Software impacts broadband networks

Software impacts broadband networks

Paul Palumbo

To mark its entry into the projected lucrative future of the telecommunications/cable-TV marketplace, the largest software company in the world, Microsoft Corp. in Redmond, WA, seeks to play the role of interface mediator in fiber-rich broadband networks.

At the cornerstone of Microsoft`s entrance into the server software arena is its strategy that the still small market for interactive video services, such as video-on-demand, will eventually live up to market expectations and generate the billions of dollars in revenues that bullish media analysts forecast.

Craig Mundie, vice president for the advanced consumer technology division at Microsoft, says, "The flexibility built into our software solution enables delivery of reliable, secure, cost-effective entertainment, education, information and transaction services, and assists in the creation of interactive content and services."

Based on its Tiger video server software, Microsoft is testing its software architecture over Tele-Communications Inc.`s Seattle-based broadband networks. To hedge its implementation, Microsoft has also aligned with a host of cable-TV and telephone companies to gain hands-on experience with an array of fiber-based network configurations. But that is a challenging task for Microsoft because network experts differ on how to build the optimum fiber-optic broadband network.

TCI`s fundamental network is fiber to the node. This approach feeds approximately 600 households and costs an estimated $500 per passed home. But, thus far, to-the-node optical technology has proved inadequate for delivering discrete, switched, bidirectional video.

To accomplish switched video, some network experts insist that an expensive hybrid fiber/coaxial-cable architecture is needed. The hybrid approach runs fiber-to-neighborhood serving areas and two coaxial drop cable lines from there into the home for transmission and receive capabilities.

On the other hand, two of Microsoft`s telephone company testing partners--US West and SWB Communications--have opted for fiber-to-the-curb networks. According to US West network architect John Boe, the chief difference between the curb and node approaches--which Microsoft emphasizes will not alter the performance of its software solution--is that of available bandwidth.

Boe says that fiber to the curb can indeed deliver discrete, switched bi-directional video, but the cost begins to approach the $1000-per-household level that most analysts set as the high-end network investment ceiling.

Video dial tone

In other network ventures, US West is planning a video dial-tone architecture for testing in the Denver area, using Microsoft`s server software solution. Another network software architecture from Oracle Corp. is being tested in US West`s Omaha test network. The Omaha network relies on optical network units to serve 32 homes.

For the Denver network, US West is budgeting approximately $635 per passed home for video and plain old telephone service, about 27% more than TCI`s comparable costs. The monetary figures include digging trenches and laying conduit; they do not include dropping coaxial cables to the home, which could hike upgrade costs by another $400 per passed home.

Microsoft broadband strategy

Wherever broadband network tests are planned, Microsoft is trying to convince global telecommunications and entertainment companies that all points of the video server software solution meet in its "one-size-fits-all" Tiger architecture. Its ultimate aim is to provide server software that is tested enough (and works well enough) across multiple broadband networks so that it can trumpet the arrival of an interactive server standard. But the true test will be if it works so well that end users do not know it is there.

Digital video

When they run over fiber-based broadband networks, such digital applications as video-on-demand require continuous-operating media servers that can manage (and store) files that contain as much as three gigabytes for a typical two-hour movie.

Microsoft`s Tiger server software solution stores the bits of each file over an array of storage devices (Tiger cubs). With digital, video and network standards still in flux, Microsoft maintains that its software architecture is scalable, which allows it to function over multiple hardware configurations. That is the primary reason the company has committed to preliminary or alpha tests with many cable-TV and telephone companies.

To frame the market potential for broadband network services, Dataquest estimates that by 1997, video-on-demand services will mushroom to $5.1 billion, compared to last year`s $16 million. Although that total pales beside the $84 billion local-access telephony business ($64 billion for long-distance), it forms a major part of the video retail market. Combined video rental and sales is estimated to be worth approximately $14.3 billion this year.

Going the other direction on the network, pay per view, an early video-on-demand iteration, remains a relatively anemic $500 million-per-year business. However, the pay-per-view business has never been promoted on a national basis or considered part of cable operators` core business. It has mainly lacked the first-run product that typically excites viewer interest.

To have any chance of hitting the video-on-demand revenue jackpot, initially, massive investments in broadband network plant will have to be undertaken. Then, lengthy alpha and beta network tests must follow. Next, a limited installation phase will ensue and, finally, full deployment will take place.

Add millions of dollars for awareness advertising and technical support, and the price tag for true video-on-demand interactivity could surpass the estimated $1000 per passed household now targeted as the high-end of the investment scale.

Even so, it is becoming apparent from early video-on-demand testing that the telephone and cable-TV companies say they can pay for a large chunk of that broadband investment via incremental revenues derived from video-on-demand (not to mention transactional services).

If delivered, these video services will change the face of television viewing. They will allow consumers complete control in what is shaping up as a selectable viewing universe. But a premium will likely be paid for the privilege.

Panning for broadband gold

Enter the Microsoft broadband network software approach. Although facing stiff competition from Oracle Corp., Silicon Graphics Inc., Digital Equipment Corp., IBM and other server-solution suppliers, Microsoft is moving quickly and emphatically to claim its stake in the potentially huge broadband market. Its Tiger server software can be a critical computer resource in a video service provider`s headend facility. It is capable of delivering a continuous stream of movies/programming-on-demand, games, audio and interactive entertainment to asynchronous transfer mode switches.

Notwithstanding the telecommunications industry`s current preoccupation with testing (in many cases, causing delays in equipment purchases and planned launches--such as TCI pushing back its set-top box order and Time Warner`s problems in Orlando), Microsoft has assembled a group of systems integrators, network operators, set-top box providers and continuous-media server suppliers that plan to take the art of broadband network testing to a global level. q

Paul A. Palumbo is a freelance writer based in Monterey, CA.

More in Market Research