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IPTV revisited: Focusing on next-generation lifestyle services

Wed, 02/28/2007 - 7:00pm
Ben Wagner - Director, Service Provider Marketing, DSP Systems, Texas Instruments Inc.

The concept of IPTV has been much ballyhooed and rightfully so. But with the raucous buzz that invariably accompanies a "hot" technology there sometimes is a tendency toward myopia. In the case of IPTV, one first has to wonder what IPTV really is. Many terms are being bandied about these days, like Digital TV, Internet TV, TV 2.0, Just TV, NGTV, and, of course, IPTV. But after compartmentalizing all the concepts, one eventually ponders whether all the fuss is somewhat misplaced. In the end, what's really most important is the set of next-generation lifestyle services and applications that subscribers want and the most effective means of providing them.

More than cable-replacement

Certainly the world becoming digital and IP (Internet Protocol) is an essential part of this shift. But cable operators are selling themselves and their subscribers short if their sights are set on replacing one technology for providing television programming with another. Growing a subscriber base can only be done by offering excitement, utility, value, and plain old fun. It just so happens that IP technologies in the long-term points to the most cost-effective way for rolling out exciting, new and multimedia-rich services and for maintaining a high degree of adaptability and flexibility, qualities that will come in handy when consumers clamor for other new services and applications in the future.

Differentiating television programming with characteristics that draw subscribers into the viewing process by making them an active participant, such as interactivity and personalization, is a good place to start. Responding to what's presented on the screen directly through the television set extends, albeit in a diminished way, some of the involvement of the studio audience to viewers at home. Moreover, giving subscribers the ability to personalize their television content to their individual lifestyle tastes and preferences is a powerful way to develop loyal viewership.

Of course, beyond television programming are many other types of entertainment and informational services that appeal to contemporary consumers and potential subscribers. The increasing popularity of video gaming is just one example; others abound, like home shopping, interoperability with home networking and home entertainment equipment, specialized on-demand content, video blogs, podcasts and others.

The key for cable providers will be their ability to take advantage of some of today's newer applications with the infrastructure now in place while migrating over time to technologies that have the long-term capabilities for next-generation lifestyle applications. Invariably, those long-term technologies will involve IP.

Knowing what's ahead

Certainly, rolling-out any new technology or application presents operators with new challenges. Too often those challenges are unexpected surprises. Fortunately, cable operators can undertake their migration to IP with the benefit of some forewarning concerning its underlying cost structures. This sort of information can be invaluable when it comes to designing effective business models.

As traditional telecom service providers have deployed IP technologies in support of their IPTV offerings, significant data has been compiled to quantify many of the operational costs associated with their multi-billion dollar investment in capital equipment. A June 2006 report1 by the Yankee Group, which was funded by Texas Instruments, examined the operational costs that service providers encountered in their migration to IPTV services and the results of the survey were quite enlightening.

Beginning with the initial cost of installation and continuing through ongoing support and service, the Yankee Group study identified where operational costs were coming from, what levels these costs could be expected to achieve and some of the reasons for the various cost categories. (Figure 1)

Figure 1

Over the course of the first year of service, the study found that an IPTV subscriber could be expected to generate an average of $733 in operational cost burden for the network operator. Because of the more complex configuration procedures for some of the on-premise equipment and the bandwidth-sensitivity of video applications, technicians were usually dispatched for provisioning and device installation, running turn-on costs up to an average of $360. Home wiring deficiencies and other problems often exacerbate the initial installation process.

Following installation, support and service calls can mount considerably. During the first 30 days, an average subscriber racked up support costs of $60.30, the Yankee Group study found. Over the next 11 months, support and service-related costs dropped to around $28 per month for a total first-year support cost of $733. The study posited that subscribers would be willing to pay about $60 per month -- or $720 per year -- for unbundled IPTV services. At that rate, the entire first year's revenue stream would be consumed by operational costs. In addition, there is the cost of churn caused by subscribers who become dissatisfied with the quality of the service. Clearly, it is in the operator's best interests to provide a high-quality service and hold on to subscribers long enough to recoup capital and operational cost expenditures. Fortunately, IP-based equipment, much of it based on advanced digital signal processing (DSP), is up to the task.

Wanted: DSP innovation

DSP technology is playing a major role in the way cable operators are coming to terms with an IP world. First, operators must attract subscribers with new interactive applications personalized and customized to the consumer's individual lifestyle. DSP technology is essential for processing many of the media-intense applications of today and tomorrow. Second, successful operators have always paid attention to the profitability of new services. DSPs provide key solutions for controlling and eventually reducing the capital and operational costs associated with an IP-based network and the services running on it.

Because of the programmability of the DSPs in an IP network, new services can be rolled out quickly and cost-effectively through software upgrades and extensions, eliminating the need to physically replace dedicated resources. And by distributing significant DSP-based intelligence at every node in the network -- from headend equipment all the way to the IP-phone on the home's kitchen counter -- service and support costs can be slashed significantly. Quality management and diagnostics can be performed remotely by centralized personnel, cutting the time support personnel spend on the phone with disgruntled subscribers and reducing the eventuality of a costly truck roll.

Equipment manufacturers that supply infrastructure systems, set-top-boxes (STB) and other types of devices to the cable industry have long been aware of the advantages of DSP technology because they have been able to pass along significant cost savings to operators. For example, each new generation of DSP typically integrates more and more functionality onto a single semiconductor chip. In fact, this trend has extended to the point where entire systems are now incorporated into a system-on-a-chip (SOC). Reducing the number of chip components needed to implement a system like a STB, for instance, allows the cost of infrastructure and in-home systems to be reduced accordingly.

But while this application-specific approach at the chip level offers significant advantages in terms of cost reductions and flexibility, it places an added burden on chip suppliers insofar as chip designers must have an intimate knowledge of the systems that their chips will be go into. Metaphorically speaking, no chip is an island. Indeed, taken in isolation a chip could have perfectly adequate performance parameters, but in actuality, when placed within the context of the system, it could jeopardize the system's overall performance if it had not been designed with the entire system in mind. Therefore, systems-level thinking is critical for today's technology providers. In addition to optimizing performance in today's networks, chip suppliers must also design in enough flexibility for those unknown software extensions that will assuredly occur in the future.

Developing flexible architectures capable of delivering IPTV and, even more importantly, tomorrow's new interactive and personalized lifestyle services will require knowledge of the technology deployed throughout the IP network. A broad portfolio of intellectual property touching on all aspects of IP networking will be needed if equipment manufacturers are to bring reliable and interoperable IP products to market quickly.

At the end of the day, innovations based on DSP technology are helping cable operators look beyond the buzz of the moment and stay focused on what will be essential to their success in the IP world of the future.

References:
1. "IPTV Lifecycle and Operational Costs", June 2006, The Yankee Group, by Nicole Klein.

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