IPTV is dead - long live broadcast

IPTV whether that is VoD, download or live, has moved slowly forward over the past few years. The jungle drums have changed from beating out a multitude of predictions to a constant rhythm of new service launches.


Some initiatives have the seeds of commercial viability, others you know are much shakier. Almost none of these new services are commissioning content. Those that are, are not exactly mainstream and usually rely on a enthusiast and volunteers. Other “unique” or “original” content is UGC. So the vast majority of commercially viable services are reliant on content that has been created for and funded for, by more traditional platform such as cinema DVD/BD and TV broadcast. Therefore they are relying on the, much talked about, “long tail” value of content, or at best trying to extract just a little more value out of content at some stage in its life cycle.


The first thing against IPTV is, Internet/PC is not the place to watch quality content if you want to see it first. It will have been on another platform first. That is where the premium revenues will come from.


The second thing against IPTV is the picture quality is lagging behind other delivery mechanisms. 2Mb/s is arguably just about sufficient for a SD TV picture, 5 Mb/s is DVD quality and a 1080p HD feed that matches Blu-ray quality is 40Mb/s.


So here I am (as a consumer) with my nice large (and expensive) 1080p screen watching HD cable, DTH or DTV channel. For the latest films I have the choice of the cinema or the rental and purchase of a Blu-ray. Why am going to watch IPTV? Even if it doesn’t keep buffering, I am unlikely to get anything close to the same picture quality without downloading to some storage devices in my house. Wait a minute isn't that a DVR?  Oh no it yet another box I've got to but and wire in and balance on the stack of Set Top Boxes.


I will sacrifice picture quality for something I may have missed. Better to see it in a poorer quality than not at all. Services such as iPlayer are undoubtedly a new facet to the growing arsenal of my TV entertainment options, alongside DVR’s, and games consuls. 


I may also sacrifice picture quality to see something unique, niche or exclusive but this is unlikely to be the way that most people consume most TV content most of the time. Even if broadband bandwidths are larger and all you can eat, there is a large number of things that have to come together to make it work for the consumer.


Virgin and Sky, providing pay TV services with multiple channels, are also providing broadband. Virgin in particular provides some of the highest broadband connection speeds available in the UK at the moment. As bandwidth increases their users could opt to drop the pay TV bouquet for OTT IPTV. As Virgin and Sky provide larger broadband they could be undermining their own business. Are the stupid? No. They know that whatever you get via IPTV that is free will be old (to at least some degree), will be inferior or a niche that they do not service anyway.


The big success of IPTV in the UK is the BBC iPlayer. There also exists the ITV player and 4oD. All three share the same fact that they are free to the consumer. Most (if not all) content consumption to date has been to a computer of some sort. Presumably this tech savvy audience knows how to access all three yet the iPlayer is by far the largest of all the IPTV options in the UK put together (with the exception of YouTube). 


If we assume that the content is comparable, then why the disparity in take up? The most obvious difference is the lack of adverts on iPlayer. The second difference is the range of content across the four BBC TV channels and the umpteen BBC Radio channels. This makes the iPlayer a comfortable and resourceful destination for content. Watching iPlayer is like watching a DVR, watching ITV player and 4oD is not, as I can’t skip the ads. I also have only the content of one channel to select from. (ITV and Channel 4 do not offer a variety from their main output).


IPTV is a cleaver technology but just because you can do something doesn’t mean you will. The real challenge is to deliver something the customer wants, something they may not yet know they want, but like so many people that have a DVR will tell you “I wouldn’t do without it now”. The thing to note is that the mass adoption of DVR's hasn't really happened yet. Most people have them as part of their DTH or Cable package. But Freeview/Freesat customers have not taken to them on mass yet. The industry is looking for the next revolution when this one hasn't happened yet. 

Internet Television Broadcasting - One CDN Winner

Internet Television Broadcasting

Radio stations have been “broadcasting” on the internet for some time and Hulu and a few others have been “broadcasting” TV over the internet for a while too. But to avoid any doubt the internet is not a broadcasting environment. The TV you get via you Ariel (antenna) or satellite dish (TVRO) is broadcast – that is, it is being sent once to a wide geographical area (footprint) and you simply need to turn on to receive it. Often referred to as “point to multipoint”. There is no return path and the broadcaster has only statistical surveys to confirm and calculate who, if anyone, is watching.

Move to the internet and (ignoring CDN’s for the time being) each computer watching the video has a separate and direct connection back to the source server. They may be watching the same content at the same time but each is watching a unique stream. This is “point-to-point”, even if there are lots of destinations.

So a broadcast digital channel (via an antenna or dish) transmitted at 1.5mbit/s it is using no more than 1.5mbit/s to reach 1 or 10million viewers (assuming a single footprint). 10million viewers over the internet and the bandwidth required 1.5mbit/s x 10million = 7,500 gbit/s. (7.5Tbit/s). The bandwidth used would be no different if each of the 10million viewers were each watching a different programme (content).

Your internet service provider (ISP) built their business model on the assumption of much lower bandwidth utilisation (hence those fair usage policies to limit your maximum use) from their view of the world around 2005 (give or take a few years).

Your ISP connects to the internet via a big “pipe”. They spread the cost of that connection amongst all their customers. They also have a deal with their service provider where they pay for bandwidth used. As more customers start to watch video, such as the BBC iPlayer the bandwidth used goes up, pushing up their costs. The BBC doesn’t pay your ISP and I’m sure, like me, you don’t want to pay any more too.

My view is I’ve paid for up to 8mbit/s 24/365 a year and unless I exceed that why should I pay more?

There is another problem too in that the internet backbone gets clogged up as all these video streams compete with each other to get across the internet. The result is the internet slows down, video IP packets get lost, the video stutters or freezes, or drops out completely.

What is the solution? CDN, or content distribution networks, have been around from 2000 or so. The solution then and now has changed very little. The content source (say Disney) would want the end user to get a reasonable experience and for Disney not to be blamed for bad, interrupted, jerky or lost steam. The CDN would take the video stream over a separate network, bypassing the internet, and store the video at the edge of the Internet. This involved putting lots of edge servers in. The result was that instead of getting the video from the Disney site (invisible to the consumer) the request was redirected to the CDN edge server avoiding internet congestion and giving Disney (or whoever) a quality of service that customers expected.

Since then consumer bandwidths, choice of video, choice of supplier, and customer expectations have all increased. It isn’t the odd event but an everyday demand for video that is swamping ISP’s. Customers expect a relatively TV type experience, and increasingly HD. ISP’s could ignore the odd event as over a month or so it would even out. The constant demand of consumers for video is growing.

Some even believe that customers will get all their video over the internet and antennas and dishes, will be a thing of the past. I have my doubts, but the opportunity to insert different adverts to each stream specifically based on your profile. It could use your browser history where you have been looking at new TV’s to insert adverts about new TV’s or local retailers. All clever stuff, but would I want it hummm! As long as it didn’t start using information from the “adult sites” I visited!

Whatever the future holds the problem is that the content provider is getting paid for their content (advertising, subscription, pay-per-view or licence fee/tax) they are (currently) paying the CDN to get it to the edge of the network and the “poor” ISP is then having to pay for it to get onto their network and to their consumers. As it has grown it is now too much for them to ignore so most have employed “traffic shaping”. Traffic shaping means that content coming from a particular source is restricted, effectively artificially re-introducing the problems that the CDN was bypassing.

This is interesting as there is no longer a technical problem with delivery video but almost purely about money and business. Here are some things to consider;

Your ISP is Sky and you have a fantastic video service of Sky content. Your friend it with TalkTalk and their video service is crap. Sky maybe £2/month more but if it’s worth it your friend changes ISP. What option does TalkTalk have if customers migrate away?

Sky content on the Sky ISP platform is great (as they own the content and want to push their content and their adverts that sit around it). Knowing sky there will be some value added up sale to try and extract a little more money out of you and increase the ARPU (average revenue per user). However, BBC and ITV content is not so good. BT ISP has good BBC, ITV and BT Vision content, but not Sky. Suddenly the ISP market is more differentiated (not just price) but also more confusing for the consumer.
One option the ISP’s can do is to look at how they can deliver the service the customer wants at a reduced cost. One option doing the rounds is by extending the CDN concept into the ISP’s networks e.g the CDN server sits in the local exchange. This reduces the cost of bandwidth connection into the Internet.

Who pays? The CDN’s can stump up some as they have reduced their costs. The broadcaster/content owners as they don’t need to the original CDN service.

How would this work? The each ISP pays for a CDN service and then charges each broadcaster for using it. Where is the competition in all this? Won’t the CDN providers and the ISP all have to charge the same? There is a lot more detail but that’s potentially solved the problem.

What if a broadcast/content owner doesn’t want to pay the ISP? They stop paying their CDN provider as the “traffic shaping” negates most of the benefits.

What happens if CBS decides to sell/deliver programmes direct to the UK consumer rather than a broadcaster? Who contracts with whom, and for what, revenue share?

The broadcaster is really a content aggregator, it could be argued that Google and other search engines, YouTube, Facebook or some new entrant, could take over that aggregation role. To be effective the CDN will need to collect the content from all the sources (certainly the big boys) too. The technical issues are minor compared to the commercial and rights issues and complicated web of relationships that could emerge. Then bung in fads and transient events, start-ups and the short attention span of internet users and this will be a dynamic market.

My point? There is a lot of jockeying going on behind the scenes and little new revenue is generated. Like the DTH satellite platforms in Europe there is probably only room for one CDN provider (for Video at least) in each territory, so expect a fierce battle to kick off soon.

Networks & Network Providers

I took part in a panel discussion today about networks. Over seventy industry leaders from across the UK. Was FTTH (fibre to the home) a good investment? Would FTTC (fibre to the cabinet) be cheaper and just as good? How do network operators reduce their costs?

I was surrounded by people all intensely interested in networks. One person (a Welsh MP) pointed out that the EU defined broadband as anything above 150kb/s and some other organisation had defined it is anything above 256kb/s (from memory). The UK government had so far not defined what it means by “broadband” and therefore the ambition to get broadband into every home by 2012 probably achievable simply by defining UK broadband as anything above 32kb/s.

However….During the discussion it was easy to get caught up in the hype and technology and how you could get 40Mb to the home. Would the customer pay for it, and how much?

Consumers don’t by broadband because they want broadband – sure early adopters and techys might get into a “my broadband is bigger than your broadband” type of discussion, but, as the actress said to the bishop, it isn’t about size its what you do with it.

Consumers buy broadband as a means of getting to content. In fact going back to the basic telephone service people wanted to talk to other people. The networks provided the connection and the consumers the content.

Technology and assets give companies a barrier to competition. Their ability to control and use the technology allow them to dictate the way it is used and who uses it.

The record industry is a good example – recording studios and vinyl pressing plants were expensive and inexcusable technologies for new companies to invest in and entre the market. They were certainly not in the reach of the consumer. But as new technologies came along so it eroded this control/power. Pressing plants were sold off as what differentiated one label from another was not how well the record was made but what was on it.

Broadcasters had technology but also had the benefit of limited radio spectrum. The licensing regimes of the UK and Europe, meant that it was difficult for new entrants to make the investment and take the risk to bid for a license. This additional barrier (lower in radio broadcasting) kept them in control and complacent, beyond the natural life of their business models.

Anyway back to networks… These too are starting to lose their power as one network (fixed line or mobile) starts to look very much like the other. Why chose one over another: –

1. Does it work?
2. Is there a cheaper one that works just as good?
3. Is it hassle to get/maintain?

What has changed for the network operators is that the desirable/compelling/valuable content that customers want to get to, is not user generated, point to point of voice and data.

So what do network operators (service providers) need to do? Do they want to simply survive or do they want to transform?

Railway operators never got into air transport. Yet they were wealthy organisations at the time and could have easily expanded. Enormous synergies in scheduling time tables, selling tickets, reservations, engineering operations, logistics of rolling stock/planes, and staff roles. But they were rail operators, stuck with the technology and not the transport market need they serviced.

Networks operators follow the same route, married to providing networks and not the fulfilment of the consumers’ demand for content access.

So how do I see the network providers evolving, as apposed to becoming a low cost commodity utility? One thought…

The telephone directory was a way of customers finding out information about what (or in this case who) was on the network. As the internet grows (around 5,000 pages/second in 2008) it is increasingly difficult for the consumer to find what they want. Google (fast as it is) is throwing up a mountain of information to sort through. How many pages am I going to visit before I find the information I was after?  You Tube. Very funny clips, but if I have to spend 50-minutes watch dross, to find a 3-minute gem, I’m going to start to rely on my friends sending me a link in an email. Much more efficient!

As content (quality, professional production) gets onto the internet, how does the consumer no it even exists, let alone where to find it.  Is there a role for the network provider to be trusted recommender or aggregator of content? Is that worth paying for? Collect information on what I like and sell it on, but let me see some benefit. And not just in the adverts

I think it is almost impossible to predict what the consequences will be if 40+Mb/s is delivered to the home but some indicators now are not good.

Of the population that can get broadband, the take-up is way less than 50%. So not the “must have” technology.

Of the people that do have broadband around 50% get less than 1Mb/s download speed. Assuming that they are putting up with this (as they continue to pay) if not delighted, then 4Mb/s would probably fit their current needs not 40Mbit. “What about HDTV?” I hear you cry. Does anyone want to stream live HDTV over the internet?

• If it’s a film or recorded programme = download it
• If its news = why HD
• If its sports = why are you not watching in on a broadcast channel

Take the scenario that there are two adults and two teenagers, each simultaneously watching a streamed HDTV programme. 10,000 lines in an exchange area x 4 40,000 video streams. Will the backbone cope –

“Some will be watching the same programme?” Even if they are if two people watch the same if they start at different times they are different streams.

“Cache the content in the local exchange!” for how long? 3 hours of HDTV per person adds up to a lot of storage.

I’m sure 40Mbit to the home will come. It could enable social change (maybe even a revolution) with people working from home and a growth in cottage industries, a reduction in travel and CO2 emissions. Our kids are already used to interacting and socialising and would probably be easy to adapt and adopt this working environment. But will we look at the society that creates with pride?

TV is not dead but it could be terminal

In the beginning the broadcasting was limited to geographical regions due to largely to technical limits of transmitter height, transmitter power, radio frequency propagation and the curvature of the earth.
The technology and its limits lent itself to regional and national programmes. This in turn fitted nicely with cultural boundaries, language and advertising brands. TV programme rights followed suit and were sold on geographical (usually national) basis.

A French person can watch free to air (FTA) French programming in France (with or without adverts) but if they come to the UK they can not. The broadcasting technology didn’t allow it. When satellite came along this was not the case – hence the preverlance of BSkyB systems in Spain where UK expatriates watch UK TV, even though this is not allowed by BSkyB.

What is the impact of this – on the programming, none. On the advertising maybe it is less effective but when Ford advertises a car or there’s an advert for Cif, or Snickers, these are international brands and the value is unaffected. The losers are those advertisers that don’t provide their product in Spain. You could also argue that the local TV advertisers are also losing out, but do the expat’ community speak Spanish or watch Spanish TV?

If you now travelled from Spain to say Turkey, or further away from the UK, you would eventually find that the satellite footprint ended and even a very large dish would not pull in a signal.

The internet now bypasses the limitations of satellite in not being distant limited. SlingBox and others have utilised this to enable consumers temporarily away from home to watch TV from home. Losers? The advertisers aren’t losing, because they are not trying to get an impulse buy, the “impact” of the advert will have an effect when you return home. The rights owners haven’t lost out as the consumer has only temporarily shifted location.

As internet TV becomes more prevalent the model that grew out of the technological limitations becomes increasingly threatened. As geo-blocking artificially tries to limit access it throws down a gauntlet for those that see the Internet as a free and open medium. However, on the internet the role of the broadcaster is missing.

Broadcasters provide a useful role not just in what they commission (by far the most important role), not the scheduling of content, but the role of content discovery that the consumer needs. From a consumer’s perspective broadcasters aggregate content that would otherwise require a trial and error search on the Internet. If the broadcasters’ brand value is clear such as Discovery, History, MTV or Disney etc the consumer knows what content to expect. On more general channels the experience can be a bit more hit and miss.

The role of discovery can be fulfilled by social web sites, community blogs etc but how many do I need to join and how often do I have to check them. Broadcasters could develop a strategy to be the online content discovery mechanism that would naturally flow into the content delivery mechanism and thereafter the advertising channel. Since the content is potentially distributed globally they become global brands and since local adverts and adverts based on personal profiles are possible the advertisers win too. The online portal becomes a pull through to the traditional broadcast, where higher quality and differentiated services such as 3D can be delivered.

I don’t know what the future of the internet hold for the broadcasters but the old model is not going to survive.