Only connect

Hybrid platforms and connected TVs have been key topics of late, with interest fuelled by initiatives such as Project Canvas in the UK and HbbTV. Stuart Thomson looks at how service providers may stand to gain or lose from new technological innovations.

In the eyes of a number of observers, hybrid platforms are increasingly seen as the future of IPTV. And the meaning of ‘hybrid’ has undergone a subtle shift thanks to the growing momentum behind services that come under the rubric of ‘over-the-top.’

Over-the-top is most usually referred to in the context of a threat to established pay-TV platforms. The launch of broadband-delivered on-demand and catch-up services by broadcasters (the forthcoming Project Canvas) and consumer electronics manufacturers manufacturers (such as Sony and Philips) as well as a host of hybrid services launched by new entrants such as the UK’s Fetch TV or VideoFutur in France, have been greeted with little enthusiasm by pay-TV incumbents.

From the point of view of telcos, however, the limited success of walled garden IPTV services to date, together with the possibility of using hybrid services to cement customer loyalty, have added to interest in the opening up of the IPTV experience amongst broadband service providers and free-to-air content providers alike. In the UK, the BBC-led Project Canvas initiative has been joined by BT and TalkTalk, both of whom see it as a way to expand the population to which they can offer some kind of triple-play service. BT already operates the hybrid BT Vision service, marketing its own on-demand content to complement broadcast services delivered over the digital-terrestrial network.
Technology providers that traditionally have supplied direct to service providers rather than look to a retail model are now addressing the growing interest on the part of their existing customers in various forms of hybrid service. “There is room for the telcos to have a place by either partnering with broadcasters or by offering a kind of triple-play bundle and managing the network,” says Steve Morris, systems architect at IPTV middleware provider ANT, which supports a number of IPTV service providers.

In fact many service providers view the over-the-top content with a certain trepidation. However, the bringing together of broadband-delivered content with broadcast offerings will provide a stronger tool to cement customer loyalty than over-the-top on its own. “We believe that over-the-top boxes will be more effective when combined with anchored broadcast content,” says Dom Castley, chief marketing officer at UK-based IPTV specialist Amino Communications. “In terms of our service providers it’s more of a value add that they can bring into one device with one interface.” For Castley, the inclusion of home media and DLNA functionality will be key to the success of such platforms. Amino is the first set-top provider to announce a device based on the new Intel Atom CE4100 processor, designed to support internet and broadcast applications on a single chip. Far more powerful than existing platforms, the Intel processor removes the problem of software having to be re-written for each new version of hardware that comes out. Amino has created its own customised version of Moblin, the Linux-based operating system for the chip. Intel has more recently teamed up with Nokia to develop a next-generation OS, MeeGo, which Orange has already said it will use to deliver multimedia services to a wider range of devices.

“I think there will be a big battle between the telcos and cable operators, the major internet players and big consumer brands.”
Christophe Aulnette, Netgem

“There will be many different routes to market for our technology,” says Christophe Aulnette, CEO of Netgem, which provides hybrid IPTV set-tops and software to a number of service providers including France’s SFR, hybrid digital-terrestrial/broadband on-demand service Fetch TV in the UK, its own VideoFutur service and its joint venture with FNAC. He also sees opportunities for DTH pay-TV operators to use IP set-tops to deliver their services over the top to second TVs in the home, as an alternative to the more problematic delivery of content around the home from a master set-top. “I think there will be a big battle between the telcos and cable operators, the major internet players and big consumer brands,” says Aulnette. However, he says, established service providers have one big advantage over their rivals: “The way to success is to deliver a balance of local and global content – that’s why we think telcos are well-positioned in that battle.”

Quality of experience

One question that service providers need to address is to what extent ‘connected TV’ services can match the experience of a walled-garden IPTV or cable service. The idea of giving TV viewers access to the open internet in some form or other is as old as digital TV itself. But rapid improvements in bandwidth and the proliferation of video on the web through YouTube and more recently broadcast catch-up services including the BBC’s iPlayer have given impetus to the idea that the open internet can be used as a distribution platform for video to the TV.

“Connected TV can match and extend the experience of a walled garden service by allowing real time access to online content and up-to-date services which are limited in a walled garden. Having a standard for connected TV like HbbTV or even Canvas will open the TV application market to a vast number of supporters and contributors similar to what happened with the Apple App store,” says Zvika Haas, product and marketing director at set-top provider AirTies.
Service providers themselves could adopt a loosely defined walled garden model in order to differentiate their offerings from disruptive new entrants, and enhance their existing pay-TV services. They continue to enjoy advantages. The speed at which over-the-top will eat into their market is likely to be slowed by the symbiotic relationship between content providers and their traditional distribution platforms. Cable and other pay-TV operators after all continue to provide the bulk of revenues to channel owners. Content providers are therefore unlikely to cut the strings that bind them to pay-TV platform operators in favour of a DIY approach. Nevertheless, the new entrants – whether consumer electronics firms or free-to-air broadcasters – cannot be ignored. As Suranga Chandratillake, founder and CEO of video search engine provider Blinkx points out, not all popular content consists of big budget shows that require mass distribution platforms. Low-cost reality formats can command even larger audiences.

“TV manufacturers doing it directly and even games console providers are opening up the market,” says Chandratillake, who argues that walled-garden services are comparable with early attempts to do something similar on the web, and are likely to be superseded by a more open model. Blinkx has teamed up with UK connected TV start-up Miniweb, providing the search capability to power the latter’s platform. Miniweb provides an interface and the Blinkx search engine can find programming and web-based content that is relevant to the interests of the viewer.

Ian Valentine, chief architect and founder of Miniweb, argues that connected TV is the fourth major shift in TV technology (following the move from black and white to colour, analogue to digital, and standard to high-definition). “It’s a natural evolution that enhances the value of TV,’ he says. “It’s more significant than the hype around IPTV, which was basically a means for a telco to use DSL to deliver a pay-TV service like cable.”

Points of differentiation

For Valentine, the popularisation of the user guide by digital TV platforms together with innovations including the DVR have accustomed people to navigate the TV experience in a different way, preparing the ground for an opening out of the platform to a much wider variety of content sources available on the web. Connected TV is not, however, the same as just making the web available on TV.

Connected TV is about bringing video-rich content from the web and tailoring the navigational elements for consumption on the TV. “The connected TV user experience is TV on steroids,” he says. “We have focused [our own] business around video and how to get the maximum amount of internet video to a device when it’s connected.” The key, he says, is to make search manageable.

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The argument for a platform such as Miniweb is similar to that put forward by the BBC for its Project Canvas initiative – to avoid a situation where content providers have to build applications to run on every device in the market. One of the sources of tension in the emerging connected TV space is between device manufacturers, who want to be able to develop their own user interfaces as a point of differentiation, and content providers that want to exercise some editorial control over the way their services are presented.

For Valentine, the problem that faces the backers of Canvas and similar projects is that they want to push device manufacturers in a particular direction, but the device manufacturers (which do not have content but do have global scale) may want to go in another.

Making the service manageable to the user is certainly a key challenge. There is clearly a need on the part of consumers within particular markets for some kind of unified platform for services. “A model where every TV channel has its own VOD service would make the consumer experience worse rather than better,” says Paul Bristow, vice-president of strategy at set-top box supplier ADB.

With free-to-air content suppliers increasingly moving towards the creation of their own platforms after the manner of pay-TV providers, and content owners creating their own VOD portals linked to archive content, the number of interfaces through which the consumer will be invited to search for his or her desired evening’s viewing can only proliferate. “From a user’s perspective, I don’t want to have to zap through 200 channels each with their own VOD portal,” says Bristow.

Creating a completely open environment to content and application providers is seen by some as the ultimate destination. A discussion around the usefulness or otherwise of ‘widgets’ – downloadable interactive applications that can sit on the TV screen – has been underway for some time. Chandratillake is skeptical, pointing out that web-like services including Apple TV and Yahoo TV have not been a huge success. Valentine of Miniweb agrees. “Everyone is trying to copy Apple right now – there is a lot of focus on apps. I think it’s a distraction,” he says.

Amino’s Castley believes that an app store model will be very interesting to both service providers and subscribers. However, he believes that initially they will carefully select the apps they make available to their subscribers based on things like brand fit or language, and only slowly open the platform up as they learn more. “The trick, long term, will be for the service providers to not create their own apps, but to open the gates for developers worldwide to showcase their creativity and provide a wide choice,” he says.

Other technology challenges to over-the-top delivery to the TV include the perennial one of constrained bandwidth. While broadband connectivity is improving dramatically in many markets, the availability of high-speed services is far from uniform. Possible solutions include the use of progressive download technology as well as adaptive bit-rate streaming, a technology whose development was initially driven by the need for a way of delivering video over bandwidth-constrained mobile networks. Progressive download (where the first few seconds or minutes of the stream is stored on a hard drive or Flash memory on the receiving device in order to provide a buffer) has been used by a number of operators to deliver on-demand services. Apple and Microsoft have developed rival adaptive bit-rate streaming technologies that allow the quality of the video delivered to vary dynamically according to the bandwidth available at any given time.

Keeping costs down

For service providers, it remains important to keep the cost of the end-user equipment down, particularly if the cost of the box is subsidised. “The ability to run next-generation software on all generations of chipsets is a big competitive advantage,” says Aulnette. “You do not have to resort to big expensive set-tops to get the user experience.”

Italian technology provider Pirelli Broadband has been active in adding over-the-top capability to its platforms, with most of the functionality being delivered from the headend in order to keep costs down and give the service provider added control (although Pirelli is developing a range of devices from low to high-end, including one based on the Intel Atom CE4100 – a position currently monopolised by rival Amino). The company provides back-end software that can be used to search for content on the web, and more importantly, can be pre-set to search for content according to specific quality parameters (for example only searching for HD content). “You end up being able to engage with high-quality content that’s available on the web,” says Roberto Pellegrini, vice-president of strategy and innovation at Pirelli. The ability to filter content according to quality parameters is likely to be a desirable part of the over-the-top TV experience. Filtering according to quality parameters can of course also be extended to deliver some sort of filtering according to the profile or viewing habits of the user. For Pellegrini, operators are likely to take a fairly cautious approach to over-the-top.

One possible strategy is to use the capability of a gateway device to deliver advanced interactive services such as e-healthcare and home security – an approach that Pirelli, for example, as a gateway as well as a set-top supplier, is well-placed to support.

With sources of content proliferating, there remains a place for some kind of operator role to being all the different pieces together. Existing pay-TV operators are well-placed to fill this role, offering over-the-top as an added-value service. In the case of satellite DTH players, the over-the-top delivery of VOD can complement services (including push-VOD services) delivered over the satellite connection.

Even in the case of ‘open’ platforms, such as Canvas or other broadcaster supported platforms (such as HbbTV), there will be a need for a ‘walled garden’ of sorts in order to deliver an experience that viewers will feel comfortable with and are able to navigate. “If connected TV is being discussed with Canvas and HbbTV as examples, then we see such services being open platforms to allow the delivery of entertainment services over broadband – in which case all the aspects of an IPTV or cable service, walled-garden or otherwise, must be put in place,” says Ian Walker, director of sales and marketing EMEA at set-top provider EchoStar Europe. “That means a state-of-the-art GUI coupled with a user-friendly experience with emphasis being placed on the ability to easily access mupltiple services as well as simple microbilling for pay-TV elements.”

An aggregator role will be key to enabling individual content providers to turn a profit, argues Walker. “The main challenge remains that of making services commercially viable,” he says. “That does not mean that every individual service provided must be a stand-alone profit centre but that the whole mix of free and pay services, of linear broadcast and on-demand services, of push and pull VOD, of OTT TV and walled-garden services, and of applications and peripheral services must add up to an attractive bundle for which total revenue generated exceeds total costs incurred.”

Trade-off

A number of questions remain. What kinds of devices will be required to support the delivery of over-the-top services? How open should the platforms be to content and applications from the open internet? And how precisely do the platform requirements have to be set down?

For ADB’s Bristow, the age of “ship and forget” products is coming to a close. Device manufacturers must build in the capacity to upgrade to accommodate new functionality and services. For Telekom Austria, ADB has added DivX capability to its boxes, enabling the operator to allow DivX-encoded content to be displayed on the TV screen. However, the openness of the platform to multiple video formats, while desirable, adds to the cost of the end devices. “The more formats you put inside, the more it costs,” says Bristow. It is unlikely, for example, that set-top manufacturers will embrace HTML5 video.

A number of other recent technologies could have a practical benefits. The use of adaptive streaming, pioneered by Apple and Microsoft, could enable services to be delivered reliably over bandwidth-constrained networks, for example. However, ANT’s Morris argues that there is no point in increasing the cost of equipment by adding new features immediately, especially where there is no clear standard. “It’s a case of crossing bridges when you come to them,” he says. “Adaptive streaming is an obvious case. It’s something that will be needed in 18 months time but for now there is no clear technology that is winning the war, so there is no clear choice.”

Similarly, trying to create a platform that is open to all forms of content might be attractive at one level, but it could also expose the platform to malicious software attacks and other hazards commonly braved by internet users but less tolerable to the same people when they settle back on the sofa as TV viewers. Any ‘opening out’ to third-party application providers is likely to be viewed with caution by whoever is held responsible for the connected platform – whether it’s the Canvas consortium or the TV manufacturer. “Being able to put apps or widgets over someone else’s programme is something that broadcasters get very nervous about,” he adds.

For this and other reasons, it remains clear that the age of the service provider, with a walled garden of some sort (albeit in a somewhat wider-ranging form – a walled wildlife reserve, perhaps) is far from over. But there is an equally strong argument that today’s service providers really have little choice but to embrace the over-the-top world.

“It is definitely a threat to them. At the moment, connected TV – at least in Europe – does not have premium content. But as in the US, services like Hulu and Netflix will arrive – or Canvas,” says AirTies’ Haas.
For Pirelli’s Pellegrini, service providers have the advantage of an existing population of vertically integrated set-top boxes (and possibly home gateways) that can enable them to keep some control of future developments. “Broadcasters and telcos can overcome their initial reluctance and fear of cannibalisation and instead counter the risk of being overwhelmed by over-the-top content via devices that are outside their control,” he says.