Telcos can use essential guidelines to partner with and profit from the interactive TV realm
The satellite and cable industries are placing big bets on interactive TV and its close cousin, video-on-demand. Yet with all of the excitement in those segments of the telecom industry, telcos have largely been left behind. The informed telco executive knows this will change as operators begin to discover how well interactive TV and VOD fit with their DSL architectures. By understanding some key factors, telco executives can negotiate successfully with potential interactive TV partners.
Technology today
Interactive TV technology currently is available and being deployed worldwide. For the purposes of this article, interactive TV refers to digital TV broadcasts with a return path and includes Internet services such as e-mail and shopping, VOD and broadcast TV. AT&T anticipates commercial deployment by 2001. Interactive TV offerings from WebTV, WorldGate and others have been available for a couple of years. DirecTV announced its relationship with AOLTV to provide America Online via satellite. Europe is forging ahead with efforts under way at UPC across Western Europe, BskyB, Telewest and NTL in Britain, and Canal+ and TPS in France. In addition, there are trials in various stages worldwide for VOD.
Efforts among telcos have been more tentative. Until recently, Qwest Communications (formerly U S West) garnered the most visibility among U.S. telcos with its DSL offering in Phoenix. Hong Kong Telecom has been running an interactive TV system for several years, and YesTV is working with a number of telcos, including BT. And recently, Blockbuster and Enron announced plans for a DSL-based offering. While we can only hope that these and other efforts prove successful, there is no doubt that interactive TV presents a unique challenge for telcos, which must be prepared to face several issues (See Table 1).
Table 1. Issues of interactive TV
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Interactive TV technology is relatively untested, especially over DSL
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Not all copper loops are created equal
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Interactive TV is still in the development stage
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Interactve TV developers have limited experience with TV broadcast
While lack of TV broadcast experience may be an issue, there are many partners available to lend a hand. The technical issues are more fundamental, but perhaps easier to resolve.
It's all about the bandwidth
Will interactive TV work in telco networks? Ask 10 different people in the industry, and you'll likely get 10 different answers.
The very high bit-rate DSL (VDSL) equipment vendors will say, "Of course."
The cable operator will say, "No."
Most pundits will guess, saying "five years."
But the movie studios will say, "Give us a 4 Mb/s pipe, and we'll give you DVD-quality movies on demand and you'll have bandwidth left over for all the Web pages you can view."
The movie studios are right. Telcos will want at least a 4 Mb/s pipe for DVD quality offering. In fact, telcos will want to allow 5 Mb/s for overhead and spare PC Internet bandwidth. This 5 Mb/s bandwidth is within the realm of possibilities for asymmetrical DSL (ADSL) and certainly VDSL.
With this bandwidth target in mind and the knowledge that DSL vendors are constantly improving reach, capacity and cost, telco planners can turn their attention to understanding the role that they will play in interactive TV.
Seven gates to success
None of today's communications infrastructures (cable, satellite and telco) are perfect for interactive TV, but, as shown in Figure 1, DSL has some advantages:
1) Content and services
2) Content servers
3) Broadband network (to DSL access multiplexer (DSLAM)-equipped central offices (CO)
4) Local access (DSL last-access transmission of at least 4 Mb/s)
5) Advanced set-top boxes
6) Interactive TV software system
7) Back-office systems (to tie the operations together)
The first and most obvious elements of any interactive TV system are its content and interactive services. Supporting each of these content types places various technical demands on the interactive TV system.
VOD includes movies, TV and other recorded content stored on centrally located servers available to consumers at any time. Movie distribution deals must be cut with all the major studios. Once the deals are done, the video must be stored on large servers on the telco's premises.
Broadcast TV will be similar to today's multichannel cable or satellite services. Networks and local broadcasters will clamor for new distribution outlets. The biggest issues are getting the video to the telco's network and properly inserting local ads.
Interactive services include HTML- or extensible markup language-based content, either encoded in video streams or directly accessible from the advanced set-top box. Interactive services can be further divided into core services such as e-mail, banner advertising and search on one side, and content services such as home banking, games and weather maps on the other. The main issues are in reformatting these services from use on PCs to use on TVs.
Content servers come in three varieties for the three types of content. VOD content, including local movies and inserted advertising, is housed in large redundant array of inexpensive disks, or RAID-based servers generally made by specialist manufacturers such as EMC, nCube and Seachange. The servers contain MPEG-2 compressed content optimized for between 3 and 4 Mb/s transmission rates. The servers are loaded by receiving satellite downloads of content such as movies (this is how hotel systems receive their movies) or by MPEG encoding taped content such as advertisements.
The second type of content is broadcast TV, but it doesn't necessarily reside on a traditional server. Interactive TV operators will typically receive broadcast content from networks via satellite systems such as HITS and GE Americom. Local content is either received over the air or via traditional telecom data links. Satellite and data link broadcast content typically is received in MPEG-2 format. Depending on the level of compression used by the original broadcaster, the content can be fed directly into the interactive TV operator's data network. Advanced operators may, however, buffer the broadcast content on large disks to allow for time-shifted and on-demand playback much like TiVo and ReplayTV systems provide in the home.
Finally, interactive Web content such as HTML and JPEG images are stored on standard Web servers running specialized software from companies such as Liberate and Microsoft that format content for TV viewing and manage the session with the set-top box client software. The Web servers also can handle access to the broader Internet, and the good ones reformat standard PC-based Internet content for the TV. Banner ads, TV listings, account information, e-mail and e-commerce services are handled through these Web servers.
In regards to the broadband network, the data network from the server location(s) to the DSLAM in the CO should be straightforward for most telcos; however, a few points are worth making.
First, multicasting is required to make broadcast TV efficient. There isn't a data network in the world that could handle the individual transmission of every 4 Mb/s video stream TV viewers want to watch.
Second, quality of service (QOS) is important. The most rational approach to QOS is to deploy IP over ATM.
Finally, traffic estimation for VOD is a new science. Estimates are that one VOD data stream will be required for every 10 broadcast streams during prime time. Telcos have been dealing with issues like this for more than 100 years; cable operators haven't. Advantage, telco.
In terms of local access, forget about 1.5 Mb/s G.Lite for TV service; digital cable and satellite operators broadcast MPEG-2 generally at around 3 Mb/s. It's safe to say that consumers would notice the difference. Studios are sensitive to the quality level at which their content is broadcast and prefer 4 Mb/s, a higher transmission rate than cable currently provides.
Therefore, providers should plan for 5 Mb/s of bandwidth in interactive TV DSL because they will need 10% or so for protocol overhead, and consumers will want to share the data pipe with their PC for Internet access.
Sharing the DSL link brings up two more sticking points. First, operators will want to provide traditional Internet access to the PC through the same DSL modem that supplies the TV. The implication is that the DSL modem will need to support at least two data ports.
Second, every TV that gets the interactive TV service will need a data port and the associated 4 Mb/s of data throughput. Data requirements for multiple TVs quickly add up and outstrip full-rate ADSL. We're a long way from actually having this problem, but the issue needs consideration in the marketing department.
The advanced set-top box needs a powerful processor, a suitable amount of memory, an MPEG-2 decoder and integrated remotes and keyboard for a seamless user interface. Motorola (GI), Pace and Scientific-Atlanta and others make appropriate advanced set-top boxes. In addition, these devices typically are loaded with client software from companies such as Liberate, OpenTV and Microsoft. The job of this equipment is to take the data stream from the DSL modem and interpret it appropriately. If the data contains MPEG-2 video, then it is decoded and displayed. If it's HTML code, then it's interpreted and displayed, as are graphics. The advanced set-top box also performs security and maintenance functions.
One of the more confusing parts of the interactive TV system is the client/server software that runs the show. As mentioned, Microsoft, Liberate and others are the main purveyors of this software. Providers can think of the software as specially designed Web software that provides formatting and data management specially tuned to the TV. However, it is possible to use standard Web software to implement an interactive TV system. This has the advantage of familiarity and, possibly, extendibility. Only time will tell which is the better technology strategy. Among the functions inherent in the software are session control, messaging front-end, parental control, ad and content serving and data gathering.
Last, but certainly not least, are the back-office systems necessary for running interactive TV. Many of the billing and customer care system vendors currently are building in support of interactive TV and VOD, primarily driven by the cable industry. In addition, provisioning support for interactive TV services requires new development and integration from service provisioning vendors. Content management is also an important component of the back-office systems. Because of the difficulties in addressing these critical areas, telcos frequently partner with interactive TV operators that have developed self-contained end-to-end systems.
A matter of time
Motorola, Microsoft, Seachange, Next Level Communications, YesTV and every other supplier of interactive TV technology and service seem to be itching to start delivering TV over telco loops. Given the obvious benefits of finding new revenue sources to raise average revenues per subscriber, it is only a matter of time before telcos take them up on the offer and get into the interactive TV game. By understanding the basic elements of DSL-based interactive TV, telcos will be able to leverage their opportunity.
