The Hikari-TV service comprises 76 channels including high-definition channels, more than 10,000 video on demand titles and over 13,000 titles in its karaoke service, and is accessible to consumers via a “broadband button for Hikari-TV” on the remote.

“This network has 89 percent coverage in Japan and over 10 million fiber-to-the-home subscribers,” Christman said. “One of the benefits of these closed networks is it gives the provider a little more control than they have on the broader open public Internet, especially when it comes to things like quality of service.”

That may make it seem as though telcos have a major advantage over traditional TV service providers. Yet, according to Savoie, other problems emerge – in part because telcos saw a later market entry and they’re facing established industry standards and customer benchmarks.

“Most telcos would tell you that this was a difficult service introduction,” he said. “For telcos it’s the first one that a benchmark was already established. The traditional role of a telco has been telephone, Internet overlay services, mobility services and then they got into TV. It’s the first service they introduced that a customer benchmark had already been established.”

The growing interest in IPTV combines increased broadband penetration with the capability of integrating television with other IP-based services on a home network such as Internet access and phone service, video on demand and karaoke, and opportunities to make TV interactive, ultimately making more efficient use of the broadband connection, NTT executives say.

“The purist in me says IPTV is traditionally telcos providing TV service over their copper or fiber lines,” Savoie said. “Where there’s a clear distinction for me is as soon as you go Quam that is typically a cable deployment. For example, the Verizon (News - Alert) broadcast TV deployment, in my personal view looks a lot like more a cable deployment. While for AT&T and others that is more of what the industry defined as a telco IPTV offering. It opens the door to a lot more interactive services.”

“You certainly sense that over the next few years there will be a coming together of those systems. It will all start depending on what your access network looks like – whether it is a combination of fiber and DSL – that today defines whether it’s IPTV or cable. But as you’re seeing more fiber to the home deployments those lines are being grayed out.” IT

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