[opendtv] News: The Internet revolution is about to be televised
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Tue, 22 Feb 2005 09:25:41 -0500
The Internet revolution is about to be televised
=46ebruary 22, 2005 12:00am
Source: All material is subject to Copyright.
Sunday Business:
AFTER dominating the world's living rooms for=20
more than half a century, the television age is=20
drawing to a close. It will be replaced by=20
internet television, which will bear as much=20
relation to television as the small screen did to=20
radio. And guess who is a big force in this=20
revolution? None other than Bill Gates, who=20
transformed the world with his software. And even=20
sleepy BT is at the forefront of this radical=20
technology.
Internet television - internet protocol=20
television (IPTV) to give it its full name - is=20
the next big thing. It should not be confused=20
with those jerky and fuzzy video clips on a PC.=20
IPTV will provide a picture at least as good as=20
television from digital cable or satellite.
But the real difference between traditional=20
television and the new medium is that IPTV offers=20
viewers a two-way street. Instead of passively=20
watching one-size-fits-all television channels,=20
viewers will be able to see whatever they want,=20
choosing from libraries of millions of movies and=20
videos. Today's multi-channel choice will seem as=20
restrictive in content and as archaic as the=20
early days of the BBC when newscasters wore=20
dinner jackets and viewers were limited to one=20
channel.
Because of the immense choice, the new internet=20
televisions will need special software to help=20
viewers select the content that interests them=20
from the ocean of programmes on offer.
Nor is IPTV just another way to access the=20
internet. According to soon-to-be-released=20
IPTV-related statistics from the British Market=20
Research Bureau (BMRB) the internet and=20
television sectors are beginning to converge to=20
produce a new medium that is different from=20
either of its predecessors. Less of a private=20
medium than the internet as viewed on a PC, the=20
new medium will be used for shared entertainment=20
for the household.
The convergence of television and the internet to=20
create IPTV is no longer some white-coated=20
laboratory genius's idea of something that we=20
will adopt in the future once the bugs have been=20
ironed out. It is a technology that has been=20
perfected by world players and is about to be=20
launched across several continents. The=20
infrastructure needed to provide IPTV is in=20
place. Millions of homes have broadband internet=20
connections and companies such as Microsoft have=20
developed the computing power needed to turn=20
television sets into IPTV receivers.
Internet television would seem fanciful, but for=20
the interest and investment in it by Microsoft's=20
Gates. He has emerged as IPTV's greatest prophet=20
and has been making bullish predictions about the=20
future of a technology where Microsoft has a head=20
start. Gates recently said that consumers would=20
be able to select the highlights from sports=20
events themselves and that viewers should have=20
control of the coverage of events. He added that=20
consumers should also be able to text or video=20
conference friends when watching events or shows=20
from different locations. Gates says that this=20
kind of innovation has a terrific consumer=20
response.
Gates has proven his ability for being able to=20
spot commercially successful technologies years=20
before they emerge in the marketplace. One of his=20
most oft-quoted saying is that people=20
overestimate what technology can achieve in six=20
months but underestimate what will be achieved in=20
six years. This ability to hit a moving target=20
years in advance of everybody else has enabled=20
Microsoft to establish a similar lead in IPTV to=20
the one it had in desktop computing 20 years ago.
Microsoft began to invest in internet television=20
a decade ago when most broadcasters thought the=20
technology so risible, futuristic and problematic=20
as to be a complete non-starter. But Gates knew=20
the personal computing industry was on an=20
inevitable collision course with television=20
broadcasting, a view that may explain some of the=20
animosity that has existed in the past between=20
Gates and global media tycoon Rupert Murdoch.
Gates has been confident that Microsoft's=20
investment in internet television would pay off=20
one day, despite the industry view that the=20
technology was a non-starter and destined to be a=20
casualty of the dotcom crash of four year ago. He=20
recently said that Microsoft does not make=20
short-term plans and behave like a day trader.
"We are believers in the power of software.=20
Anywhere we see a chance for great software,=20
we're going to invest in it and we're going to=20
stick with it. It's very important for us to have=20
gotten in early to do a television platform.=20
Since we've been working all this time, we really=20
have the software ready," Gates said.
The reason few people outside the computing and=20
communications industries are aware of a=20
technology that is about to transform=20
everybody's' lives is that providers are holding=20
fire on. IPTV has the potential to blow big=20
content suppliers like Sky out of the water. IPTV=20
will also make the concept of traditional=20
television advertising redundant, as few viewers=20
will opt to watch ad breaks when they have=20
absolute control over what they watch.
Internet television is due to make its debut in=20
the US by the middle of 2005 and it will appear=20
in Europe towards the end of the year. US=20
telecoms giant Verizon Communications announced=20
its intention to use Microsoft's software for its=20
internet television rollout.
Verizon's service will initially comprise an=20
interactive programme guide, high-definition=20
television, digital video recording and=20
video-on-demand and is due to launch in so far=20
undisclosed markets around the middle of the=20
year. Microsoft's deal with Verizon follows a=20
contract from US telecoms operator SBC=20
Communications to use Microsoft software to=20
launch a planned television service and an=20
agreement with BellSouth to conduct television=20
trials with the software.
Although Microsoft has begun 2005 with a flurry=20
of deals with cable and telecoms companies in the=20
US, its IPTV technology is about to be adopted in=20
Europe.
"If we win a substantial number of the cable and=20
telecom deals around the world, then you could=20
see a pretty good-sized business," Gates recently=20
predicted. Although Microsoft is rumoured to be=20
advanced in talks with European telecoms and=20
cable providers, few appear willing to discuss=20
their plans. The technology has the potential to=20
transform these companies' roles and few are=20
willing to unveil plans before they decide how to=20
manage such far-reaching changes.
Sources at UK-based telecoms giant BT, for=20
example, privately admit that the telecoms=20
operator has plans for IPTV, but the company will=20
not comment officially. The telecoms operator did=20
lift the veil slightly at its recent financial=20
results meeting when Ian Livingstone, chief=20
executive of BT Retail, revealed that his own=20
household was being used as a guinea-pig to trial=20
video-on-demand services prior to a commercial=20
rollout next year. At the same press conference=20
BT also announced that it is carrying out an=20
automatic upgrade to make its customers'=20
broadband connections four times faster and that=20
it is also developing a service to be four times=20
faster again.
The company is committed to a overhaul of its=20
copper network. Called the 21st Century Network,=20
BT estimates it will cost the company GBP10bn=20
(E14.6bn $1.9). This network upgrade is similar=20
to that being undertaken by Verizon in the US as=20
a preparation for its IPTV rollout, although BT=20
is keeping its cards close to its chest. But it=20
is difficult to understand what commercial=20
justification this level of investment could have=20
without IPTV. BT chief executive Ben Verwaayen=20
has said that the network will be able to support=20
applications such as video conferencing and=20
distance learning. But video conferencing has=20
been available for some time and has not been=20
commercially successful; the strategy for=20
distance learning is still to be developed.
But IPTV would have the potential to justify BT's=20
GBP10bn investment in 21st Century Network.=20
Although video-on-demand does not necessarily=20
equate with full-blown IPTV, it is a signpost on=20
the road and could be the way in which the new=20
technology is first marketed.
IPTV will be harder to explain to ordinary=20
viewers than video on demand. Early indications=20
of this trend can be seen from the experience of=20
the nascent internet television market in Europe.=20
The 2004 launch of services such as Maligne TV=20
and CanalSat DSL in France, FastWeb in Italy has=20
followed a similar pattern, introducing video on=20
demand before rolling out a wider range of=20
internet-based services. But companies like=20
Verizon, BT and Fastweb will be taking a step=20
into the unknown as with any new technology. No=20
one can gauge the public appetite for foreign=20
documentaries or news, classic films or other=20
archived material.
The BMRB calculates that there are 47.1m adults=20
aged over 15 in the UK, 29m of whom are viewers=20
of digital television. There is a large crossover=20
of people who are also surfing the internet; 50%=20
of British adults have used the internet in the=20
past month. There are just over 23m internet=20
users in total and just over 20m home internet=20
users, of whom 11.5m are home broadband users.
But, according to the BMRB, video gaming, for=20
example, may not be the money-spinner some had=20
hoped. One indication of this is that the=20
proportion of Sky/cable digital television=20
viewers who are playing games through television=20
has been falling over the past year and stands at=20
only 55%. Only 10% of digital television viewers=20
said that they would pay to play games through=20
digital television. In its forthcoming report,=20
the BMRB will also reveal that there has been a=20
decrease in the proportion of Sky/cable digital=20
television viewers who have used e-mail.
More encouraging for IPTV is that the proportion=20
of all digital television viewers who have=20
interacted with programmes has increased in the=20
past year from 47% to 54%. This trend is=20
sports-related with the Olympics, Wimbledon and=20
Euro 2004 attracting most interaction.
But theories that IPTV viewers could be tempted=20
to use IPTV for voting or competing in=20
competitions may be flawed; 57% of digital=20
television viewers say they are more likely to=20
use a phone to vote or enter a competition than=20
the interactive button on the television remote=20
control. This contrasts with a figure of 65% only=20
one year ago.
There is evidence of appetite for video on demand=20
which may be why the telecoms operators are using=20
it as a way of tempting consumers to use internet=20
television. According to the BMRB, 7.3m UK=20
consumers, about 16% of the adult population,=20
have paid to watch films on television. Another=20
4.9m, about 10% of the adult population of the=20
UK, have also paid to watch sport on television.
But there are likely to be problems ahead for=20
IPTV in supplying video on demand. Just as the=20
rollout of online music has been dogged by the=20
ability of internet to offer songs free, so the=20
Hollywood studios, together with other filmmakers=20
and content owners, are wary of a technology=20
capable of delivering their content free.=20
Hollywood's worst nightmare is of millions of=20
IPTV users logging on to the movie equivalent of=20
a file-swapping site such as Kazaa to download=20
films without paying for them.
While the studios would have the legal power to=20
sue anyone doing this, piracy on this scale - as=20
the music industry knows to its cost - is hard to=20
police. The service providers have little vested=20
interest in safeguarding copyright. Their=20
interest is to ensure that consumers use their=20
network to access IPTV.
=46or this reason, Gates has been a regular visitor=20
to Hollywood to reassure film copyright owners=20
that Microsoft's IPTV platform will dovetail=20
effectively with copyright protection software.
Microsoft argues that the studios' best=20
protection against abuse by IPTV is a software=20
standard that allows consumers easy access to=20
video content on the internet.
According to a Microsoft spokesman, it will be=20
possible for content providers to distribute=20
video through IPTV on a pay-per-view basis using=20
the company's digital rights software. But the=20
spokesman added that IPTV will also make it=20
simpler for consumers to record and store their=20
favourites.
"With an internal or external hard disk,=20
customers can pause, fast forward and rewind live=20
and recorded content, and since it's IPTV,=20
multiple recordings can be made without the need=20
for tuners so there's no need for costly hardware=20
upgrades," said the spokesman.
Gates will need all his tactical skills not only=20
to persuade content owners of the merits of IPTV=20
but also to reconcile the threat it poses to=20
cable television operators with the opportunity=20
it presents to telecoms operators like Verizon=20
and BT. This is particularly true in the US,=20
where cable networks pass roughly 95% of=20
households.
In Europe, the situation is different. Despite=20
the six-to-nine months lead the US has on Europe=20
in internet television, European telecoms=20
companies and internet service providers are=20
already using digital subscriber line (DSL)=20
technology.
In France, for example, telecoms operators like=20
Iliad have already introduced so-called=20
triple-play services which stream voice calls,=20
broadband internet and digital television down=20
existing lines. With European telecoms giants=20
like France Telecom about to follow and BT=20
waiting in the wings, IPTV could have an easier=20
landing in Europe than in the US.
=46or Microsoft, the recent deals with telecoms=20
operators represent a bridgehead into a new mass=20
market, something Gates believes is crucial to=20
the future of his Seattle-based software giant.=20
Despite its current financial health, Microsoft=20
is troubled by computer viruses and software=20
piracy. It is also seeing new and existing=20
customers buying products based on open-source=20
software such as Linux.
Microsoft has to ride the shift of computing=20
power out of the office or study and into the=20
rest of the home. Gates's answer is the networked=20
home and central to this vision is the=20
convergence of the internet and the television.=20
Gates believes that by providing his company's=20
software to IPTV and helping safeguard copyright=20
over the internet, Microsoft can establish a=20
fresh revenue stream.
He is confident, recently stating that despite=20
the many difficulties, Microsoft IPTV will be "a=20
very, very good-sized business. And that is=20
reinforcing all the other work we're doing - our=20
media [compression technology], our=20
digital-rights management. It's a great thing for=20
getting other efforts around the company to=20
critical mass." If IPTV succeeds, Gates will have=20
remade the world in his image for a second time.
<< Copyright =A92005 All material is subject to Copyright. >>
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