We Want Our Packet TV!

A flurry of recent news about IP-based television products seems to signal market growth. After all, where there's smoke, there's fire, right? The announcements point to activity in the area of packetized television, which would allow broadband service providers to package video service with Internet access (see Digital TV: Who'll Tune In?). But even with excitement building, it's clear that only parts of this puzzling market are taking off.

Let's start by reviewing the latest announcements:

More announcements are on the way, too: Next Level Communications (Nasdaq: NXTV), which makes broadband access equipment that supports multimedia, is on the verge of announcing a contract with Canada's fourth-largest carrier. SkyStream Networks Inc., which makes IP TV gear, plans to announce a sizeable contract win next week.

Still, only some of the news seems aimed at the market hotspots, according to Ryan M. Jones, media and entertainment strategies analyst at Yankee Group.

He says the largest market opportunity today is coming from cable operators, who are intent on making the most of their network resources by putting video over data-oriented transports like Ethernet. In contrast, he sees the video-over-DSL market, which consists chiefly of small, independent telcos, as more iffy.

"The TV-over-DSL market has movement in it, but it's very fractionalized, more scattered. The opportunity on the cable side is very much larger and more straightforward," Jones says. He notes that until the RBOCs are freed from some of their regulatory contraints, which could happen in 2003, it will be tough to see ongoing dependable activity in the video-over-DSL market.

The vendors themselves have differing opinions on the market segmentation. Tut sees its chief opportunity with independent telcos, where it currently has a presence, and with European PTTs. "The independents aren't as affected by the telecom downturn as the RBOCs," says Mark Carpenter, executive VP at Tut. He says Tut's mission is to extend video content over any access network, using its newly acquired gear to help and partnering with third-party makers of access networking equipment, such as Alcatel SA (NYSE: ALA; Paris: CGEP:PA) or Advanced Fibre Communications Inc. (AFC) (Nasdaq: AFCI), and Next Level.

In contrast, Internet Photonics sees its key market where Jones does, in helping cable operators make more efficient use of existing facilities that often run video and data on separate networks. Putting both data and video over Ethernet is seen as a key strategy for unification. "I think this could be a $500 million market before 2006," says Gary Southwell, VP of marketing.

Optical Solutions sees a combination of independent telcos and cable operators as key to its future success. "I would predict that as independent telcos, municipalities, and the former Bells get involved in video, the majority will be digital," says Darryl Ponder, CEO of Optical Solutions. From his viewpoint, that spells opportunities for any kind of access technology that can handle video, including PON.

Coincidentally, video over IP is the subject of a new Light Reading poll. To participate, click here.

— Mary Jander, Senior Editor, Light Reading
BobbyMax 12/4/2012 | 9:24:07 PM
re: We Want Our Packet TV! All these technologies are interesting but have little or no commercial value. The PON technology has been around for a long time but did go anywhere because of lack of interest on the part of RBOCs. It appears that RBOCs would be interested in providing packet technology over DSL.
BobbyMax 12/4/2012 | 9:24:06 PM
re: We Want Our Packet TV! All these technologies are interesting but have little or no commercial value. The PON technology has been around for a long time but did go anywhere because of lack of interest on the part of RBOCs. It appears that RBOCs would be interested in providing packet technology over DSL.
Dr.Q 12/4/2012 | 9:24:04 PM
re: We Want Our Packet TV! Video over IP has the potential to challenge the existing broadcast networks and the nascent digital TV market.
The (US) broadcast industry is currently going slow on converting to (congressionally mandated) digital format, with the stated excuse that there are not adequate safeguards to prevent recording & piracy of the programs. [They are worried about such things as people recording the program, then watching it at another time and blipping over the commercials. One industry president has gone so far as to assert that viewers have an implied contract to watch the commercials.] Content producers are also concerned about piracy, whether it be digital broadcast, DVD or audio CD. While there are legitimate concerns being raised, footdragging for any reason may wind up costing them a major piece of the market.

Here's how:
The new era digital distributor needs to control the software for playing the content--much like AOL distributes (free) its access software. This could be distributed free, or could be licensed for a monthly fee. Each copy of the software would have a unique registration number.
A user would order and download the content (movie, music, TV program, etc) directly from the distributor, supplying the registration number of his player. The content would be encrypted by the distributor before it gets downloaded. The content file could contain certain encryption that so that it could only be used by the software with a specific registration number. Other embedded limits could be that the content could only be played a certain number of times, or for a certain time period. The content distributor would have the ability to "upgrade" the player software periodically to thwart hackers who found ways to defeat the encryption (much like AOL or Microsoft periodically forces consumers to upgrade).

The winning strategy requires getting this type of service in place and getting a significant market share before the traditional broadcasters. This will offer content producers the security that digital broadcast lacks, making it more attractive for them to distribute through this outlet than through broadcast, which should in turn increase the number of subscribers.

. . . just a crazy idea, but it might work.

-Dr. Q
optical Mike 12/4/2012 | 9:24:03 PM
re: We Want Our Packet TV! Bobby, are you as ignorant as you seem?

Just because the RBOCS have not announced any large scale PON deployments does not mean they are not interested. The greedy self serving BOC's will squeeze every bit of revenue they can out of the copper for as long as the can. If they had their way we'd all still be using nothing but dial up. With Fiber to the Home deployments up over 200% this year and upwards of 300% next year, you will see that the more access line they start to lose the more interested they will become.

whyiswhy 12/4/2012 | 9:23:58 PM
re: We Want Our Packet TV! Precisely because, for consumer markets:

1) Excessive overhead in IP
2) Optimized for point to point transport
3) DSL does not have the bandwidth needed
4) You can't get DSL installed anyway
5) Coax and satellite is already there

For enterprise markets:

1) Large scale video in the enterprise is a toy with no value added.
2) Already exists for group meerings
3) Presumes more bandwidth than exists to make it useful for sales.


1) 802.x wireless appliances like digital cameras etc with VidoIP (or a wireless card) will eventually sell...eventually.

lightgrieving 12/4/2012 | 9:23:32 PM
re: We Want Our Packet TV! While I agree the concept of packet tv is neat but is a an alternative ? How will it support the concept of multidrop within a household without overcharging for increased bandwitdh required (the old argument cable companies used to fight sattelite)- sure it could be broadcast at the customer prem, but idea is to enable independently tunable units.
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