Saturday, June 30, 2007

Telsur Offer IPTV in Chile

Telsur, a telco that operates in southern Chile, has introduced an IPTV service that offers 80 broadcast channels in response to Telefonica Chile's recent IPTV introduction in sections of Santiago described earlier in this blog.Telsur has invest $30 million to upgrade its broadband network, which has 50 thousand subscribers.

IPTV is starting to develop some momentum in South America. There are also efforts in Brazil, but the regulator there is not allowing the telco to offer broadcast services. Limiting the service to only video on demand makes the business case more difficult.

Europe to have 8 Million Fiber Homes by 2012

The European Fiber to the Home Council set a goal of having 8 million fiber connected homes in Europe by the end of 2012. There are 820 thousand fiber connected homes in Europe today. The council expects that 6.0 to 6.5 million of these fiber connections will come from build outs by utility companies and municipalities. The remainder will be provided by carriers.

These fiber homes will be a strong market for IPTV services. I expect that these fiber deployments should achieve the 80 percent video penetration that SureWest has in the Sacramento area with its FTTH deployment.

It is interesting to see to what degree these fiber deployments are supported by utility companies and municipalities in Europe such as Amsterdam and Vienna. Paris and Pau are two cities in France deploying fiber. France Telecom and Free in France are two carriers that have started investing in FTTH.

CableLabs Working on IPTV

CableLabs, the U.S. cable technology organization, has started working on specifications that will define how IPTV can be delivered over DOCSIS 3.0 cable modem technology.

A DOCSIS 3.0 capable hybrid set-top could bond a minimum of four RF channels in the up and down direction. Cable operators could use that pipe to deliver a range of IP based video services and applications using the its faster speeds and its ability to handle IP multicast and unicast. They could deliver long tail video,or download a movie to the set-top box's hard drive.

An IPTV implementation would also give a cable company the ability to provide a personalized mosaic navigation systems because it would not be limited by the number of physical tuners in the device.

CableLabs has not set a schedule for this work yet.

The U.S. cable companies are putting this technology forward as a response to IPTV from the telcos. This is not a quick fix though. There is a considerable amount of technical work that has to be done. It also requires dedicating scarce spectrum to the IPTV service.

The biggest issue is that it will require replacing the subscriber's set-top box. The cable companies will go slow when they deploy these DOCSIS 3.0 services and will use it to retain or win back telco IPTV customers. The cable companies will not want to invest in a wholesale set-top box replacement program.

Thursday, June 28, 2007

Free Offers Video Sharing

Free in France has initiated a service that permits its subscribers to share their videos to all or part of its subscriber network. The user plugs his or her video equipment to the video input port on the Freebox HD set-top box. There is no charge for this service.

This is the kind of service that we expect to be offered by more IPTV service providers. Easy access to the TV for shared video is something that the IPTV providers can provide that differentiates them from You Tube and the other PC based video sharing services.

Monday, June 25, 2007

Verizon Has 500,000 IPTV Subscribers

Verizon said at NxtComm last wee that it now has 500 thousand IPTV subscribers. This is an increase of about 300 thousand since the beginning of the year.

ATT stated that it had 40 thousand IPTV subscribers and that it will pass 18 million homes by the end of next year.

Verizon is doing extremely will and is likely to approach 1 million IPTV subscribers by the end of 2007. It is now one of the top handful of IPTV deployments globally.

It appears that ATT is still struggling to get off the ground. It looks like its results will be about half of what Verizon achieved in the first year of its commercial deployment.

ATT's claim that it will pass 18 million homes by the end of next year looks to be very difficult, if not impossible. It will be interesting to track its progress. I guess that I will feel more positive about their statements when ATT brings U-verse and VDSL to my house in San Francisco. It told me in October that a VDSL system serving my home would be installed at the end of January. The work has not started yet.

Saturday, June 23, 2007

Telecom Italia at 31,000 IPTV Subscribers

Telecom Italia said recently that it had 31 thousand IPTV subscribers at the end of 2006 and was offering the service in 250 towns in Italy. According to the report, service offers 24 broadcast channels and 500 movies at any one time. It brings in 200 new pieces of on demand content and offers 2,500 different movies over a year's time. It includes a digital tuner that provides access to digital terrestrial channels along with the IPTV channels.

Telecom Italia has had a slow start for its IPTV service, which was introduced at the end of 2005. It has strong competition from FastWeb, Sky satellite services, digital terrestrial services.

Tiscali UK adds 19,000 IPTV Subscribers

An Ofcom report cited that Tiscali UK added 19,000 IPTV subscribers in the first quarter of 2007. Its total now stands at 62 thousand.

This is 44 percent growth in one quarter, but the numbers are relatively small given the size of the market and that this service has been available for several years. If Tiscali can maintain growth of 20 thousand per subscriber it should double its subscriber base and move itself into a better position. Things will get tougher for them as BT's BT Vision IPTV service gathers momentum, though.

HBO to go MPEG-4 HD

The premium channel HBO announced that it will introduce HD versions of all 26 of its channels in MPEG-4 format. HBO said that it had no choice because of the bandwidth savings of MPEG-4 over MPEG-2. This transition will start in the fourth quarter of 2007 and complete in the first quarter of 2008. HBO will transmit the HD channels using 8 Mbps of bandwidth for each.

This is good news for the TelcoTV providers virtually all of whom will used MPEG-4 as their native format for HD programming. They can take these MPEG-4 feeds and use them directly.

It is not as simple for the cable companies. They will have to transcode these MPEG-4 feeds to MPEG-2. This involves extra expense for the transcoders and potentially some loss of quality.

Thursday, June 21, 2007

Verizon to add HD VOD and IPTV

Verizon said that it will offer HD VOD services soon. It also said that plans to move to an IPTV architecture. It is currently using an RF over fiber approach for broadcast content. It also has a long term plan to use DWDM technology in its access network as the next step beyond GPON in a three to five year time frame.

Verizon is reaping the benefits of its investment in fiber. Its fiber architecture gives it a platform that will permit it to significantly improve the performance of its broadband services over time.

Wednesday, June 20, 2007

Motorola Introduces Open Set-Top Box

Motorola has made the Kreatel KreaTV software platform available on its own set-top boxes. This platform makes these devices with the range of middleware systems that Kreatel supports with its own boxes. Up until now, the Motorola set-tops have supported only the Microsoft Mediaroom software for ATT.

This opens the European and Asian markets to the new Motorola set-top boxes. It also gives its current customers the ability to transition to other middleware systems without changing set-top boxes.

Monday, June 18, 2007

Microsoft Rebrands IPTV

Microsoft introduced a new version of its IPTV system and changed its name to Mediaroom. The new version includes digital terrestrial support (required by BT Vision) along with:
  • Personal media sharing to easily listen to digital music and view digital photographs stored on PCs elsewhere in the home on the TV.
  • Multimedia Application Environment provides support for web services and applications, such as video-on-demand portals, casual games and interactive TV services.
  • Enhanced MultiView capabilities to see multiple channels, programs and camera angles on one screen

These are nice additions but none of them is groundbreaking. Microsoft's problem is to show that it can scale and support large numbers of subscribers. It appears to be doing well at Swisscom. ATT, BT, and Deutsche Telekom are its proof cases.

Sunday, June 17, 2007

ECI Takeover in the Works

Israel based ECI Telecom is holding talks with an investment firm about tale of the company's stock for $1.2 billion. Major shareholders in ECI apparently would like to divest their holdings. These discussions apparently have not reached a definitive stage.

ECI has done very well in the access business and particularly in supporting IPTV services. Nearly all of the IPTV subscribers in France Telecom are served by ECI systems. About 40 percent of the VDSL lines being installed by Deutsche Telekom are served by ECI systems.

The broadband market is reaching a point of saturation and it is likely that telco spending on broadband equipment is starting to decline. This will make a very competitive market even more so. This puts a smaller company competing with Huawei and giants such as Alcatel-Lucent, Ericsson, and Nokia Siemens in a very tough position. It is not surprising that its current investors would like to find a way out.

Cisco Introduces Cable PON

Cisco's Scientific Atlanta unit is introducing what it is calling D-PON, which is a PON based FTTP system that fits into existing cable HFC networks. D-PON will enable providers to provide an alternative to the telco G-PON FTTP offerings for greenfield application from Verizon and ATT. This system will be available in the fourth quarter of 2007.

Motorola has offered a similar PON based system for cable companies, so the two main U.S. cable architectures will support PON FTTP access. This is another of the growing numbers of arrows that the cable companies can add to their quiver to counter the IPTV offerings from Verizon and ATT.

Friday, June 15, 2007

ATT Selects GPON Vendors

ATT has selected Alcatel-Lucent and Ericsson to supply GPON systems for its U-verse IPTV service. The company plans to use GPON in new greenfield builds starting in 2008. It will use VDSL FTTN systems where it is over building its current network.

Deploying fiber is about the same cost as copper in a new build. Operation and maintenance costs are significantly lower, so choosing fiber for new builds makes a lot of sense. However, given the slow rate of the U-verse rollout, I do not expect to see the company roll out GPON at a high rate.

Light Reading/Cisco IPTV Scaling Test

Light Reading published an article that describes the results of an IPTV network scaling test that shows that a Cisco network can scale to support one million IPTV subscribers with QoS and resilience.

Light Reading asked the European Advanced Networking Test Center AG (EANTC) to run an end-to-end IPTV test on Cisco equipment. Cisco passed, showing its gear can handle a 60,000-user POP and, by extrapolation, a 1 million-subscriber IPTV service. It also demonstrated features such as Call Admissions Control (CAC) and Video Quality Experience (VQE).

EANTC simulated various failures and fiber breaks, and Cisco's routers managed to restore TV service in 625 milliseconds, worst case. And in QOS tests, Cisco correctly prevented the TV streams from getting disrupted when other types of traffic threatened to clog the network.

These results are interesting, but not surprising. There is little question that Cisco's routers can support IPTV networks.

The more interesting question is if this is the best architecture for IPTV. Our recent report Networking Strategies for TelcoTV Services comes to the conclusion that IPTV traffic does not fit a Layer 3 IP network well and that a Layer 1 optical network will provide a higher level of service at a lower cost. The issue is how to handle the on demand unicast traffic that everybody expects to dominate these networks. We are offering a free white paper on this subject.

ATT Micro Marketing for IPTV

ATT is using ice cream trucks to sell its IPTV service in Connecticut. The truck goes to Little League fields, train stations and suburban cul-de-sacs. With music playing, the truck stops and a door opens on the side to reveal a flat-screen TV showing programming from U-verse, ATT's IPTV service. It is like a magnet, people come running when the music from the ice cream truck is played.

ATT is using a variety of small-time selling strategies, such as wine-and-cheese parties, movie nights in local theaters along with the ice cream truck to sell its IPTV service one neighborhood at a time.

AT&T's U-verse service is not available in entire communities much less than the entire state. The company has to find ways to target the people that can actually buy the service. To demonstrate the differences among U-verse service and cable or satellite TV, ATT has to show it to people. Many of the selling points are based on features, from the on-screen menu to the speed of channel changes.

SureWest in the Sacramento California area has used a similar retail marketing approach. When it introduces its FTTH IPTV service into a new neighborhood, it cruises the neighborhood with a big sign on a trailer that it calls its "land blimp". It then blankets the neighborhood with door to door sales people. This approach has been successful. Surewest has consistently had about a 25 percent market share in the areas where it offers its fiber service.

This marketing approach shows what ATT is facing with its highly fragmented U-verse IPTV introduction. The coverage is not sufficient to support mass marketing techniques even on a local basis.

Telefonica Chile Introduces IPTV

The Chilean unit of Spains Telefónica has launched IPTV services in Santiago, its first in Latin America. Telefónica Chile has invested US $20 millionn into network upgrades and equipment purchases to facilitate the IPTV rollout.

The service is limited to the wealthier neighborhoods in the northeastern corner of Santiago.
The neighborhoods chosen for the rollout are the only areas where the network has sufficient bandwidth to handle 6Mbt channels needed to deliver the service. There are plans to expand the service to other parts of the city in 2008.

By the end of 2007, Telefónica expects to have some 3,000-5,000 IPTV subscribers. However, in the near term the service is only a complement to Telefónica's existing digital TV and satellite services.

The IPTV service offers video on demand, with some 240 hours of content available. Every month around 20% of that content will be updated.

At the end of May its competitor, VTR had a 71% share of the pay TV market, down from 77% at end-2006, according to Telefónica. The incumbent has had digital and satellite TV services for one year and at the end of May had a 14% market share with 156,547 clients, a 66% increase compared to the end of 2006.

This is a small beginning in IPTV for Telefónica in Chile. Don't expect dramatic growth. The broadband network there is not ready to support IPTV on a broad basis. This is also Telefónica's third pay TV service and will have to compete for resources within the company.

ATIS Releases IPTV Architecture Document

ATIS has released its its IPTV High Level Architecture document, which is a high level architectural framework for end-to-end systems’ implementation and interoperability. It will serve as reference architecture for the IPTV functional specifications to be defined in separate documents.

This document is available from the document center on the ATIS website for $108 for non members.

This work is important but rather after the fact. Most major carriers have already committed to IPTV architectures. They will have to evolve the pre standard implementations to standards over time.

Thursday, June 14, 2007

Portugal Telecom starts IPTV

Portugal Telecom launched an 88 channel IPTV service. It also has more than 80% of the cable and satellite TV business in Portugal, under the TV Cabo brand. This IPTV service includes video on demand and HD service

It owns a subsidiary that accounts for more than 90% of the landline telephony and nearly 80% of the broadband in Portugal. This subsidiary is also a leading film distributor and owns 148 movie theaters. This subsidiary will be spun off as a separate company in September.

Portugal Telecom has invested over 10 million euros in the service, and will initially launch IPTV in three target markets -- Lisbon, Oporto and Castelo Branco -- but intends to roll out the service to the entire country, with more than 100 channels, in the coming months.

Other domestic operators such as, Cabovisao and Ar Telecom, have also launched IPTV services, but have not built up a significant subscriber base to date.

Cable in Portugal is in about 30 percent of the homes and satellite is in less than 10 percent of homes. About 3/4 of the cable subscribers are still using analog cable, which makes them vulnerable to IPTV.

In these market conditions, Portugal Telecom should do well, as long as it performs well and it markets the service well.

IPTV Taking Off in Russia

Sistema's Comstar Direct ended Q1 2007 with 397,700 broadband Internet subscribers and 100,500 IPTV subscribers. While the broadband figure was 39% higher than the Q1 2006, the IPTV service increased 604%.

Comstar Direct added seven new channels to its Stream IPTV service – RUTV, Vesti, Viasat Sport, Bridge TV, Dom Kino, 2×2 and TeleNanny – since the beginning of 2007.

Sistema in Russia is now one of a small but growing set of service providers with more than 100 thousand IPTV subscribers. It is now among the leading IPTV service providers.

Tuesday, June 12, 2007

Telcos Pushing for Statewide Video Franchises

Light Reading has published and article that gives a good summary of the push by ATT and Verizon to get the individual states in the U.S. to institute state wide video franchises that will eliminate the requirement to acquire franchises on a community by community basis. Fifteen of the fifty U.S. states have state wide video franchises today. Massachusetts and Georgia are currently considering statewide franchises.

ATT and Verizon were not successful in getting the U.S. FCC to declare a national franchise. Their backup is to get more statewide franchises. ATT has 12 of its 22 states with statewide franchises, including its two largest states, Texas and California.

Verizon also has a number of states with statewide franchises including New Jersey and Virginia but not New York or Massachusetts.

This will continue to be a slog for these companies

Saturday, June 9, 2007

Downloading Videos is Incremental

An article on LightReading gave comments from a Starz! executive about the impact of Vongo, its Internet download service, on its subscription movie channel. From 70 to 76 percent of Vongo customers don't get Starz or another premium network such as HBO or Showtime as part of their cable or satellite TV service. In addition, 20 to 25 percent of Vongo's subscribers do not subscribe to a cable or satellite multichannel video service, opting instead to get their fill of video via broadband and from DVD rental services such as Netflix.

The Vongo service is predominantly used by men with an average age of 38, and to consumers with homes teeming with multiple computers and other electronic devices. From 30 to 36 percent of Vongo's subscribers base is viewing Vongo content on their TV screens. The quality on the TV screen is somewhere between the DVD and VHS. Vongo encodes video at about 1.3 Mbit/s using Windows Media.

Starz would like to see Vongo offered with cable and TelcoTV services. It stated that there are negotiations going on in that regard.

These results are interesting from a couple of respects. First, the average age is well beyond the 20's that most people expect will be the predominant users of these services. This means that there a lot of people in their 40s or even 50s using Vongo.

The other interesting fact is the number of people watching Vongo content on their TVs. These people are connecting Windows PCs or Xboxes to their TV to accomplish this. This means to me that this is a pretty technically savvy group of people.

Our report The Battle for Broadband TV covers these issues and predicts that services are likely to hook up with TelcoTV service providers. You can download a free white paper to see what we think about this.

Friday, June 8, 2007

Ultra HD - An Overwhelming Prospect

Ateme, a French MPEG-4 encoding company, is participating in a demonstration of Ultra HD, with NHK, the Japanese broadcaster. This Ultra HD demonstration will be at a resolution of 7680 x 4320, which is four times the resolution of HD of 1920 by 1080 in both directions. This demonstration will use prototype super-fast cameras that can capture data at a rate of 4,000 frames per second and capture 22.2 audio (as compared to today’s 5.1 surround sound).

Ateme expects that the Ultra HD standards will be complete in 2009. NHK estimates that satellite transmission tests will begin in 2011, and that by 2020, Ultra HD will be ready for broadcast to households.

Ateme is using 16 MPEG-4 AVC encoders in tandem for this demonstration in order to provide a very high level of quality, consequently the demonstration will require 128 Mbps to encode the Ultra HD stream. Ateme state that this bandwidth can be reduced first by allocating bandwidth more intelligently between the 16 encoders. Finally, bandwidth can be reduced with a single Ultra HD specific encoder that can encode an entire frame at one time.

It is not clear how much the bandwidth to provide Ultra HD encoding can be reduced, but if it follows the pattern between SD and HD, I would estimate about 75 Mbps will be required. Of course, it could be less if resolution or quality standards are reduced.

What this does mean is that Ultra HD will require a fiber to the home service and one that provides something around 500 Mbps per subscriber. This is in the ball park for GPON depending on splitter levels. Gigabit point-to-point Ethernet will also work. It is out of the question for VDSL, even with bonding.

Ultra HD will also be tough for the cable, satellite, and digital terrestrial broadcasters. They will have to provide very high amounts of bandwidth as well. Getting rid of analog channels will help the cable companies, but it will be a major strain for all of them.

The difficulties in delivering Ultra HD for all of these media calls into question NHK's estimate of a 2020 service introduction. It seems likely that only the youngest among us will regularly receive Ultra HD service.

Thursday, June 7, 2007

France Telecom buys in Spain

France Telecom has bought the competitive broadband carrier from Deutsche Telekom. This adds 400 thousand broadband subscribers to Orange Spain giving it a total a total of 1.1 million subscribers. This makes it number two in Spain after Telefonica with 4 million broadband subscribers. does offer IPTV services based on Microsoft software.

This is the second foreign competitive carrier that Deutsche Telekom has sold in the last couple of months. It also sold its Club Internet subsidiary to Neuf Cegetel.

I expect that Orange will move subscribers off of the Microsoft software.

Verizon to use VDSL in MDUs

Verizon will be using Westell VDSL DSLAMs to distribute its FTTP FiOS service in Multiple Dwelling Units (MDUs). Westell was not able to provide any details on this deal.

Using VDSL to distribute fiber broadband services in MDUs is common. VDSL will operate over existing telephone wires at speeds approaching 100 Mbps due to the short length of these in house copper links.

Thanks to Ohad Hammer, a regular reader, for passing this article on.

Wednesday, June 6, 2007

China Telcos Wants IPTV Deregulation

China Telecom and China Netcom called for the deregulation of the IPTV market in China. They stated that there is a worldwide trend to deregulate IPTV; however, they stated that it is not happening in China. For example, regulators have only allowed China Telecom to offer IPTV commercial services in only six cities.
The two firms hope that IPTV can provide them with a major source of broadband revenue, but broadcasting authorities are concerned that IPTV could hurt cable TV operators. In December 2005, the broadcasting authorities in Quanzhou, in East China's Fujian Province, ordered the closure of an IPTV service jointly run by China Telecom and the Shanghai Media Group, despite the fact that the Shanghai Media Group had been granted a license to operate the service by the State Administration of Radio, Film and Television.

A new law is being developed to address this issue but is not expected to be passed before March 2008.

China Telecom has 210,000 IPTV subscribers with 150,000 in Shanghai. China Netcom has more than 140,000 IPTV subscribers.

The short term prospects for IPTV in China are cloudy at best. There is still a lot of uncertainty that is based on how the government will sort out the conflict between the cable and the telephone companies. It is likely that this will be sorted out in the next year or two, but it is wise to take a conservative approach for now.

Tuesday, June 5, 2007

Swisscom IPTV Profitable in 2009

Swisscom does not expect to see profits from its Bluewin IPTV service over the next two years. Swisscom would need 200,000 to 250,000 customers for Bluewin TV to yield profits and expects to get there by the end of 2009.

The service has been installed in 30,000 to 40,000 households. Swisscom is currently adding about 1,000 to 2,000 households every week.

Swisscom continues to do well. I think that reaching profitability in three years for such a complex service is a very positive sign.

Monday, June 4, 2007

New Accenture IPTV Survey

Accenture has just released its IPTV Monitor - Issue 4, which reviews that global status of IPTV. It also gives the results from surveys. One interesting result is that nearly half of the respondents to one survey felt that targeted advertising will become an important revenue source from IPTV services. Another survey found that more than one third of the service providers surveyed believe that competition from cable, satellite, and digital terrestrial is the single biggest obstacle to IPTV adoption.

Like its other IPTV Monitor's, Issue 4 is well worth downloading and reviewing. Download the earlier issues as well, if you have not seen them.

Saturday, June 2, 2007

U.S. FCC Addresses MDUs

The U.S. Federal Communications Commission (FCC) ruled that competitive video providers must have access to the inside wiring in multiple dwelling units (MDUs) at the terminal block in order to provide video services. It also ruled that wiring behind sheet rock is considered to be inaccessible as is wiring behind brick or cinder block. Consequently, competitive video providers should not be forced to cut into sheet rock to provide service.

This ruling will help ATT and Verizon to offer their IPTV services in MDUs where the cable companies are already established. This is particularly important t0 Verizon that serves a large number of MDUs in New York City and other large Eastern cities.

Friday, June 1, 2007

ATT Hits 30,000 IPTV Subscribers

Randall Stephenson, AT&T COO and CEO designate, said that ATT has 30 thousand IPTV subscribers for its U-verse service. It now offers the service in 20 markets and and is currently adding 500 subscribers per day.

ATT is adding subscribers on a consistent basis since its last announcement on April 18 when it said it had 18 thousand U-verse subscribers. If you are an (anal)yst like me, you will calculate that this is an average rate of about 480 new subscribers per day. This is consistent with Stephenson's announcement.

Based on this rate, ATT should finish the year with over 100 thousand U-verse subscribers. This number should increase significantly as the number of markets where the service is offered increases.