Analysis and Implications of Google's Proposed Web TV Service

Introduction:

A picture of scissors literally cutting a coaxial cable.
Cutting the Cord

The WSJ and NY Times reported that Google wants to offer live TV channels as well as pre-recorded TV shows (On Demand) using the public Internet.  The two newspapers indicated that the service would share a closer resemblance to cable TV than to streaming services like Hulu or Netfix, allowing customers to select channels online in real time, just as they do on cable, satellite or telco TV. The move would be a potential boon to the company’s struggling Google TV service.   Intel, Apple, and SONY are reported to be working on similar services.

Analysis:

The problem for those and any other new broadband TV provider will be in securing reasonable, nonrestrictive licensing deals from media companies that own the video content.  Many analysts believe those companies (Time Warner, Disney (which owns ESPN and ABC), Fox, CBS, NBC/Comcast, Viacom, etc)  are more likely to help out legacy program distributors (cable, satellite, telco TV providers) rather than broadband Internet newcomers.  Another question is whether both popular and unpopular channels will be bundled into various packages offered to consumers.

Bloomberg’s Kirsten Salyer asks “Can Google’s Online TV Kill Cable?”  Perhaps, but not right away she says:  “Can Google and others compete against the Time Warner’s in terms of price and content? Not immediately, but news they are trying is a warning that TV providers are going to have to be more innovative about how they adapt to the Web.”

Will Google offer live video in It’s proposed Broadband TV Service?  That’s really the key to differentiating a Google Web TV service from the video on demand streaming services now offered by Netflix, Amazon and Hulu.

As the WSJ article notes, Google has already financed original programming for YouTube and offers or plans to offer TV and Gigabit Internet service in cities with Google Fiberthe company’s  broadband, fiber optic Internet service .   

Unique Insight and Perspective:

Indeed, what this author finds most interesting is Google ability’s to offer live and recorded TV programming on Google Fiber, which is now sold in Kansas City, MO and Provo, Utah.  It will soon be available in Austin, TX, according to the Google Fiber website.

There’s another interesting angle which no one has yet identified till now: a further broadband Internet capacity crunch brought on by the web newbies streaming real-time and on -demand programming.   This will require new broadband Internet peering agreements between CDN providers and ISPs.    It became a critical issue when Netflix video streaming became popular a few years ago and that company contracted with Level 3 Communications for a Content Delivery Network (CDN) to deliver its streaming video.

In 2010, Level 3 Communications and Comcast (the largest broadband ISP in the U.S.) entered into a legal battle related to the costs of the former’s broadband data flowing into the cable company’s broadband Internet access network.  Level 3 complained that Comcast had begun charging a new fee to deliver Level 3 traffic (mostly Netflix streaming) to its own subscribers. Level 3 called the fees unreasonable. Comcast argued that Level 3 was trying to send heavy traffic across its network without bearing its fair share of the cost.

The dispute was settled yesterday with the details not disclosed. On July 16th, the two companies said  they had “resolved their prior interconnect dispute on mutually satisfactory terms.”    The agreement changes how Level 3 routes traffic across Comcast’s network, sharply cutting the fees the backbone provider must pay when traffic overwhelms certain connections, a person familiar with the matter told the WSJ.

One blogger at the Benton Foundation wrote that she “suspects the resolution of the Level 3 and Comcast dispute involved some sort of network re-engineering.”

The peering arrangement and any network re-engineering could help both companies (and serve as a model to others) to avoid the kind of standoffs and gridlock that will almost certainly occur as the volume of Internet video traffic soars.

What few pundits realize is that some form of CDN or equivalent will be needed to transport the high volumes of streaming video, in real time, to wireline broadband ISPs.  Hence, peering arrangements and billing agreements will need to be made between those two types of network operators.

Closing Comment:

We can expect a further explosion of broadband traffic resulting from new streaming video services from Google, Intel, Apple, and SONY joining Netflix, Amazon, and Hulu.  Are the network operators prepared for this?  This author doesn’t think so!

Viodi View – 03/16/2011

“If you haven’t seen it, then it is new to you.”  Something like that was a tag line from NBC around a decade ago touting their summer line-up of reruns.  That was in the days before DVRs became ubiquitous and appointment television still ruled the day for the masses.  In those days, the PC might be used for gaming, but it wasn’t a mainstream way to access video programming.  Other screens such as smart phones, personal media players and tablets had come and gone (think Apple’s Newton and GO corporation and clearly were not ready for prime time at the turn of the century.

Fast-forward to today and tablets are flying off-the-shelf in numbers that are the equivalent to a top-10 MSO worth of subscribers every quarter. According to a new study from Parks Associates, 3G+ connected tablets will make up more than 68 million of the projected 126 million to be sold in 2015.  These tablets are potential screens that didn’t exist a decade ago and their RF connectivity provides the potential for bypass of the traditional land line infrastructure.

This possibility of a new sales channel is probably part of the reason that Time-Warner is getting pushback from content owners regarding the release of an iPad app that allows one to view content on his iPad from within his household.   In a sense, this isn’t new ground, in that Time-Warner had trialed a linear programming system over broadband to the PC in their San Diego system some years back (good white paper on this effort can be found here).  This earlier trial was different in that it was to a device (a PC or lap-top) that didn’t have the convenience, battery life or connectivity of a tablet.

Still, the model is changing and affiliate relationships are changing, as shown by today’s story that Netflix is considering the acquisition of original programming, so it isn’t too surprising that content owners do not want to give-away rights to something that they might be able to monetize in a new way.


Broadband – Friend or Foe

So, what will the role of OTT video ultimately be and what will the relationship of OTT and the broadband operator be?  These are just a couple of the questions we will be pondering in a panel at IP Possibilities next month in Kansas City.  This is a must-attend event for anyone interested in how IP technologies affect the independent communications service providers.  In preparation for the panel, I found this video, which sheds light from some industry leaders on the related question of whether OTT is “friend or foe.”  Even though this video is from a couple of years back, it still is relevant to next month’s conversation.  Note, Shaun Carlson is now with V3 Technologies and will be speaking at the MTA Convention in less than 2 weeks.  Click here to view.


Increased Video Traffic Necessitates AT&T to Cap DSL Internet and U-Verse by Alan Weissberger

Bandwidth caps are one way that broadband providers can ensure a return on their investment in broadband.  AT&T’s announcement of a 150/250 Gbyte DSL/Uverse cap is consistent with other providers (e.g. Comcast’s limit of 250 Gbytes).  At this point, these caps could be viewed as an  insurance policy against potential cord-cutting.  Click here to read Alan Weissberger’s look at AT&T’s announcement regarding their bandwidth caps.


Local Content – Putting Smiles on People’s Faces

Cullen McCarty of Smithville Telephone and Gary Evans of HBC Give Tips for Local Content Success.
Cullen McCarty of Smithville Telephone and Gary Evans of HBC Give Tips for Local Content Success.

One way that operators cantake advantage of over-the-top is by placing their own local content online.  In this video interview at last year’s Broadband Properties Summit, Cullen McCarty of Smithville Telephone explains how they are producing online video.  Smithville’s online video strategy proceeded its launch of its franchised video operation.  This video also features Gary Evans of HBC talking about the keys to success in local content.  Local content will be the topic of two panels I will be moderating at the 2011 Broadband Properties Summit.  Click here to view.

 


Challenges in Educating the Customer Regarding New Infrastructure

Andrew Tang of PG&E
Andrew Tang of PG&E

PG&E made the headlines of last week’s San Jose Mercury, as the California Public Utilities Commission ordered this investor-owned utility to devise ways for customers to refuse smart meters. The intent of this order is to placate critics of the meters who have expressed concerns over accuracy of these devices and the potential health effects of the radio frequency emissions.

In this first part of a two-part video interview, Andrew Tang of PG&E points out the challenge of when and how best to educate the customer on a technology that rolls out over time; similar to the challenges operators face when deploying Fiber to the Home technologies.  Ironically, just as this issue goes to press, I saw the first television commercial from PG&E regarding the benefits of Smart Meters.  Smartly, this commercial features well-respected figures not affiliated with PG&E.   Click here to view.


Some Tweets and Short Thoughts

  • Our thoughts, hearts and prayers are with our Japanese friends and readers in the wake of the horrific ongoing events. It is an amazing country, with a resilient population, who will find a way to rebuild from this tragedy.
  • Noticed that Vidyo made WSJ’s top 50 start-ups. Coincidentally, using their video conference software in a local content talk today with a group of telcos. They also power Google chat.
  • And congrats in order for my friends at RGB Networks (13) and Fusion-io (20) for also cracking the WSJ Top 50 start-up list.

The Korner – iPod as an Off-Air TV

iPod As An Off Air TV
iPod As An Off Air TV

This interesting device, from Cydle, turns a an iTouch or iPhone into a television capable of receiving off-air television signals via the ATSC-Mobile standard. In addition to the antenna and off-air tuner, this device has a battery that powers its electronics and will charge the iTouch as well.  This device should be out sometime this month.  We caught a preview of this device in this video we recorded at CES 2011.  Click here to view.

A related post from awhile ago, http://www.viodi.tv/2008/04/28/mobile-video/

Viodi View – 03/03/2011

OTT Conference is Over the Top

Over the top video is a hot topic, at least if the turnout from at the Over-the-Top TV/Video Conference in San Jose this week is an indication. The event was packed and there was literally a buzz of conversation in the hallway about trends regarding delivery of content to the home. One of the most impressive things I saw at this conference is the independent telco presence at this event; distributors, associations, suppliers and telcos.  Click here to read some of the observations from this conference where simplifying the customer experience was a common theme.


Batter up at MTAViodiTV at MTA – Get Your Message out on the Hotel Channel – Sponsorship Opportunities (adv)

ViodiTV will be on the hotel channel at the Minnesota Telecom Alliance Convention in Minneapolis, March 28 to 30.  This annual event is a great way to get in front of hundreds of independent communications companies.  The program is always relevant, particularly this year in the light of the recent movement by the FCC regarding the evolving Connect America Fund.  To sponsor ViodiTV, reply to this email or contact us.   To see an overview of previous ViodiTV coverage of the MTA Convention, check out this video.


Roy Perry of CableLabs
Roy Perry of CableLabs

Economy of Scope of Key to Residential Energy Management

“Economy of scope” may be the thing that makes the residential connected grid work. Roy Perry of CableLabs uses this term to describe the idea that, thanks to a common IP infrastructure, multiple services help share the cost of infrastructure. In this video interview, he refers to a white paper he co-authored suggesting that a more efficient way to meet the energy savings of a smart-grid would be to focus on the low-hanging fruit.  Click here to view our video interview with Mr. Perry.


Kevin Messner of AHAM
Kevin Messner of AHAM

From Smart Appliances to the Smart Grid

Wringing out efficiencies in the grid is big business, with AHAM (The Association of Home Appliance Manufacturers) suggesting a $900M annual savings by shifting just 5% of power consumption from peak to off-peak times. One way to realize this sort of improved efficiency is by controlling the load through communication with so-called smart appliances. Click here to view this exclusive video interview with Kevin Messner, Vice President of Government Relations for AHAM, who discusses the technical, regulatory and financial challenges of deploying smart appliances in the smart grid.


Broadband Property Summit – Discounted Registration & ViodiTV Sponsorships Available – Registration Code – “viodifriend” (adv)

ViodiTV will be on the Hotel TV channel again at the Broadband Properties 2011 Summit. Check out this video for highlights from last year, what to expect in 2011 and to consider sponsorships. ViodiTV will produce daily show coverage and interviews for a daily TV program, and for streaming on Viodi.tv and bbpmag.com after the summit. Contact us or Diane at broadbandproperties dot com for some very unique sponsorship opportunities.

To receive a discount registration for this great event, go to this link, check the “VIP” bubble and use registration code “viodifriend” to get an extremely reduced registration rate.


Reality Check: WiMAX on Track to Cover One Billion by EOY 2011 by Alan Weissberger

The WiMAX Forum claims that “WiMAX service providers around the globe today have networks covering more than 823 million people (or POPs) in approximately 149 countries and are on track to reach one billion POPs by the end of 2011. This estimate is a growth of 215 million POPs since December 2009 and surpasses the forecasted growth during that time period.”  But doesn’t everyone think that mobile WiMAX is dead?  Click here to read Weissberger’s insight on this question.


Can U.S. Reverse the Decline in R&D Spending: Global Competitiveness at Risk! by Alan Weissberger

A R&D crisis is brewing in the U.S. It’s not only the demise of Bell Labs and the huge cutbacks in pure research at companies like IBM, GE, AT&T, Verizon and others. But also the decline in U.S. federal government R &D spending, especially as a percentage of GDP. Compounding this problem, a recent report from Ernst & Young, states that companies in developed nations increasingly plan to turn to emerging markets for core research and development. That means even less R & D will be done in the U.S. in coming years.  Click here to read the rest of the post and the commentary that follows.


What makes Silicon Valley special for digital innovation? Good article/interview by Nicolas Bry of Orange with his colleague, Georges Nahon, who is Orange’s Corproate Vice President of North America for Orange and CEO of Orange Labs in San Francisco.  Like his fellow Frenchman, de Tocqueville, who, in the 19th century, gave an outsider’s perspective on America’s unique experiment in democracy, Nahon offers insight as to what makes the Silicon Valley state of mind special.

“It is also a place where optimism, generosity, altruism and communities drive the behaviors rather than individualism, egocentricity and cynism.  The Valley places a premium on alternatives to top-down, hierarchical sources of support. Governmental subsidy is seen as toxic to innovation funded by private investors. Smart risks are the norm.”

Click here to read the entire interview.


Some Tweets and Short Thoughts

  • Jeremy Toeman @ OTT Con, “Even Kabletown is innovating” – funny comment for those of who watch 30 Rock. Pace of innovation is increasing.
  • Good quote from Brian Roberts of Comcast in WSJ – “What used to be ‘reruns’ on television is now called Netflix.”
  • IPTV in disguise -Telstra to use thePlatform as cloud-based video publishing system across TVs, set-top boxes, and web

Monica Witt of Zero1.tv
Monica Witt of Zero1.tv

The Korner – A Universal Remote via the iTouch

Walt Mossberg reviewed the Peel in today’s issue of the Wall Street Journal , a device that turns the iPhone into a universal remote control via a WiFi and a Zigbee-connected infrared blaster.   One advantage to this approach is there is no hardware additions to the actual iPhone or iTouch.  This device will be available on the Apple Store March 8th.

The Peel isn’t the only approach to making a better remote, however.  We had a chance to take a look at the Voomote One from Zero1.tv.  The Voomote One is a hardware add-on that integrates an IR emitter, turning an iPod Touch or iPhone into a universal remote control.  Although we saw a working model at CES 2011, it appears as if it is still in pre-order mode, based on their web site.

It is the associated software applications that will give these hardware accessories the edge over traditional remote controls.  For instance, the Peel’s first product was a no-cost app that helps viewers discover and find preferred TV programs.  Devices like the Peel and the Voomote One promise to simplify the customer experience and are the kind of change that was the topic of many of the conversations at this week’s Over-the-Top TV/Video Conference.

OTT Conference is Over the Top

Entrance to the OTT Conference
The packed entrance to the OTT Conference

Over the top video is a hot topic, at least if the turnout from at the OTT Conference in San José this week is an indication. The event was packed and there was literally a buzz of conversation in the hallway about trends regarding delivery of content to the home. One of the most impressive things I saw at this conference is the independent telco presence at this event; distributors, associations, suppliers and telcos were all at this conference in the heart of Silicon Valley.

Another interesting development is the number of cloud-based middleware providers. Companies such as Dyyno, MG Media, Pathfinder, Verismo Networks demonstrated their offerings at this conference.

Minvera Networks demonstrated their xTV-Fusion 5.0 platform running a combination of traditional IPTV, along with the integration of over-the-top services. This sort of hybrid approach offers their existing service providers a way to embrace over-the-top applications as well as provide service providers that haven’t jumped into video with some new business model approaches.

And models are changing as evidenced by comments from Mark Benscheidt, the VP of Broadcaster Business Development of Sezmi, who suggested that, “The business model of television is broken. Broadcasters will fail to exist in the next 5 years, if they can’t navigate the new playing field. The guy who wills will be the one who can present the 5 things people want to see; the playlist is the future.”

Richard Yelen, Vice President, Managing Director for over-the-top video infrastructure provider NeuLion, reinforced the point that over-the-air television’s days may be limited in his talk. He pointed to DishTV as being, “Way ahead of the pack,” in terms of how they are using OTT to drive new revenue streams. This is allowing them to reach the television set in areas, such as MDUs, where customers cannot use satellite dishes.

Yelen pointed to the importance of authentic social networking to driving demand. One of their customers, UFC earned $1/2 million from the first event they put online.  The Twitter feed for the CEO of UFC (Ultimate Fighting Championship), which has over 1 million followers, was a key driver to getting people to pay for this over-the-top event that included unique features, such as viewer-selected camera angles and audio feeds.

Social applications are among the top three most popular that people are using with their connected TVs, according to Russ Schafer Senior Director of Global Product, Connected TV, Yahoo!. VOD and real-time information (e.g. weather, news, etc.) are two other applications are also popular. Social applications are really an electronic extension of word of mouth, as Yahoo! reported that some 20% of the people with connected televisions that use social sites on TV make their purchase decisions based on social recommendations.

Still, there was a great deal of talk in the hallways about the fragmented market and how the process for accessing content needs to be simplified. It is becoming a given that 2nd screens will be one method for improving the customer experience, particularly with regards to viewing and managing metadata, while servicing as controller for the primary screen.

There are kinks with two-screen interactions that need to be ironed out, as pointed out by Jeremy Toeman of Stage Two. He cited the example of the use-case where multiple people are watching television and the one, whose smart phone is controlling the program, goes to the bathroom, effectively taking the remote control with him. Similarly, who is the master, when multiple people are trying to control the second screen from their respective personal media devices? This could portend a new generation of “remote control wars”.

Jeremy Toeman also gave designers some good tips, including:

  • Lean back means “passive experience”.
  • 2nd screen should have all the text heavy comments.
  • People don’t want to log-in or have passwords on their televisions.

Toeman’s updated his predictions for losers and winners in his session. He cited the big service providers, TV manufacturers and content owners as being among the winners. He suggested that the biggest winner would be the consumer, provided the new features that the over-the-top approach unleashes are not overwhelming.

Viodi View – 02/17/11

Sticking to one’s metaphorical knitting, while figuring out the next thing to knit is a challenge all of us face in a world of decreasing product and service lifecycles. I feel that way lately as Roger and I have been involved in a project that has taken our focus off some of the current events, as well as some of the upcoming events. Fortunately, we have a library of interesting video interviews that will shed light on some recent items that have been in the news.


Can You Read Me Now – Verizon’s Role in the Smart Grid

Ann Shaub of Verizon At Parks Associates Smart Energy Summit
Ann Shaub of Verizon At Parks Associates Smart Energy Summit

With its recent announcements at CES and last week’s announcement with eMeter, Verizon is leveraging its strengths in telecom to innovate in the arena of the smart grid. Ann Shaub of Verizon provides an overview of their approach to making the grid smarter in this exclusive video interview at Parks Associates Smart Energy Summit in Austin last month. As she explains, their efforts to bring together all the disparate elements of the grid are not necessarily restricted to terrestrial broadband networks (e.g. think 3G or LTE, as evidenced by this earlier announcement) or even Verizon’s networks (think OTT power management).  Click here to watch.


Chris King of EMeter
Chris King of EMeter

The Complete Smart Grid

Chris King, a long-time veteran of the smart meter industry, discusses what is needed to realize the full potential of the so-called smart grid; we are closer than ever, but a few key things need to be in place.  Chris is with eMeter, a company that provides the back-end intelligence required to make sense of the billions of bits of data originating from the smart meters.  eMeter just announced a deal with Verizon to help power the latter’s smart grid business.  Click here to watch.

Note, this interview with Chris King was recorded for Parks Associates at their Connections Summit at CES 2011.


P&F 2011 Broadband Outlook Examines Over the Top Video vs Pay TV services by Alan Weissberger

Pike and Fischer’s new Broadband Competition Outlook 2011 report states that broadband service providers are rushing out new service enhancements and applications to keep the existing customers they have and to draw the attention of (hard-to-attract) new subscribers. The research firm provides forecasts on customer growth for new multichannel video services, high-speed Internet, IP telephony, and the features and applications that ride on those technologies. While the tumultuous economic conditions have made forecasting the growth in broadband adoption unusually difficult, the firm has incorporated publicly available projections on housing, unemployment, and other economic indicators into their 2011 competition forecasts. Click here to read the entire article, as well as the interesting commentary and the follow-up responses from Pike and Fischer.


Rick Schwartz of PacketVideo
Rick Schwartz of Packet Video

The Smart Phone as a Media Server

PacketVideo announced that their Twonky Mobile streaming application is now available for the iPhone platform.  At last month’s CES 2011, ViodiTV caught up with Rick Schwartz of PacketVideo, where he described the android release of this offering.  This app allows one to use his cell phone as sort of a media director, taking content (photos, audio, video) from the phone, the web or home storage devices and sending it to the television or to other devices, such as Blu-ray players, X-Box 360, Roku or AppleTV.   This was recorded as part of the Parks Associates Connections Summit at CES 2011.  Click here to watch.


Spectrum For Research and Testing – New Rules, New Issues by Robert Primosch of WBK Law, LLP

[Editor’s Note: Bob Primosch is a Partner with the Washington, D.C.-based, communications law firm Wilkinson Barker Knauer, LLP]

The FCC is considering rule changes that would make it easier for educational institutions, medical facilities, equipment manufacturers and others to research and test new wireless devices and services on existing spectrum.  By reducing paperwork burdens, shortening overall application processing time and giving applicants greater testing flexibility, the FCC hopes to accelerate the wireless product development process and thus shorten time to market.  Click here to read the rest of this article.


Broadband Property Summit – Discounted Registration & ViodiTV Sponsorships Available – Registration Code – “viodifriend” (adv)

ViodiTV will be on the Hotel TV channel again at the Broadband Properties 2011 Summit. Check out this video for highlights from last year, what to expect in 2011 and to consider sponsorships. ViodiTV will produce daily show coverage and interviews for a daily TV program, and for streaming on Viodi.tv and bbpmag.com after the summit. Contact us or Diane at broadbandproperties dot com for some very unique sponsorship opportunities.

To receive a discount registration for this great event, go to this link, check the “VIP” bubble and use registration code “viodifriend” to get an extremely reduced registration rate.


Batter up at MTAViodiTV at MTA – Get Your Message out on the Hotel Channel – Sponsorship Opportunities (adv)

ViodiTV will be on the hotel channel at the Minnesota Telecom Alliance Convention in Minneapolis, March 28 to 30.  This annual event is a great way to get in front of hundreds of independent communications companies.  The program is always relevant, particularly this year in the light of the recent movement by the FCC regarding the evolving Connect America Fund.  To sponsor ViodiTV, reply to this email or contact us.   To see an overview of previous ViodiTV coverage of the MTA Convention, check out this video.


Some Tweets and Short Thoughts

  • Congratulations to Jessica “Chief” Kizorek on the one year anniversary of her networking organization, BABW.  Nice write-up on what she is doing by the NBC-affiliate in Miami.
  • Shocking what category the U.S. leads – find out what  #1 black listed site is –  also, 23% of corporations block Facebook.  Granted this report from OpenDNS represents only 1% of DNS requests, it isstill interesting.
  • Sorry I missed this speech by Ron Laudner, CEO of Omnitel and OPASTCO Chairman. He emphasizes the importance of being “IP -Innovative and Proactive”.  OmniTel sponsored a Viodi-produced video that complements his speech.

Rob Riordan of Nsight/Cellcom
Rob Riordan of Nsight/Cellcom

The Korner – Looking Forward, While Staying Customer Focused

Independent telecommunications companies are typically the technology leaders of their communities. They have to know what is coming in technology, while, at the same time, providing their customers with great service for what is needed today. By bringing broadband to the so-called last mile, they literally connect their rural communities to the World Wide Web.

It goes beyond the physical connection, as they are often the ones helping their customers use technology to improve their businesses, wire schools to enhance learning or teaching customers how to use new gadgets and gizmos.

At CES 2011, we had a chance to catch up with a person who epitomizes balance in understanding where things are going and how that applies to his everyday customers. Rob Riordan of Nsight Telservices, a Green Bay-based telecom provider, is both a leader of the industry (e.g. former Chairman of OPASTCO), as well as a leader in his company and community. Rob literally has a global view of where things are going, as he regularly speaks at industry conferences from London to Shanghai.

Riordan explains how he is looking for interfaces that simplify the complex technology embedded with the gadgets and gizmos he brings to his customers. He provides a summary of the panel we had participated in at the Broadband Unlimited Conference and talks about what impressed him on that panel. He also mentions the work they are doing with a local clinic to extend tele-health services into to the community.

Making TV Better for the Middle Class

On one extreme, there are the television cord-cutters;those people who will use broadband and/or a combination of off-air content to eliminate the need for a franchised cable or IPTV service. On the other extreme, are those people who are satisfied with the value they receive from and are willing to pay for the convenience provided by the video packages from their franchised operator. In between these bounds lies, what Entone’s CEO Steve McKay calls, the “middle class”.

McKay estimates that 50 to 60% of viewers are interested in the convenience and features of pay television, such as live TV, DVR capability, high quality and access to live sports, but are intrigued at the cord-cutting approach as a way to cut costs and receive greater value. Clearly, with game consoles, Blu-ray players and connected TVs, it is becoming easier for this group to cut the cord. Despite these developments, McKay argues that this market segment would appreciate the value that an operator could provide by integrating broadband video and linear content into a single interface.

Entone is targeting this “middle class” with their new FusionTV service. Building on their experience with their gateway products, such as the Janus Media Hub, FusionTV allows operators to add broadband video to their existing franchised video offering. At the same time, those operators without an existing video service can use FusionTV to build a service based on broadband video content.

By using a gateway approach with integrated hard-drive, Entone may simultaneously drive two different channels of video to three distinct televisions from one central device (a media player type device required for HD signals). McKay indicates the hardware cost of this approach will be competitive with the alternative of placing a set-top box at each television.

By being a centralized unit, the user interface is common from device to device, content, whether the delivered media is from within the home or via the network. Media is accessible from any television and, by mid-2011, outside of the home on Entone-supplied client for devices such as the PC, smart phones and tablets.

The focus is providing linear programming, whether off-air or via a traditional cable or IPTV system, together with premium broadband video programming. At launch, FusionTV will integrate with Vudu, Pandora, Flicker, Twitter and Facebook. Although YouTube is not part of the first release, McKay hinted that integration with this ubiquitous video service is on the near-term horizon.

McKay suggested that the current six trial deployments, which include Tier 1, two Tier 2 and 3 Tier-3 telcos, are helping shape how the product evolves. McKay pointed out that one of the bigger challenges that the industry faces is the search and discovery conundrum. In other words, how does one make broadband video a more television-like service, instead of the type and click experience of the PC.

From my conversation with McKay, it sounds like Entone has a plan to integrate into Fusion TV intelligence to simplify the discovery and presentation for those of us in the middle class who like the TV to be a simple up/down experience. What they will be showing next week at TelcoTV is just a preview of what is ahead in Entone’s quest to make broadband video and personal media an integral part of the television experience and make TV easy for the middle class and a relevant offering for the operator.


Image courtesy of Entone.

Over the Top at NTCA

Over the top video was the theme of a panel at NTCA’s Annual Meeting in Tampa Bay. Robin Wilson of Nagravision provided an excellent overview of what over the top is and how people around the world are providing it as a stand-alone service or as a blended service with off-air or direct satellite feeds. He explained widgets in the context of IPTV and how integrate web content into the television service to create a richer viewing experience.

Wilson warned that the over the top entertainment delivery could be a significant threat to traditional (funny how something so new becomes ‘traditional’) IPTV networks. He recommended that operators look for ways to integrate over the top offerings and that widgets might be the way to start with such an integration.

He also talked of 3D and reached a conclusion similar to that which was described in the ViodiTV CES post on that topic; that is, there is hype around 3D and challenges (such as the 2D guide in a 3D world), but to pay attention to 3D as its impact will be felt in the not too distant future.

Dale Merton, COO of Toledo Telephone gave the operator’s perspective of over the top video and Toledo’s experience of offering the Vudu service to its customers. Toledo Telephone is typical of a small independent rural telephone company with about 2,100 access lines and 900 broadband customers. One-hundred percent (100%) of Toledo’s customers can get at least 5 Mb/s broadband, so their network is primed for over the top services.

Merton explained that Toledo Telephone made a strategic decision that they did not want to be in the middle between the content owners and customers. As a result, they got out of the cable business and now concentrate on their core strength of the providing a high-speed, reliable network and helping the customer simplify their entertainment experience. He provided these pearls of wisdom:

  1. User experience is paramount
  2. 99% of our customers are not geeks – the service must be easy to use and reliable
  3. Whoever has the best quality wins – quality being defined as interface, content, connections to other devices and customer service. 
  4. It must be flexible. People want to be able to use multiple TVs and be able to watch different things on different TVs. 

He said that people are moving away from single use set-top boxes to ones that are multifunction or that integrated into devices, such as BluRay players. He also said there is a market for a hybrid off-air/over the top video solution that would provide customers with local broadcast as well as on-demand and other offerings.

Merton’s comments echoed those of Bob Saunders of SkitterTV in an earlier Business and Technology meeting. Saunders suggested there is a value-conscious market segment whose needs would be satisfied with a mix of local broadcast, a minimal amount of cable network programming and access to over-the-top video. SkitterTV has developed a middleware platform for this new vision of IPTV; one where there is a blending between over the top and linear programming in one simple to use guide, supporting multiple devices (e.g. PC, TV, mobile) and yet is backwards compatible with existing FCC standards for cable (e.g. Emergency Alert, Closed Captioning, Non-Duplication).

The overarching direction of where things are going are summed up in the comments I made, while representing ZillionTV at the aforementioned Business and Technology meeting, which suggested that we are moving from an over the top approach to a ‘Through the Telco’ implementation.

[Note: In addition to his role with Viodi, Ken Pyle also represents ZillionTV in his role as Director of Broadband Affiliate Relations]. 

Surveys show strength of telecom video services with boomers surfing the web more than watching TV

Fiber-optic-based video services offered by telecoms show stronger levels of customer satisfaction than their cable and satellite-based rivals, according to a survey of 2,922 consumers in the U.S. and Canada performed by ChangeWave, a research and advisory firm. Of the 12% of respondents that said they would likely switch providers in the next six months, half said they would base that decision mainly on price.

 

Cable Leads But Fiber Looks Strong

According to ChangeWave’s latest survey, Cable (65%) still owns the bulk of the TV market, even though it’s been slowly ticking downward for much of the past 2+ years. We note, however, that they have gained 2-pts since our previous survey in March.

At the same time, Satellite providers (25%; down 1-pt) have remained relatively flat, even as the core growth story over the past two years has shifted to the fiber-optic TV service providers (11%). But what does this mean at the individual provider level?

Verizon continues to have the most satisfied customers (47% Very Satisfied), followed by AT&T’s U-verse service (39%) and then DIRECTV (34%).

In conclusion, fiber-optic companies are properly positioned to be the biggest winners in terms of future market share growth.

 http://seekingalpha.com/article/155923-fiber-optic-providers-show-strength-in-tv-service-markets?source=feed

 

Boomer TV Preferences and Internet Use
 

In an earlier survey in May of this year, Change Wave found several important changes in TV viewing and Internet use. In a survey of 1,660 members of the Baby Boom generation  – business professionals between the ages of 45 and 63, completed in early May, focused on TV viewing habits vs. home Internet usage.

The results point to a powerful shift occurring among Boomers away from traditional TV towards new types of online services and entertainment.  Importantly, this transformation is affecting lifelong habits.

-Boomers now spend more free time online (12.9 hrs per week on average) than they do watching traditional TV (11.8 hrs per week on average).

-By a five-to-one margin Boomers are watching less traditional television than they did a year ago. Among this group, 62% say it’s because they’re not as interested in what’s on TV these days, and another 26% say they’re spending more time surfing the web.

-Video-over-the-Internet now clearly represents a significant threat to traditional TV viewing. Better than two-thirds of Boomers (69%) say they’ve watched video content on their computer over the past 90 days. Even more ominously, 48% of respondents say they’d be willing to pay a monthly fee for a Video-over-the-Internet subscription if it provided the same programming currently available on their TV service.

-One place that Boomer professionals are spending more time online is with social networking sites – where 51% say they currently maintain one or more profiles.  Nearly three-in-five (57%) of these Boomers report they use the networking site LinkedIn, while another 55% have a Facebook profile – the site normally thought to be most popular among teenagers.  But Boomer interest in social networking has its limitations – 77% of users say they would not be willing to pay a subscriber fee for social networking. Of all the services, LinkedIn is the most likely to attract paid subscribers – but only 7% say they’d be willing to pay a fee if it was no longer free.

http://www.changewave.com/freecontent/viewalliance.html?source=/freecontent/2009/06/boomer-tv-habits-06-15-09.html

 

Mining Data & More in St. Louis

I have found vendor user group meetings can be as every bit as valuable as for-pay conferences. The Entone User’s Group meeting held in the convenient, historic and revitalized downtown St. Louis last week, was extremely valuable for the participants, who included Entone customers, prospects and partners. Entone has been a long-time supporter and sponsor of the Viodi View and ViodiTV and it was an honor to moderate a couple of the panels at this event and I enjoyed the interactive nature of the panels, as well as the openess of the discussions. 

Steve McKay, CEO of Entone, kicked off the conference by suggesting that Triple Play has become a zero sum game and that operators will need to continue to refine their offering to compete. McKay emphasized the importance of a whole-home media offering for operators as they seek to differentiate themselves from CATV and DBS.   Features of this offering include DVR, ability to view over the top videos, inclusion of personal media, in-home distribution and place-shifting tied together with an integrated and easy to use interface that only requires one simple-to-use remote. What McKay is calling for is not trivial and he called on the operators to push the vendor community for these sorts of whole home media devices. 

Colin Dixon of The Diffusion Group gave backed up McKay’s comments with some interesting data, particularly on home networks (going from 150 million in 2010 to 1 billion in 2030). Dixon stated that, "The PC is not and will not be the center of the home entertainment universe. The PC is a disabler." He suggested a much more TV-centric view of where over the top video is going, when he suggeested something like 12% of broadband viewers are watching 5 or more hours of video on the Internet per day and 84% of people who watch video on broadband want it on TV. 

Along these lines, he emphasized, "That the Internet is transitioning from a technology to a medium." He called what is happening the greatest realignment of television services in 60 years. He suggested that, "Bringing the web to TV is a losing proposition, while bringing the TV experience through the web is a winning proposition." To bolster this argument, he cited TDG’s primary research that suggests more than 3/4 of people prefer to watch DVDs in a social setting some or all of the time. His point was that new media must leverage existing behavior to be successful. He stressed the importance of the guide in helping people to discover content, as opposed to searching which is difficult with a television interface. He also called on telcos to look at new kinds of programming, such as gaming.  

Dixon provided an excellent overview of the entire over-the-top value chain, from content ingest to content delivery. It was a great set-up to my conversation about independent telcos and what they are doing in terms of local content. Several of the telcos in the audience mentioned that they are utilizing their VOD servers to store and stream local content. And local content is a differentiator, but it may not always be enough to keep a customer from churning. 

Doug Abolt described Consolidated Communications‘ process of how they mine their data to determine which customers are likely to churn. This has allowed them to target their marketing dollars and offers, such that they are able to get a better return on those investments. At the same time, there have been unexpected benefits, like identifying weak points in their networks. He described the virtual focus groups that are part of this process as being much more efficient, less costly and timelier than the traditional focus group. Abolt’s presentation was a good exclamation point on a couple of very productive days of learning.