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Sun Shines on IPTV

Light Reading
News Analysis
Light Reading
7/8/2005

Sun Microsystems Inc. (Nasdaq: SUNW) is aiming to be the latest big networking and telecom vendor to make a splash in the world of IPTV as the company gets ready to go to market with a brand new video server and a pack of eager partners, Light Reading has learned.

"We are going to go to carriers and offer an end-to-end IPTV solution," says Darrell Jordan-Smith, VP of Sun's global telco industries group. "We'll offer everything from the streaming technology, the processing technology, the storage technology, the Web services technology, the set-top box technology -- all the way down to the devices themselves."

Of course, a sweeping initiative like this isn't out of character, given Sun's involvement in the telecom carrier world already. The company sells servers that power data centers; it built the Java computer language that runs millions of cell phones and PDAs; and, more recently, its service delivery platforms are powering more and more carrier applications (see Sun Announces SDP Plan, System Vendors Sight SOA, KT Shines on Sun ).

Like other big-iron vendors such as IBM Corp. (NYSE: IBM) and Hewlett-Packard Co. (NYSE: HPQ), Sun will partner with a variety of yet-to-be-announced vendors to assemble a complete IPTV system. "We're going to have an architecture in conjunction with companies like Sony, Phillips, and other big consumer-based businesses," Smith says.

Smith says Sun has been talking to carriers about IPTV for some time, but its plans will become more apparent in the market in the next six-to-12 months.

Specifics of Sun's market rollout and carrier trials aren't available, but sources say a major component of Sun's IPTV play will be the technology developed by its founder Andy Bechtolsheim at his most recent startup, Kealia Inc., which Sun acquired in 2004 (see Kealia Project Raises Questions, Cisco Big Bolts for Startup, and Sun Deals for Handy Andy).

Sun's yet-to-be-announced video server, called Streamstar, is based on the digital video server technology Bechtolsheim was developing at Kealia, Light Reading has learned.

Sources say the Streamstar team, housed inside of Sun's Network Systems Group, is building the hardware and software for the next-generation video servers that will power Sun's IPTV efforts. That solution will include storage devices to handle large libraries of movies and other media, high-powered content switches, and servers capable of handling a high volume of requests from users that want to customize their own video experience.

Consumer-customized content is a key differentiator for telco IPTV because it allows for carriers to offer local events coverage and other items national satellite TV vendors and most cable providers can't match. But Sun's model doesn't put all the control at the end of the line.

Indeed, Bechtolsheim's pitch to broadcasters at the NAB2005 conference earlier this year highlighted network-based video recording capabilities -- a sort of gigantic TiVo that serves thousands of users much like a Web server hosts thousands of customized Web pages.

"The advantage is that the ad insertion behavior is completely under central control, and can range from no-skip to mini-ads... to any other business model that is acceptable to advertisers," Bechtolsheim noted in his presentation.

Sun, natch, will face some big competition from HP, IBM, the Microsoft Corp.-Alcatel duo, UTStarcom Inc. (Nasdaq: UTSI), BroadStream Communications Inc., Eagle Broadband (Amex: EAG), and others.

As an example, IBM's IPTV plan also revolves around using its own servers and storage devices while bringing in partners to help with all the other bits. IBM has partnered with video infrastructure companies such as Arroyo Video Solutions Inc., Entone Technologies Inc., and Kasenna Inc.; software companies such as Kasenna, Microsoft, Myrio Corp., Orca Interactive Ltd., and Thales Broadcast & Multimedia; broadcast headend companies such as Envivio Inc., Harmonic Inc. (Nasdaq: HLIT), Scientific-Atlanta Inc. (NYSE: SFA), and Tandberg Television; and set-top box makers such as Amino Technologies plc, Entone, Kreatel Communications AB, Scientific Atlanta, Thomson (NYSE: TMS; Euronext Paris: 18453), and others.

Sun hasn't announced its partners yet, but Light Reading sources say the company is working closely with interactive TV software provider Digisoft.tv.

Smith won't divulge all of Sun's IPTV plans. But he says the company is telling carriers it can change the economics of IPTV delivery. And he says its solution is being tested with carriers in North America, Asia, and Europe.

Though Microsoft is dominating the big carrier landscape at the moment, Sun says it is poised to capitalize on carrier worries of giving too much control to Microsoft.

"They don't believe that Microsoft has open standards," says Smith. "And they don't want to be locked into Microsoft's media player because they feel like MSN competes with them as a service provider."

— Phil Harvey, News Editor, Light Reading

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tsat
tsat
12/5/2012 | 3:08:26 AM
re: Sun Shines on IPTV

Sun does not have a very good track record in competing head-to-head with Microsoft.

However, Microsoft has proven that it can really mess up on technologies outside of Windows and Office products.

Best of luck to Sun.

-tsat
materialgirl
materialgirl
12/5/2012 | 3:08:25 AM
re: Sun Shines on IPTV
Maybe this is why they spent $4.1B on STK, to have a monster storage story behind all of this.
rjmcmahon
rjmcmahon
12/5/2012 | 3:08:22 AM
re: Sun Shines on IPTV
The mystery in my mind is what can a technology provider do about the outside plant/access problem? I don't see how these technologies get out of the labs and into the fields without somebody first solving that problem. On a similar note, I've noticed that Google invested in powerline carrier recently. To date I have heard of verly little real penetration coming out of such efforts from the power companies. It all makes me wonder if these technology providers have a viable plan.

I don't mean to sound disparaging towards these efforts. I wish them both the best of luck as our society will benefit from their success in these areas.
nosehairs
nosehairs
12/5/2012 | 3:08:21 AM
re: Sun Shines on IPTV
Perspective is an interesting thing: a common concern for companies developing the outside plant has been "why will anybody need 100 Mbit/sec data service to their house?" and now your concern is "how will this service be delivered to the subscriber?" Fortunately, there have been many companies developing both aspects.

The point is, Sun doesn't have to do anything about the outside plant. All Sun needs to provide is an IP spigot which supplies digital video at the headend, and a device (settop box) at the subscriber end to extract the digital video from the IP stream and convert it to standard video formats for subscriber viewing. The service provider has the rest of the system which brings the IP stream from the headend to the subscriber.

Most cable TV companies already offer a highspeed IP service via DOCSIS. Most telephone service providers already offer highspeed IP service via DSL. There has also been a quiet swelling of Fiber to the Home for more than 10 years, and Verizon is now deploying fiber on a large scale (3 million homes by the end of 2005, 15 million by 2008). I.e., the outside plant isn't a problem.

This equipment from Sun could be deployed by telephone companies, cable TV companies, Satellite TV companies, as well as hospitality companies (video service in your hotel room) or large residential buildings (video service in your apartment or dormitory). It's a potentially huge market, and of course, there's plenty of competition.

If there's a mystery to this whole system, it's not with the technology, but rather with the legal rights to own and/or distribute the video content. Napster and MP3 audio was just the beginning.
rjmcmahon
rjmcmahon
12/5/2012 | 3:08:20 AM
re: Sun Shines on IPTV
The point is, Sun doesn't have to do anything about the outside plant.

I believe the technology providers are dependent upon the outside plant being upgraded before their products will be deployed beyond trials. Unfortunately, at least in the US, those controlling the outside palnt will continue to treat bandwidth as a scarce resource unless somebody presents them with a viable alternative to grow their revenues. A technology provider will have to show that plan. From what I read from the article the suggested plan is advertising based. I haven't heard of any advertisers taking an interest in building out outside plant infrastructures.

There has also been a quiet swelling of Fiber to the Home for more than 10 years, and Verizon is now deploying fiber on a large scale (3 million homes by the end of 2005, 15 million by 2008). I.e., the outside plant isn't a problem.

I'm skeptical about these forecasts. Some numbers I've read say that as of March-05 in the US there were 1.6M homes passed with 213,000 FTTH homes connected. http://www.bbpmag.com

If there's a mystery to this whole system, it's not with the technology, but rather with the legal rights to own and/or distribute the video content. Napster and MP3 audio was just the beginning.

The beginning of what exactly? I don't think any credible technology provider will be involved with promoting piracy to support their business.

Anyway, best of luck to them. Our country sure could use some successes in this area.
nosehairs
nosehairs
12/5/2012 | 3:08:19 AM
re: Sun Shines on IPTV
At this point, I believe the need for bandwidth is well understood by those controlling the outside plant, so I don't think Sun or any other technology provider has to give a sales pitch for more bandwidth. What Sun has to do is differentiate its system from the competition, and according to the article Sun believes it has a better method of inserting advertisements into the video stream. Of course, advertisers don't build the OSP, but they do buy airtime from the service provider, who builds the OSP. So, if Sun's system provides the best method for the service provider to insert commercials from advertisers, then Sun has provided the service provider with a method to grow their revenues.

You may be skeptical about the FTTH forecasts, but my point was that there are multiple technologies currently available and deployable that will provide the bandwidth necessary for IPTV. I made this point because your initial post implied that these technologies don't exist, and therefore somebody must first solve the bandwidth problem. All I'm saying is there are multiple solutions available for the bandwidth problem. Now it's up to the service providers to decide which solution will work best for them. And of course, with IPTV, the only requirements of this technology are bandwidth and IP (it could be copper phone lines, copper power lines, fiber, wireless, or a wet string).

I didn't mean to imply that Sun will promote pirating to support their business. I'm merely raising the issue of the battle over who will be allowed to own and/or distribute video content. What will a telephone company need to do when it wants to distribute video content? Will it need to establish a separate franchise in each municipality? What will a hotel need to do if it wants to set up its own internal video service? How about a dormitory, or a large housing complex? What if I want to start hosting an IPTV service from my basement? The point is that we now have technology which allows us to easily copy and distribute video content, and everyone involved in generating that content will want a cut.

My reference to Napster and MP3 audio was more about how music distribution changed dramatically over a short period of time. Just as the audio casette recorder and the video casette recorder changed the market in their time. E.g., on the internet you can easily download music files from many different sources (legally and illegally). Will IPTV evolve in a similar fashion? Or will I only be able to get IPTV from my ISP?
nosehairs
nosehairs
12/5/2012 | 3:08:18 AM
re: Sun Shines on IPTV
I just read through the Video Choice Act of 2005, which was introduced in the US Senate on June 30, 2005. It addresses many of the questions I raised about who will be allowed to provide IPTV, and how they must proceed. Of particular interest is the following clause:

"Redundant Franchises Prohibited- Notwithstanding any other provision of this Act, no competitive video services provider may be required, whether pursuant to section 621 or to any other provision of Federal, State, or local law, to obtain a franchise in order to provide any video programming, interactive on-demand services, other programming services, or any other video services in any area where such provider has any right, permission, or authority to access public rights-of-way independent of any cable franchise obtained pursuant to section 621 or pursuant to any other Federal, State, or local law."

Cool.
rjmcmahon
rjmcmahon
12/5/2012 | 3:08:18 AM
re: Sun Shines on IPTV
nosehairs; Thanks for the thoughtful response. I'll be cheering for Sun in their IPTV efforts. Hopefully my outside plant worries are overblown and these products find their markets and do very well.
OldPOTS
OldPOTS
12/5/2012 | 3:08:16 AM
re: Sun Shines on IPTV
Other than the 'Video Choice Act of 2005' (See 'Picture Fuzzy for Video Franchise Bills'), what stops someone from attaching the SUN system to a network and delivering IPTV, much like Vanage does for VoIP??

OldPOTS

PS There are currently many ways to legally require that the Sun system be attached to a network, under the Data definitions rulings. Been there, done that many times.

Next: email response to Rep. Joe Barton (R-Texas)
OldPOTS
OldPOTS
12/5/2012 | 3:08:04 AM
re: Sun Shines on IPTV
UPDATE

The Texas legislature is at it again. Texas legislation, in special session, may pass a state franchise arrangement for telcos.

The proposed legislation would allow telcos to receive a statewide franchise for their new services, rather than pursuing agreements with individual cities as cable companies must do now.

The cities could lose revenue from their agreements with cable companies and telcos could discriminate by cherry picking affluent neighborhoods and ignoring low-income areas. This could have a chilling effect on economic development of cities

OldPOTS
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