Telcos should take a close look at passive optical networking when adding video to their service offerings.
Chris Koch and Ron Hartkemeyer
Optical Solutions Inc.
Telcos are poised to sharply increase their traction in television delivery over the next few years according to a new report, "Telco Video Delivery on the Brink," from In-Stat/MDR. Small and rural independent telcos are leading the charge, spurred by encroaching competition and the desire to be a one-stop source for all communications services. But there's also the omnipresent influence of Hollywood, and that alone could be the biggest driver behind the latest revolution in television: digital TV (DTV).
Americans have an insatiable appetite for blockbuster entertainment. According to In-Stat/MDR, video-on-demand (VOD) services over Internet Protocol (IP) networks will grow to a total of more than 7.6 million U.S. users, generating over $820 million in subscription and pay-per-view revenue by 2006. That's a big incentive for Hollywood to get in the DTV picture (so to speak), but it's also an enticing unregulated revenue opportunity for telcos.
Digital distress
The dilemma lies in how to do it. Some telcos have opted for an ADSL or VDSL-based video system, leveraging their existing copper infrastructure. While at first glance that may seem like a cost-effective solution, when you start looking closer, it quickly falls short. ADSL+ delivers a maximum of 10 Mbits/sec to each subscriber's home. VDSL tops that with 26 Mbits/sec to the home, but it has severe distance limitations and is economically unfeasible in low-density service areas. Now consider a home with three televisions and one computer. With most video streams falling in the 1.5- to 6-Mbit/sec range, and high-quality movie productions (over high-definition television, or HDTV) streaming as high as 19.2 Mbits/sec, the capacity of the copper xDSL feed can be quickly tapped depending on the number of subscriber services and usage patterns.
So how do the cable companies stack up in the bid to roll out digital TV? Not as well as you might think. We mentioned earlier that Hollywood has had a big hand in spurring digital transmissions. The broadcast studios were actually behind the popular MPEG standard for recording, mixing, and transmitting original content in the digital domain and recreating a near-perfect copy in analog close to the final destination of the consumer. The problem with traditional coaxial cable systems is that the final digital-to-analog conversion is done at a central, or city side, node point (not at the home), which degrades the signal delivered to the consumer. In addition, the bandwidth available per subscriber passed is inadequate to support wide-scale deployment of bandwidth-intensive services without expensive node upgrades or segmentation.
Digital salvation: PON with SDV
If Hollywood and other powerhouses like Microsoft, Cisco, and Intel had their way, Americans would have up to 100 Mbits/sec at their disposal, every day. In fact, the latter group is currently lobbying for such a standard by 2010. Will DSL or coaxial cable be up to the task? Clearly not. If great applications like VOD, HDTV, personal video recording (PVR), Interactive TV, Web TV, online gaming, telemedicine, telelearning, video conferencing, and more are going to find their way into our homes, it will be the result of direct-fiber connections and switched digital video (SDV).
SDV is the distribution of interactive television and video content in a digital format via standard network-based technologies such as ATM and Ethernet. When paired with a passive optical network (PON) in the last mile, SDV gives service providers and consumers the flexibility to participate in a full gamut of bandwidth-intensive services.
PONs deliver bandwidth up to 100 Mbits/sec, and they inherently provide the quality of service, economics, and scalability needed to capture and sustain loyal customers with IP television, advanced entertainment services, and an extended bundle of carrier-class voice and high-speed data services. Furthermore, for applications requiring symmetrical bandwidth (downstream and upstream), such as video conferencing, business circuits, and business data connections, PON is the only adequate infrastructure.
SDV with PON is where the MPEG standard really shines. Unlike the method favored by cable operators, the conversion of content from digital to analog format takes place right at the subscriber's home, vis a vis an outdoor customer premises node and an indoor set-top box (STB.) Keeping the video content in its digital form from the broadcast studio to the end consumer has a great number of advantages:
- Signal quality is vastly improved, since the final digital-to-analog conversion is done typically at the television with very low signal loss.
- Analog physical plant maintenance is eliminated.
- Metadata can be sent from the broadcast studio to the end consumer. This allows applications to interact with the end user. For example, true VOD servers can be placed in the core network, and controlled by the end user's remote control.
- Accessing of content (i.e., entitlements) can be strictly enforced in the digital domain using data communications encryption techniques.
Do the math
Advances in IP networking, combined with lowered prices for PON networking, have made the PON-based SDV solution more affordable than ever -- especially for rural telcos, which qualify for Universal Service Fund (USF) assistance and low-interest loans from Rural Utilities Service (RUS) for necessary plant and equipment upgrades.
In areas where all-new plant has to be installed, such as "greenfield" or total network rebuilds, PON technologies are at cost-parity with VDSL. But there the comparison ends. As noted in the previous bandwidth discussion, DTV transmitted over xDSL is a poor substitute for PON-powered DTV. And here's another eye-opener -- PON technologies have a more than 35-year lifespan based on current fiber guarantees, compared to copper's 15 years. That means a provider would be on its second or third copper plant before a fiber plant would need replacement. From a business perspective, the money spent on rebuilding the copper plant the second or third time would be money to the bottom line in a fiber-to-the-home (FTTH) PON installation.
Speaking of the bottom line, for telcos, the unregulated revenue streams from SDV services make for a quick return on their PON investment, and a tidy sum to register in the books thereafter. What could be better?
Hollywood loves a happy ending.
Chris Koch is a data communications systems engineer and Ron Hartkemeyer is director of business development at Optical Solutions Inc. (Minneapolis, MN); www.opticalsolutions.com.