[opendtv] Some clear thinking on IPTV

  • From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
  • To: <opendtv@xxxxxxxxxxxxx>
  • Date: Wed, 22 Mar 2006 12:29:17 -0500

Good article. It gets beyond the simplistic analyses which stop at the
speed of the last link.

Bert

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March 17, 2006

The tale of the Tube

By Christopher T. Heun

As high-speed Internet connections reach into more and more American
homes, so too does the promise that telephone companies could use them
to deliver television content. The problem is, if they did so today your
bill could be more than your car payment. A lot more.

That's the way Hank Kafka, BellSouth Corp.'s chief architect, figures
it, because of the huge amount of bandwidth required if Americans were
to watch video-on-demand and other high-definition TV programming over
the Internet the same way we watch the tube now, which is an average of
eight hours a day, often from more than one set in the house.

Kafka took some generally accepted cost estimates for today's Internet
-- that the average user downloads about 2 GBs of data every month,
which costs service providers about $1 -- and made some extrapolations.
If a subscriber were to watch five standard definition movies per month,
about 9 GBs of data, that would cost about $4.50. But if all TV viewing
were in standard definition, the price tag jumps to $112 for 224 GBs.
And if all viewing were high definition -- carried at 24 megabits per
second -- the quantity reaches 1,120 GBs per month and the bill totals a
whopping $560.

But Kafka, who first announced his estimates at a recent telecom
industry trade conference, doesn't expect anyone to pay those kinds of
prices. He just wants to make a point.

"If this kind of traffic develops and we just follow the same Internet
model we have now, then the Internet is going to be a mess. We need to
find other ways to address it," he says. "What you want is massive
amounts of cheaper bandwidth."

The headaches will start for companies like BellSouth when Internet TV,
or IPTV, services are provided via unicasting, which delivers to single
households individually rather than to an audience of multiple
households simultaneously, the current system of multicasting, which is
much more efficient.

"The key is, it moves the emphasis from just access bandwidth to core
network bandwidth that's necessary to fill up the access pipes with
sustained high-bit video traffic," Kafka says.

BellSouth will conduct a technical trial of IPTV for up to 1,000
customers by the end of the year and all of its competing service
providers are investing in IPTV too. The technology is appealing because
the content can be personalized. Major League Baseball, for example, is
working on a system to show multiple games at once while also providing
access to statistics and scores from other live games.

Count on another four or five years before a significant number of IPTV
subscribers embrace high definition TV and multiple set-top boxes to
really push the access networks being built today to their limits,
according to Mark Bieberich, director of the communications network
infrastructure at the Yankee Group.

By that time, costs will have decreased significantly for optical
components and many of the necessary broadband technologies. Still, it's
going to take that long before service providers start generating a
profit.

"The cost is massive," Bieberich says. "The way consumers will use these
services is elusive."

He estimates the price tag to be in the billions of dollars. First,
there's the equipment in the home: set top boxes with a digital video
recorder and residential gateways, the devices in homes that interface
with a service provider's network. Then there's the infrastructure that
connects the customer to the video serving office. "The service provider
has to spend significantly to upgrade that to prepare it for video
delivery," Bieberich says.

On top of that, because existing Asymmetrical DSL lines are inadequate
for video, they'll need to be upgraded to VDSL or ADSL 2+. And the
infrastructure at the office that serves the video -- switches, routers,
video on demand servers -- and the fiber that connects users to content
will all need to be replaced. The process is under way in this country
and in Europe and Asia.

"You're talking about dozens of different categories of capital
expenditures," Bieberich says. "Telecoms have to invest in the same type
of video infrastructure that the cable companies have already invested
in."

How will companies like BellSouth charge their customers for this?
There's plenty of possibilities: one of the more likely options is that
instead of paying for access speed as they do now, subscribers could
select different plans that limit the quantity of traffic they could
download; the more movies you want to see, the more you pay. Or, a
customer could pay a small fee to temporarily upgrade a connection to
download a video.

Advertisers, already frustrated that their standard 30-second spots are
easily removed by Tivo and other recording devices, may switch to
placing products inside programs or to offering directly through the
IPTV connection specials to buy merchandise related to a program.

Since IPTV requires high-speed Internet connections, it's worth noting
that the rate of U.S. broadband adoption -- and average connection speed
-- is sluggish compared to the rest of the world. In response,
municipalities across the country have begun setting up their own
wireless Internet networks, drawing protests and lawsuits from telephone
companies objecting to what they say is unfair, taxpayer-funded
competition. BellSouth has sued, successfully, to block Lafayette, La.,
for example.

Advocates of municipal wireless movements, who insist their way is
cheaper for consumers, are frustrated by a market in most of the country
that prevents anyone but the local phone or cable company from providing
Internet services.

"Three years ago, the thought of cities doing their own Wi-Fi clouds was
crazy," says Dwayne Hendricks, chief executive of the Dandin Group,
which is working on a $9 million project for rural Sandoval County in
New Mexico that's nearly the size of Connecticut. "But now it's
happening, everybody's doing it. It's finally occurred to people that
this stuff really works and it provides a competitive service to the
duopoly.

"You're having the government compete with the private sector because
the private sector is not doing the job."

In the next five years, Sandoval County is hoping to provide wireless
service of 100 megabits per second over an area of more than 3,700
square miles. "The county wanted a wireless infrastructure to outperform
any telco or cableco in the country," Hendricks says. Once the network
is established, it will be open to service providers who will be able to
determine the price for connecting residential customers.

All material on this site Copyright 2005 CMP Media LLC. All rights
reserved.
 
 
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