Open Mic - The Market Imperative to Cable IP Migration
MSOs face a challenge.
The question of how MSOs can best deploy Internet Protocol technology to remain competitive represents a formidable, strategic planning challenge. Consumption of entertainment video has moved beyond the TV set to PCs, tablets and smartphones, so operators need to make sure their services can be accessed by subscribers wherever they are, which necessarily requires the use of IP technology.
MSOs need to debate the timing of investments in IP, capex vs. opex, the extent to which linear content must be included in the IP flow, what the cost benefits are, what types of migration strategies to pursue, and whether IP-based infrastructure can meet the performance requirements of cable TV.
The implementation of IP distribution capabilities suited to the quality, security and performance requirements of premium content touches every aspect of network operations, from the back office to the headend to the core, and from the distribution plant to the customer premises. Complicating matters, operators must devise network migration strategies that meet short-term and long-term goals alike, which means technology choices must address needs as they arise, in the most cost-effective way possible, while avoiding incremental steps that lead to dead ends and stranded capital.
SHAPING AN IP MIGRATION STRATEGY
Several approaches to implementing IPTV delivery over the HFC plant are under consideration, each with its upsides and downsides. These include:
- IP home – Content is delivered over the traditional MPEG-2 transport infrastructure and is then encapsulated in IP packets for distribution to all devices within the home.
- Overlay network – Delivery to mobile devices is achieved via a separate video processing and management system. Those devices may be connected to the DOCSIS network or to a distribution network owned by another service provider.
- Hybrid distribution network – Most content is delivered over the ATSC/DVB network in MPEG-TS format and encapsulated in IP at the home gateway, while some content, possibly VOD and new high-tier services, is delivered as managed services over DOCSIS.
- IP video over DOCSIS – All content is delivered in IP over bonded DOCSIS channels, either leveraging the new dynamic upstream/downstream bandwidth management of the current generation of advanced CMTSs, or bypassing the CMTS downstream with IP streams to special QAMs, which attach DOCSIS MAC frames to IP packets for delivery to a special cable modem and to devices in the home, including IP STBs, smart TVs and portable devices.
NEW REVENUE OPPORTUNITIES
While retaining subscribers and attracting new ones is critical, it’s also important to note that by employing IP technology toward those ends, operators also open paths to new revenue sources that might not be available otherwise. One of these is the aforementioned opportunity to leverage the cost-saving benefits of IP to introduce new high-value services, including higher-bandwidth speeds, whole-home DVR with managed home network service and “first-run” home theater service.
Another revenue opportunity stems from the benefits accruing to third parties, such as OTT content providers or connected device manufacturers, that affiliate with cable operators. There is great value to an OTT supplier whose content gains exposure through an MSO’s blended service navigation system.
The biggest revenue opportunity, however, may be in advertising, since the ability to extend IP-based content to all devices expands the ad placement opportunities as cable moves into new modes of advertising, such as interactive response, dynamic on-demand and addressability. The emergence of an integrated multidevice advertising placement environment in cable coincides with a shift in “Madison Avenue thinking,” where leading agencies are pursuing ways to extend campaigns to touch all users via all access methods. Moving to a blended service paradigm with the integration of select OTT content into the service mix will also extend advertising opportunities into the Web video realm. The ability to insert local ads sold by MSO sales forces into OTT content could be part of the deals struck with OTT suppliers in exchange for providing them exposure on the traditional and virtual cable programming guide.
There is no denying that MSOs face a complicated challenge in developing strategies that will deliver what consumers want while assuring a smooth, cost-effective transition to advanced digital cable services that are as reliable as today’s digital cable platform. Openness to new ideas, an understanding of how an IP-based cable TV platform works in contrast to legacy operations, and working with vendors that are committed to interoperability in the interest of building the best-possible solutions for customers will lead to optimal solutions. Cable companies have every reason to believe that with their migration to IP, they can maintain their status as the leading providers of subscription TV and broadband services in the years ahead.
Next month’s column will be written by BNI Video founder and CEO Conrad Clemson.