Indicating that Comcast is reheating plans to license its cloud-fueled, IP-capable X1 platform to other pay TV providers, Canadian operator Shaw Communications announced that it will test X1 following a decision to scrap its original IPTV transition initiative.
Shaw disclosed its plan last Thursday (June 25), announcing it would move ahead on a technical trial of X1 and take a $55 million write-down of IPTV assets following its decision to abandon the prior plan.
Shaw said it started to deploy an end-to-end IPTV solution in 2013, but paused in late 2014 to conduct a review and to assess other options. It didn’t disclose details on its original IP video plan, but Cisco Systems/NDS was believed to be among the vendors involved. Shaw has also been deploying an IP-capable gateway from Arris that was spawned from the vendor’s 2009 acquisition of Digeo.
PARTNERING FOR SCALE
Shaw executives said the decision was driven by the need to drive scale into its next-generation video platform and the acknowledgement that it would be hard-pressed to develop such a system in-house.
“As we look at the complexity of this rollout [of IPTV], it’s hard to imagine for us that we could have done something like this on our own, like our first effort was in this area,” Jay Mehr, Shaw’s executive vice president and chief operating officer, said on the company’s fiscal third-quarter earnings call.
“Scale is a key factor in our business, particularly as we enter the world of next-generation video,” Shaw CEO Bradley Shaw added. The Canadian MSO “used to be an engineering-driven company that built stuff,” he said. “We used to be the aggregator. And we’re not that anymore. We’re now a customer-centric organization defined by customer experiences. And when you look at it, the Internet has changed everything in this new world, and we need scale.”
Shaw, the CEO added, is now “committed to getting scale through industry solutions that are partner-led. And Comcast is an example of that … and a proof-point of this strategy.”
Shaw has not yet decided to go with a full rollout of X1, but Mehr characterized the program as “very capital-friendly.” Shaw will launch only boxes that Comcast has in production for X1, envisioning a 40% savings in the MSO’s consumer premises equipment, he noted.
Comcast has been basing X1 deployments on a hybrid IP/QAM HD-DVR, but has also developed an IP-only HD client called the Xi3. The company recently announced it is working on a 4K-capable box called the Xi4 and is developing the Xi5, a device that will support high dynamic range (HDR), an emerging format that supports a wider palette of colors and brighter pixels for both HD and 4K video.
Shaw executives also said the service could ride on Comcast’s video cloud architecture, meaning Shaw could avoid the costs of duplicating it for Canada.
Shaw ended the third quarter with 1.88 million cable video subscribers and 851,569 satellite-TV customers.
If Shaw decides to go with a full rollout of X1, the move would add some significant fuel to Comcast’s X1 licensing efforts, which appeared to stall out during its pursuit of Time Warner Cable. Comcast had been eager to license X1 to help it recoup some of the costs required to build it and to drive more economic scale into the platform and the devices that power it. Acquiring TWC would’ve helped with scaling out X1 further, but that’s off the table now; Comcast walked away from its proposed TWC merger in April, and Charter Communications, which is developing its own IP-capable platform, has since swooped in to take another stab at acquiring TWC.
BOOST FOR RDK
A commercial deployment by Shaw would also help RDK Management, the joint venture of Comcast, Time Warner Cable and Liberty Global that is managing the Reference Design Kit (RDK), a preintegrated software stack for IP and hybrid QAM/IP devices. X1 uses the RDK.
Shaw is the second pay TV provider to publicize its interest in testing X1. Cox Communications has been kicking the tires on X1 as it pursues a next-generation “future-state” video project. Kevin Hart, executive vice president and chief technology officer at Cox, said in an interview in April that the MSO has completed a successful technical lab trial with X1. Cox’s next step is to test X1 with Cox employees.
Shaw isn’t the only Canadian MSO to do an about face with IPTV. Cogeco scrapped an alternative IPTV project last year due to “performance issues” and instead cut a deal with TiVo.
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