After the dust settles in the broadband wars, will consumers expect more than just an ultra-fast Internet connection at a competitive price — perhaps something like a high-definition Internet TV service?
The cable industry is readying DOCSIS 3.0, the next generation of cable-modem technology that allows for downloads of more than 100 Megabits per second. Comcast, for example, has planned its first “wideband” launches for sometime in the second half of 2008.
It’s a potent weapon against telephone company services, such as Verizon Communications’ FiOS Internet.
But cable operators may also have the opportunity — or the need — to layer additional services on top of those higher-speed connections.
The most obvious application? High-quality Internet protocol video, delivered either to a PC or a set-top box.
First, such a service would require more bandwidth than DOCSIS modems typically provide today. And it would give cable companies, which are already in the business of distributing video content, an answer to over-the-top video services.
“Obviously it’s going to take a while for cable to get to IPTV, since they have so much invested in MPEG,” said Adam Powers, a principal engineer in Macrovision’s connected home business. “But once you get an IP backbone into the home at DOCSIS 3.0 speeds, it’s much easier to distribute content.”
In a report published this month, Parks Associates analyst Michael Cai predicted the number of U.S. households with broadband connections of 10 Mbps or faster will grow more than fivefold between 2007 and 2012, from 5.7 million to 32.5 million.
But Cai noted, “as consumer excitement over pure bandwidth subsides, service providers will have to deliver appealing, bandwidth-intensive, value-added services such as HD video streaming and content place-shifting” to retain customers and increase average revenue per subscriber.
TRIALS UNDER WAY
Gil Katz, director of cable solutions and strategy for Harmonic, said at least two major U.S. operators (which he wouldn’t identify) are actively testing IPTV-over-DOCSIS systems with his company.
“I don’t think you will hear a single operator say delivering IP video to the home is not interesting,” he said. “They’re focusing on linear cable channels to the PC first — which surprised us a little — but it’s all part of delivering more value to subscribers.”
Harmonic offers a way to deliver IP-encapsulated MPEG-4 video streams over DOCSIS modems, while bypassing a cable modem termination system (CMTS). That architecture, according to Katz, allows IP video to be delivered at about the same cost per stream as a traditional digital cable MPEG-2 stream.
But the best way to deliver IP video streams over DOCSIS is still a matter of debate. Motorola has proposed an approach similar to Harmonic’s, while others like Arris and Cisco Systems have argued that CMTS bypass methods only introduce complexity.
In any event, interest in the general concept continues to snowball. Verimatrix, a content-security technologies provider, this month debuted the ViewRight PC Player 2.0, a Windows application that receives IP broadcast streams. The software incorporates digital video recording features that can record up to four simultaneous programs.
ViewRight PC Player uses Verimatrix’s conditional-access software, so no CableCard or other special-purpose hardware is necessary to watch IP video. The application also integrates the company’s user-specific watermarking technology, which can trace copies back to the source machine.
Barry Hartman, Verimatrix director of IPTV product management, said that by extending linear programming to PCs, cable operators can either generate incremental revenue or offer the service as an extra to triple-play subscribers.
“The problem with video on the PC today is, you can’t get HD-quality TV content very easily.” Operators, he said, are “interested in getting that video to subscribers’ PCs.”
DOING A 360
At least one cable network — ESPN — has been trying to convince operators that broadband services will need to offer video behind a walled garden to attract and retain customers.
The programmer in September relaunched ESPN360.com as a live-events video destination, with 2,500 promised over the course of a year. The distribution model mimics cable TV’s: ESPN charges Internet service providers a per-subscriber fee to offer their customers free, unlimited access to the site.
“Today if you’re buying cable modem service, it’s about price and speed,” said John Zehr, ESPN senior vice president of digital production. “After that is fought to its completion, we believe content will be the differentiator.”
So far, ESPN360 has been picked up by Verizon, AT&T and RCN, among others. But big cable operators, including Comcast and Time Warner Cable, haven’t signed on.
Gary Croke, director of marketing for Symmetricom’s video-quality assurance division, argued that the cable industry risks getting cut out of the equation if it doesn’t start to attractively package up IPTV and other video services with broadband.
“Video is a high-margin service,” he said. “Look at the video content delivered over the Internet: Most of it is over-the-top video, from YouTube and the media companies. The cable companies are not in the value chain.”
But cable providers will have the means to provide a managed IP video service with quality of service far better than that available from most Web sites, according to Bill Wall, technical director for Cisco Systems’ service provider video technology group (formerly Scientific Atlanta).
“It would be the kind of video quality you’d expect from your cable operator,” he said.
Wall said DOCSIS 3.0 also lays the groundwork for media gateways, which would store video and audio files in a central place for all devices in the home, such as PCs and set-top boxes.
And, using the additional bandwidth with wideband, operators may want to go the other direction — bringing Web-sourced video directly into set-top boxes, which Wall said is more efficient than compositing that at the headend.
“We’ll see more of that as we see video content on the Web exploding,” Wall said.
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