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Broadband Access
Breaking the one-way video mentality
IP video services empower users with new choices and features
by Sean Buckley
Traditional broadcast video service was always pretty static: You went home, turned on the television set and — for those of us that remember rotary dials — you got up and changed the channel. Later, the remote control created the advent of flipping through the menu of what Bruce Springsteen famously called “57 channels and nothing on.”
If you were lucky enough to afford what were premium movie channels like HBO or Cinemax, new content—primarily movies—would be updated on a monthly basis via the arrival of a shiny program catalog. Since HBO and Cinemax debuted in an era before Video on Demand (VOD) or even pay-per-view, you were beholden to watching this content on their schedule, and more often than not the titles were very repetitive.
Now I am thinking that video and its latest service platforms, IPTV and Internet TV, while often seen as separate domains, aren’t about great feats of technology, but rather about catering to the customer’s ever-evolving video viewing habits.
This idea became clear to me when I attended a panel called "IPTV versus Internet TV" during the recent Broadband World Forum event in Brussels, Belgium.
During this session, Myles McBean, General Manager of Disney’s European Online Services division, proclaimed that arguing over the merits of IPTV versus Internet TV is irrelevant, but what is relevant is what the user wants to get out of the video experience.
“It’s just not about technology, it’s not even about the content, it’s about the consumer,” he said. “Fundamentally, what the Internet has taught us is we cannot control the consumer; the consumer controls us.”
Telcos take diverging paths
Since the mid-to-late 1990s, telcos worldwide have continued to make attempts at delivering video. Prior to the advent of the Internet, telcos initially envisioned that copper-based DSL would be their video ticket. Now, telco video delivery is being done over both various flavors of DSL and increasingly fiber with varying degrees of success.
Providing five 9s reliable telephone service for over a century, the incumbent telephone companies — or at least those that offer TV and IPTV services — argue it should be run over a managed network.
Along with U.S.-based IPTV frontrunner AT&T, European operators such as Belgacom and BT believe the only way to ensure a quality experience that’s free of the Internet’s unpredictable whims is to have it run over a managed network.
Offering what it calls a 6-pack communications offering (e.g., TV, Internet, voice, data and mobile) to its customer base, local Belgium incumbent Belgacom reported 40 percent of its IPTV customers are new ADSL Internet customers, a trend the operator says it will increase in 2008.
Jean-Marc Capitaine, Product and Solutions Director, Consumer Division for Belgacom, believes that the video experience is part of a larger integrated package of services a service provider has to have and one where “customers will pay if they get good quality.”
Similarly, BT believes that the TV experience is one driven by premium content that comes over a managed platform.
"It’s my view that YouTube-based content works very well on the Internet, but for some of the IPTV providers it’s not somewhere where we’re going to compete directly and it provides a very different experience,” Richard Young, Head of Business Development for BT Vision. “If you use a PC screen to stream video, it might be a three or a four foot experience, but it’s not a one-foot experience.”
Given the investment required to launch IPTV, other U.S.-based telcos such as EMBARQ, FairPoint, and Qwest don’t have any interest in simply replicating what the cable operators are doing. Instead, these operators have decided to give their customers a broadband pipe that plays into the changing nature of the video customer.
Qwest is a good example of this trend. Although the company continues to operate some video over copper services and offers satellite services via a partnership with DirecTV, Qwest’s CTO Pieter Poll told me he basically wants users to leverage its ongoing investment in Fiber to the Node to enable interactive video services.
“We don’t plan to do an IPTV solution where we are going to build an infrastructure to do what cable does today,” he said. “We can do that but we don’t think it’s a wise investment on top of fiber to the node, especially if you look at how our customers are expecting to use the Internet in the future and receiving their entertainment in the home. The home is far more about VOD and what’s important to a customer is a very clear way to see what content that you have or what’s available on the Internet."
Video goes over the top
All of the interactive and changing viewing habits Poll is referring to are evidence that the traditional boundaries between the service provider continue to change. Unlike the traditional landline phone days when it was the phone company that dictated the services, rates and even the features a consumer got, the Internet continues to develop new services created far outside the telco’s walls.
The most obvious trend that best illustrates the breaking of the traditional customer and telco boundary is Over the Top (OTT) video. OTT video, a product that allows the user to go to a well known brand such as Disney to get their content and use the broadband line to watch that content either on their PC or on the TV via a specialized set top box or even a gaming device like a Microsoft XBox.
Yes, it is unfair that the telco does not initially get revenue from OTT video. If telcos operators try to fight the Internet video craze via rate limiting, they will only cause subscribers to get frustrated and possibly cause them to leave. Instead, service providers with broadband access networks should look at Internet video as a means to complement their business with new content delivered through partnerships with video distributors like Cinema One or Netflix.
Whether or not service providers embrace OTT video services, it’s a service segment that continues grow. ABI Research predicts that the number of viewers who access Web-based video will quadruple in the next few years, reaching at least 1 billion users by 2013. (see:)
And for those naysayers that Internet video can’t delivery good quality, I would say take a look at peer-to-peer video provider Zattoo, which touts itself as the TV when you don’t have a TV. Not surprisingly, the most active customer segment (30 percent) is younger users of the so-called Facebook generation that are more accustomed to watching video on their PCs and handheld mobile devices.
Outside of the Facebook generation, Zattoo’s service is also finding relevance in other spheres. The company reports that 20 percent of users report they don’t have a TV, while 18 percent of users are in a different place and 14 percent are in a place where another TV is occupied.
What Zattoo and other OTT players realize that while the majority of video consumers still want to sit at the set, they are certainly willing to access video from other domains when necessary.
No matter if the service is managed IPTV or Internet-based TV, the fact is end-customers have an expectation they can go to go to their brand like Disney or ABC, get their content, download it and watch it on their own time and on the device that's most convenient for them.
The tables have turned, and it’s the users — not the service providers or the network — that are in charge.
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