Web TV offers new revenue streams to telcos
The market for Web TV is starting to grow, but how are carriers and service providers approaching this opportunity and what services are on offer?
By Antony Savvas
The definition of Web TV for most market watchers is very wide and includes free video streaming, pay-per-view (ppv) live webcasts, and video-on-demand (VOD). It also could be argued that pirate versions of content distributed through peer-to-peer networking over the Internet should be included too.
In addition, a number of broadcasters are allowing Internet users to access selected programmes and news events on the Web while simultaneously broadcasting them in the traditional way.
There is no doubt that content providers are keen to distribute their material in as many formats as possible, illustrated by support for accessing material on PDAs (personal digital assistants) and, over the next few years, even mobile phones. But what is the state of the backbone network and local loop when it comes to allowing these new opportunities to take a firm hold?
There is plenty of dark fibre in the ground to carry the extra traffic generated from Web TV, and the increase in network building in metropolitan areas is clearly going to help. It is obvious,however, that more needs to be done for the local loop to enable customers to access the content in an easier way. Since incumbent carriers are not being fast enough to unbundle their local loops to competitors, this seems to vindicate those that were advocating about three years ago that, to deliver things like Web TV, the focus for the telecoms industry should be direct fibre links rather than improved DSL copper links.
But, while DSL has so far not been the quick driving force some predicted it would be for more interactive and on-demand user activity on the Web, the demand for user-selectable content is clearly there.
Napster has shown there are plenty of users ready to take advantage of peer-to-peer technology when it is made available, and a series of Napster successors like KaZaA.com have continued to allow use of the Web to get free content, including illegal videos which break copyright laws. The latest Star Wars film has been the most recent victim of this type of distribution, with hundreds of thousands if not millions of people seeing the film without having to go to the cinema or having to wait for the DVD or video to come out. Hollywood's Motion Picture Association of America predicts that, by the end of this year, more than 1m illegal downloads of films will take place every day, costing the industry billions of dollars.
The latest big event to see the legal distribution of images on the Web was June's World Cup, with Yahoo! charging surfers a USD20 fixed fee up-front to view almost the entire championship via Internet video streams. But many users would have been disappointed that they couldn't officially download the content for future viewing, and that the video highlights for each match lasted just four minutes each! Yahoo!'s stinginess, which included a total viewing time for each subscription of 15 hours, was partly dictated by football's governing body Fifa, but these limitations only increased the scope for pirated content.
The content market is therefore keen to take advantage of some of the infrastructure enhancements by carriers to enable them to sell their content to keen buyers.
Next Level Communications, a provider of kit that allows telcos to deliver bundled digital TV, high-speed data and voice services to subscribers over existing copper, has just struck a deal with Telenor in Norway. Next Level's set-top box allows users to view three separate DVD-quality video streams on different TVs in the house and VOD movies, while also allowing them to surf the Web on their TV screen at 2.5Mbit/s.
It is talking to most European carriers about prospective deals, including Deutsche Telekom, France Telecom and British Telecom. However, Telenor is first to go commercial with the technology, after a bundled service trial in the town of Stavanger at the end of 2001. The solution, including central office terminals and access multiplexers to support the set-top boxes, is already being used to support 100,000 homes in North America via telcos Qwest, Bell Canada and others.
Next Level's director of marketing services Geoff Burke says: "We can deliver 26Mbit/s into the home, with each channel taking 3-5Mbit/s, leaving ample additional bandwidth for interactive services like VOD."
The digital TV streams and videos are typically viewed on a TV, with the solution designed to allow telcos to compete with cable TV services. For a stream to a PC, the system can simultaneously deliver up to 2.5Mbit/s of data bandwidth, which is good enough for MPEG video streams.
And it's not just the carriers who are tapping into the Web TV market either, with good examples of ISPs in both Switzerland and Israel sending ppv streamed content over to subscribers using DSL broadband links.
Broadband users in Switzerland can go to the ISP portal Bluewin (www.stream-it.ch) and get movies streamed over to them for single credit-card payments of SFr5-7 (USD1.80). TV programmes and live events are also available. Bluewin is offering the facility to users in the three main Swiss conurbations of Basle, Geneva and Zurich, and is using a technology platform from Infogate Online working with Compaq's Media Storage and Media Streaming solutions. "This architecture will allow us to introduce a whole set of new and attractive services in a very short period of time," says head of broadband services Giovanni Conti.
Another ISP providing a broadband streaming service is MSN Israel. Microsoft's Israeli portal (www.msn.co.il/msnhighway) offers near-DVD-quality movies, video clips, and the latest games to broadband users on a ppv basis. Games cost USD0.75 per hour, movies USD2.5 for a 24 or 48 hour period, and a three-month English course USD20. MSN Israel says it is getting 10 new customers a day using the ppv service, which is impressive in such a small country.
The most popular content so far to be accessed through MSN Israel is adult films. This is a trend replicated elsewhere on the Internet of course, although many large portals have so far steered clear of such content and have chased the family audience instead. But with pornography and music now the major targets for illegal downloads via peer-to-peer technology, the porn industry will be keen for the MSN Israel deal to be copied by other service providers, including telcos.
In terms of interactive and on-demand content, Web TV has up to now been surpassed by the digital TV industry, with players like Sky in the UK signing up a few million users to the technology. So it is no surprise that, in some countries, digital TV is being combined with Web TV packages with the involvement of the telcos. For example, in northern Finland Oulu Telecom is working with Cisco Systems to deploy "long-reach Ethernet" (LRE) to deliver real-time digital TV broadcasts and simultaneous broadband Internet services at up to 15Mbit/s via a TV set.
LRE is designed to improve the bandwidth offered by Oulu through ADSL connections. Under optimal conditions the maximum downstream performance of ADSL is 8Mbit/s, with an upstream performance of no more than 1Mbit/s. But Oulu says LRE is faster and less expensive to deploy and maintain than ATM-based access technologies and can deliver symmetrical connections, giving users 15Mbit/s both ways.
Managing director Risto Siivola says Cisco's LRE technology extends the use of Ethernet, while using the existing phone network with digital phone and ISDN lines. Oulu is using LRE to connect hotels, residential units, office buildings and educational campuses. In the core network, broadband is implemented by switching over from ATM to IP technology, and in the access network from ADSL to LRE. Oulu's LRE solution, based on Cisco Catalyst LRE switches, POTS splitters and CPE products, is enabling services such as real-time video delivery to customers.
When it comes to how telcos and service providers should configure their systems to cope with Web TV, broadband solutions provider BroadJump did some research into preferences of both broadband and dial-up customers in the US. This showed that most customers (75%) would prefer to pay for services like VOD, on-line gaming and music events on a ppv view basis, rather than a basic monthly subscription.
It is clear that, in today's economic climate, telcos cannot rely on simply providing bigger connection pipes to make a profit; they need to provide and take control of supplying enhanced services like Web TV. To do this, they need to modify their systems to cope with these ppv billing requirements if they are to avoid being caught by the falling profits to be made from simply providing bandwidth. While it is arguable that all customers need a variable package of content services to persuade them to buy into broadband to begin with - with many simply wanting fast access - it is the telcos that need to start pitching to those that do want packages to allow them to stay in business, and Web TV will play a big part.
Antony Savvas is also a freelance networks and telecoms journalist: email@example.com