Wednesday, May 30, 2007

Net Neutrality

TelecomView has just filed comments with the FCC giving our thoughts on the U.S. Net Neutrality issue. We believe that networks should not be neutral and that preferential treatment should be provided on a service basis. For example, I believe that my Vonage VoIP calls should have higher priority than my wife's file downloads.

We also describe the difference between the broadband services and the Internet services offered over them. Broadband services often include an IPTV service separate from the Internet service today. Our comments also suggest that there should be equal access arrangements available for these IPTV services, so that other content providers can offer video services as part of these IPTV services.

Click on this link to get more information and to request a copy of our comments.

Tuesday, May 29, 2007

BBC to Launch HD

The BBC in the UK plans to launch HD on as many platforms as possible in 2008. It is currently offering HD over satellite and is getting a strong positive reception. It believes that 80 percent of the homes in the UK will have HD sets by the end of the decade.

This move to HD will put significant pressure on the new BT Vision service. BT's broadband network does not provide enough speed to support HD today. The availability of HD on satellite and cable is likely to increase the acceptance of these services.

Verizon Takes Over Middleware

Verizon is previewing a new version of the middleware package for its IPTV service. It started with the Microsoft Foundation software, but has made it its own by taking over development. Enhancements in the new version include an improved graphics interface and a Gemstar TV guide.

This is not the IPTV Edition software that ATT and others are using for their IP based services. Verizon uses an RF technology similar to cable networks to deliver TV.

Verizon was unable to get the features that it needed from Microsoft, so it went in its own direction last year.

Sunday, May 27, 2007

China Telecom to test AVS

EETimes has reported that China Telecom plans to test AVS video encoding at its Shanghai Telecom subsidiary in this article. China Telecom denied the report but a vice director of a state owned research group confirmed it.

China Netcom plans to use AVS-based IPTV in 20 cities by the end of 2007,.

AVS is one of several domestic standards that China is promoting in order to reduce its dependency on foreign intellectual property. If the strategy is successful, it will shift the flow of royalties and fees to local, rather than foreign, companies and help to build up domestic technology.

Using AVS will require unique encoders and set-top boxes in China since the rest of the world is going to MPEG-4 AVC. This will significantly raise the cost of IPTV deployment in China, since the set-top box typically accounts for 3/4 of the capital investment in IPTV services.

China is very serious about developing its own technology. It finds that the return from building low cost hardware is low be case so much of the margin goes to technology patent holders outside of China.

U-verse Blog

Here is a link to a blog by a new U-verse user. Installation was tough but U-verse has some interesting new features, such as the ability to record four channels at the same time on the set-box's hard disk.

I am going to continue to watch this blog and I will let you know if anything else interesting turns up.

Thursday, May 24, 2007

Chunghwa to use Microsoft IPTV

Chunghwa Telecom, the incumbent carrier in Taiwan, has joined with Microsoft in a broad agreement that will include using Microsoft IPTV Edition software. No date was announced when Chunghwa will convert from its Alcatel software that it is currently using to the Microsoft software. The two companies plan for Microsoft's IPTV Edition software to become the core of Chunghwa's Digital Life strategy that will include TV services, on line gaming, and home offices services. These services will be delivered over fiber and DSL services.

Chunghwa also plans to use Microsoft software to provide CRM, ERP, and other business services to small and medium sized enterprises. Chunghwa will also use Microsoft software to help manage its networks.

Chunghwa has had quite a history of IPTV middleware packages. It started with Orca, which took it from zero to about 40 thousand subscribers. It then switched to Alcatel's middleware a bit before the Microsoft alliance was announced. Alcatel software has taken Chunghwa up to nearly 300 thousand IPTV subscribers. It will use Microsoft to take it to the next step.

Wednesday, May 23, 2007

Advanced Advertising

LightReading published an article on a panel that it put on JP Morgan technology conference Telecom 2.0: The Collision of Content & Communications in Boston. The panel stated that advanced advertising may be the key to ATT and Verizon differentiating their services from the cable companies. The panel also stated that this kind of advertising could double the revenue potential of TelcoTV services.

I wrote a report for the Multimedia Research group called Advanced Advertising for IPTV Services that was published last fall that reached similar conclusions. TelcoTV networks can provide a lot of information about how ads are watched today that advertisers cannot get today. For example, it is possible to track the number of viewers that switch an add off in the first 10 seconds. It is also possible to offer new forms of interactive ads.

Our recent report Networking Strategies for TelcoTV Services describes what telcos will need to do to address the load that these interactive advanced advertising services will put on their networks.

Tuesday, May 22, 2007

Free Extends IPTV Coverage with MPEG-4

Free in France has extended the availability of its free IPTV offering to subscribers using MPEG-4. Free has been encoding its video offering with MPEG-2 at 3.5 Mpbs. It now encodes 18 channels with MPEG-4 AVC at 1.7 Mbps, which permits its subscribers with lower speed connections to receive video content. These 18 channels are the free to air TNT digital terrestrial channels available in France. Free is using MPEG-4 AVC encoders from Ateme, a company with headquarters in France.

Free is getting the promised factor of two improvement going from MPEG-2 to MPEG-4 AVC. This improvement permits Free to increase the number of its subscriber that can receive video services.

Friday, May 18, 2007

Motorola's Cable PON

Motorola introduced PON for cable networks at NCTA last week. I could not understand what it is from the press release, so I just finished a briefing with them.

Motorola is integrating its PON systems into its cable network architecture. PON can carry a cable RF signal to the subscriber and deliver it to a cable set-top box. This makes it straightforward to integrate PON into a cable video service.

The PON provides a data service that is as good or better than the DOCSIS service but is not exactly the same. This means that the cable company will find it easy to support the PON data service in a green field where there is no cable modem service or to support business services. This is more of a problem in an overbuild where both data services will coexist. Motorola is working to address these issues.

Motorola stated that the key to this approach is the back office integration. Motorola has made it possible for the cable company to manage the PON with the same systems that it uses to manage the cable system.

Motorola has found strong interest in PON from the cable companies in North America and Europe. It will start serious discussions with Asian cable companies later this month. Cable companies are interested in PON as a way to support FTTP. This is becoming important to cable companies that are getting telco fiber competition from companies such as Verizon in the U.S.

Motorola's cable PON system is another technology that cable can use to counter the growing threat of TelcoTV services. It will help cable companies facing telco fiber to the home competition in particular. I expect that this will be a strong market for Motorola on a global basis.

City Telecom IPTV Flat

City Telecoms Hong Kong Broadband Network service had 120 thousand IPTV subscribers at the end of February 2007, up from 116 thousand at the end of August 2006. As a whole, its broadband business was flat as well, growing to 227 thousand subscribers at the end of February 2007, compared to 220 thousand subscribers at the end of August 2006.

City Telecom is positioning itself as a premium service provider with broadband services in the 20 to 100 Mbps range using its fiber based access network. It is phasing out its 10 Mbps offering. At 25 Mbps it has a significant performance margin over its DSL competitors such as PCCW. Its 25 Mbps service is priced at $27 US per month and its 100 Mbps service is priced at $38 per month.

City Telecom is struggling to get ahead in the Hong Kong market. PCCW has the momentum today. City Telecom's financial position is improving with higher ARPUs generated from stronger uptake of its higher speed services. This has resulted in the company returning to profitability.

It introduced its IPTV service with a first year free offer and quickly generated 100 thousand subscribers. I believe that that this strategy caused a high level of churn with the service as people had to start paying for it. I think it has done well to maintain this customer base even though further growth has been slow.

Telfonica Targets 1M IPTV Subscribers

Telefonica's Imagenio IPTV service is preparing a new assault on the pay-TV market from September 2007, with new programming and more channels available. The company plans to offer up to 200 TV channels by the end of the year and hopes to reach one million subscribers in 2008.

Telefonica has made a good start and seems to have the service in hand. This is a good time for it to get more aggressive.

Thursday, May 17, 2007

Telefonica Adds 36K IPTV Subscribers

Telefonica ended 1Q07 with 418,618 IPTV subscribers in Spain, an increase of 35,591 subscribers during the quarter. It added 168 thousand subscribers in the previous 12 months. Telefonica stated that it had a 44 percent share of the net pay TV adds in Spain during the quarter.

Telefonica's O2 operation ended 1Q07 with 26 thousand IPTV subscribers in the Czech republic. This service started in the third quarter of 2006. O2 added 10 thousand subscribers in the first quarter.

Telefonica is continuing to make good progress. It has fallen behind the France Telecom's pace, but it should end 2007 with 550 thousand to 600 thousand subscribers.

Motorola to Acquire Modulus Video

Motorola has agreed to acquire Modulus Video, a privately held company focusing on MPEG-4 AVC encoding systems. The terms of the agreement have not been announced.

I have heard that Modulus has sold MPEG 4 encoders to ATT in the U.S. and Telefonica in Spain. This acquisition will beef up Motorola's ability to support MPEG-4 services.

Wednesday, May 16, 2007

Swisscomm FastWeb Tender Succeeds

Swisscom's tender offer for FastWeb stock was successful with an acceptance level of 80.7 percent. This will give Swisscom ownership of 82.4 percent ownership of Fastweb stock when its own 1.7 percent of FastWeb shares is added in. The settlement of the tender offer will take place on May 22, 2007.

Swisscom will start to work with Fastweb to develop business plans and explore forms of cooperation in more detail. Fastweb's operations will continue to be managed separately. Swisscom will retain the Fastweb brand in Italy.

This arrangement should benefit both companies. FastWeb should be able to help Swisscom with its own IPTV offering.

Belgacom Adds 9.8K IPTV Subscribers

Belgacom added 9,826 IPTV subscribers in 1Q07 bringing its total to 149,491. The net adds in 1Q07 was nearly identical to its 9.6 adds in 1Q06 on top of a base of 33 thousand IPTV subscribers. It stated that the churn from its Try&Buy program affected its 1Q07 IPTV numbers. This program lasted from April 2006 through the end of January 2007.

Belgacom's IPTV revenue was 8 million euros in the 1Q07 compared to 2 million euros in 1Q06. The increase was due to the much larger number of subscribers as well as higher ARPUs. Its ARPU in 1Q07 was 13.40 euros compared to 11.90 euros in 1Q06.

Belgacom expects to add 100 thousand new IPTV subscribers in the full year 2007, which is the same as its 2006 results. It expects that its IPTV ARPU will be 15 euros in 2007.

Belgacom is making good progress and should be able to achieve its goal of 100 thousand new IPTV subscribers in 2007.

Monday, May 14, 2007

FastWeb adds 20,000 IPTV Subscribers

FastWeb added 20 thousand IPTV subscribers during the first quarter of 2007 for its new offering of the Sky Italia content over its IPTV service. This service became available to only existing FastWeb customers at the beginning of March 2007. This service became available to new FastWeb customers at the beginning of April 2007.

Based on this news we estimate that FastWeb new has 225 thousand IPTV subscribers. The impending combination of FastWeb and Swisscom should make the combination the number three TelcoTV service in Europe after Free and France Telecom and before Neuf Cegetel and Belgacom.

Swisscom at 40,000 IPTV Subscribers

Swisscom announced that 40 thousand people had signed up for its IPTV service that was launched in November 2006. There are more than 25 thousand with the service installed today.

The tender for FastWeb stock is open through May 15. We should hear as early as May 16 whether or not it will be successful. Silvio Scaglia, the founder of FastWeb, has tendered his shares. Swisscom will consider the tender successful if it receives at least 50 percent of the shares but will likely proceed if around 49 percent of the shares are tendered.

Swisscom is doing well with its new IPTV service and seems to be on track to have at least 100 thousand IPTV subscribers by the end of the year.

It will be interesting to see how it changes its IPTV strategy after the FastWeb acquisition is complete. I think there is a good likelihood that it will abandon its Microsoft software and replace it with the FastWeb system. The company could easily integrate both service together.

SureWest IPTV Up 20%

SureWest is both an incumbent carrier and a fiber based competitive carrier in the Sacramento California area. It now has 20,445 IPTV subscribers at the end of March, up 3,379 or 20% in the last twelve months. It offers a total of 305 broadcast channels, including 19 HDTV channels. The company has a total of 146 thousand access lines.

SureWest has the largest IPTV subscriber base among the small U.S. Telcos. It is continuing to do well with its IPTV service competing against Comcast.

Friday, May 11, 2007

BT Will Start BT Vision Marketing

BT will start its full marketing campaign for its BT Vision IPTV service this weekend with a national TV advertising campaign and some retail availability.

BT should do well since this is a free offer for its existing broadband subscribers. Its challenge will be to make its video on demand offering profitable without a base of revenue from a broadcast service.

Neuf to buy Club Internet

Neuf Cegetel, the French competitive carrier, has agreed to buy Deutsche Telekom's French broadband carrier Club Internet. This will make Neuf Cegetel the number two broadband carrier with 3 million subscribers after France Telecom.

Club Internet has been a Microsoft showcase account in Europe. It is almost a certainty that Neuf will abandon the Microsoft platform and convert Club Internet to its own software and delivery system.

ATT Ups IPTV Spending

ATT will increase its spending on its U-verse IPTV service to between $6.0 billion and $6.5 billion through the end of 2008. This is up from $5.1 billion. It expects to have 18 million homes passed by the service at that time, up from 3 million at the end of 2006.

This is not going easily for ATT. Frankly, it is difficult to see how it can pass 15 million additional homes with this service by the end of next year. This task is certainly easier than a FTTP approach since all that is required is installing remote access systems, but it is a huge acceleration in the pace of this project.

Saturday, May 5, 2007

Bigband Offers IPTV over DOCSIS 3.0

Bigband has introduced the ability for cable companies to offer a TelcoTV like IPTV service over a DOCSIS 3.0 cable modem infrastructure. This technology would enable cable companies to provide additional channels and expand their video on demand capability.

I have felt for a long time that DOCSIS 3.0 is the best weapon that the North American cable companies have for beating back the new TelcoTV offerings from Verizon and ATT. Its 100 Mbps data speed is well beyond what VDSL can provide and will be tough for Verizon to compete against with its fiber architecture.

I have also felt that the best way for the cable companies to take advantage of all of this bandwidth would be to use it to deliver TV services. Bigband is the first to make such an offering. Others will follow. This will make it that much harder for ATT and Verizon to establish themselves in this market as quickly as they can. Verizon is doing OK, but ATT needs to accelerate its rollout.

Friday, May 4, 2007


TelecomView has just published a report called Network Strategies for TelcoTV services. We found that TelcoTV service providers are moving from simple broadcast services to more and more services that use on demand techniques.

The problem that these service providers face as they make this change is that it will fundamentally change the nature of the traffic on their networks. Broadcast channels are transported using multicast technologies that send only one copy of each channel down each link independent of the number of viewers.

On demand technologies require that a unique video stream be sent across the network to each viewer, which significantly increases the load on the network. In fact, the unicast load from video on demand, NPVR, and advanced advertising services will cause video traffic to quickly dominate these networks.

Our conclusion is that TelcoTV service providers will have to move their video traffic off of their IP and Ethernet networks and on to a non blocking optical distribution network to be able to support Telco TV services, especially with the addition of NPVR and advanced advertising services.

You can get information about this report by clicking here.

You can order a free white paper that discusses our findings (as well as other free white papers) by clicking here.

I have been concerned about the load that video traffic will put on the networks that support TelcoTV networks for a long time. The recent announcement of new optically based systems from Sun Microsystems showed a new approach that became the inspiration for this report.

Most TelcoTV service providers are not thinking about this today, but they will be before long.

Thursday, May 3, 2007

ATIS Webinar

ATIS will hold a webinar on Tuesday, May 8 1:00 PM ET/10:00 AM PT. You can get more information and register at:

This group is doing important work, particularly for the North American market. I plan to attend myself.

ATIS Webinar

ATIS will hold a webinar on Tuesday, May 8 1:00 PM ET/10:00 AM PT. You can get more information and register at:

This group is doing important work, particularly for the North American market. I plan to attend myself.

Switched Digital does not threaten TelcoTV

I spoke with Mot0rola t0day about their switched digital offering. Switched digital uses the same multicast techniques that TelcoTV users for channel selection for cable digital services. The way it works is that the set-top box sends a channel switch request to the headend when the subscriber requests a new channel. The headend then selects an unused digital slot and uses it to bring the requested channel to the subscriber or ties into the slot that is already being used to bring that channel to other viewers.

This frees up digital channels carrying unwatched channels and increases the number of channels that the cable company can provide. Rather than being limited to the number of slots, an indefinite number of channels can be provided, similar to a TelcoTV service. Only the channels watched will take up actual slots on the cable.

Cable companies are starting to deploy this technology. They will have to decrease the number of homes that they service with a fiber to coax converter called an optical networking unit (ONU). That number varies today but is typical around 500 homes. In order to eliminate blocking, cable companies will have to decrease this to somewhere around 100 homes per ONU.

You can get more information on Motorola's approach to switched digital at

Switched digital helps the cable companies by making better use of the spectrum on its plant. This will help the cable companies to provide more broadcast channels, support more video on demand viewers, and support new DOCSIS 3.0 cable modem services.

Switched digital will be available to only the approximately half of the cable subscribers in the U.S. that subscribe to digital services. It will not be available to the other half that subscribe to only analog services.

The analog cable subscribers will be the most liable to switch to TelcoTV services. Switched digital does not do anything to protect this part of the cable subscriber base.These analog customers will be just as likely to switch to TelcoTV services before switched digital services are introduced as after.

What switched digital will do is make cable digital services more competitive with TelcoTV services. Adding switched digital services will protect this digital cable subscriber base as well as free up spectrum. Of course, the cable companies recognize this and have been migrating analog customers to digital at a steady rate.

Free has 1.9 M TelcoTV Subscribers

Free, the competitive broadband carrier in France, now appears to have 1.9 million TelcoTV subscribers. It had 2.5 million broadband subscribers at the end of 1Q07. This translates to 1.9 million subscribers of receiving TelcoTV services. Its TelcoTV service requires an unbundled loop, which account for 75 percent of the total.

Free forecasts that it will have 2.8 million broadband subscribers at the end of 2007 and 4 million at the end of 2010. It also expects that its unbundling rate will grow from 75 percent at the end of 2006 to 80 percent at the end of 2007. This translates to 2.2 million TelcoTV subscribers at the end of 2007 and at least 3.2 million at the end of 2010.

Free's service continues to grow at a strong rate. It has been setting the pace in France and has set the standard for broadband offerings in that country. It is definitely a very important company to watch.

Wednesday, May 2, 2007

IBM and Cisco Partner for IPTV

IBM and Cisco have formed a partnership to address the Tier 2 and Tier 3 carriers implementing TelcoTV services in Europe. While the Tier 1 carriers in Europe have already set their strategy, the company sees significant opportunities with the smaller carriers, especially in Eastern Europe and the Middle East as we as some carriers in Scandinavia. Their first joint deal is with Dansk Bredband in Denmark.

Cisco sill provide networking products, Scientific Atlanta headend systems, Arroyo video on demand servers, as well as home gateways and set-top boxes from Linksys and Kiss.

IBM will provide business and technical consulting services plus a vendor finance package.
The two companies will also include middleware from Kasenna and content protection from Verimatrix as part of their TelcoTV offering.

IBM and Cisco have complementary roles, so this combination makes sense for both companies. However, while the Tier 2/Tier 3 market is quite active, the Tier 1 carriers will have most of the subscribers and will account for most of the spending in most product categories.