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No Tru2way? No Problem

As TiVo Inc. (Nasdaq: TIVO) gains popularity with some MSOs, SeaChange International Inc. (Nasdaq: SEAC) says its IP-based backchannel -- its way of delivering an MSO's VoD content without using tru2way devices -- is ready for prime time.

"At this point, we've productized it. It's pretty much plug-and-play from our perspective," says Kim Wilson, the VP of business development at SeaChange.

His evidence comes from recent MSO dealings with TiVo. Suddenlink Communications , which uses SeaChange's VoD back-office, is preparing to integrate TiVo boxes into its video-on-demand (VoD) platform. Wilson says that implementation closely mirrors the one completed for RCN Corp. , which has tied its VoD system with TiVo "Premiere" boxes in at least two markets so far. (See Suddenlink Boxes Up TiVo Deal and RCN to Expand TiVo 'Premiere' Rollout.)

One difference is that RCN uses SeaChange servers and back-office for VoD, while Suddenlink matches up the SeaChange back-office with servers from Motorola Inc. (NYSE: MOT). But the way in which the TiVo box integrates with the SeaChange's VoD service is similar: The TiVo box uses the regular cable QAM delivery path for video and an IP connection as the return path for all the navigation and stream control functions.

SeaChange and TiVo coined this project internally under the name Cardio, but it's really the same concept that TiVo is proposing to the Federal Communications Commission (FCC) as the agency considers a new set of CableCARD rules. (See Policy Watch: TiVo, Cable Trade SDV Barbs .)

And Wilson says Cardio could be applied to other consumer electronics devices outfitted with CableCARDs. SeaChange hasn't announced anything like that, but the possibilities would include digital TVs or even the new Ceton Corp. device, which lets Microsoft Corp. (Nasdaq: MSFT) Media Center PCs function like set-top boxes. (See Ceton Plays the Waiting Game and Ceton Pitches Cable Set-Top Alternative .)

The idea of using an IP backchannel in lieu of tru2way does have its critics, who claim that the idea is technically onerous, particularly for handling switched digital video (SDV), or that it could leave MSOs exposed to service theft. (See Policy Watch: TiVo, Cable Trade SDV Barbs .)

On the theft question, RCN and Suddenlink are obviously comfortable that the IP backchannel approach doesn't open a way for subscribers to view unpurchased content. (Otherwise, they wouldn't be using it.) [Ed note: By the way, Suddenlink has not confirmed that it will use the IP backchannel approach for its future deployment with TiVo or described, technically, how it will integrate TiVo boxes with its VoD platform.]

As for the technology argument, Wilson says the VoD integration is straightforward, "a cookie-cutter operation." The MSO links its provisioning system with TiVo's, and SeaChange adds a proxy between its system and TiVo's to extract the VoD catalog to the TiVo search database.

Wilson says he wouldn't be surprised to see similar deals bubble up with some operators over the next several months.

The other firms with VoD backoffices for service providers (e.g., Arris Group Inc. (Nasdaq: ARRS), Ericsson AB (Nasdaq: ERIC), and Concurrent Computer Corp. (Nasdaq: CCUR)) will soon mimic what SeaChange has done with TiVo. (We've asked the other vendors to weigh in on their TiVo integration plans.)

MSO fragmentation
However, IP backchannel could spark a religious war that pits the nation's largest MSOs, which have made heavy investments in tru2way and intend to lean on the platform for interactive services, against smaller domestic operators that have had little desire to use tru2way, sometimes due to lack of cash and/or engineering. (See Comcast, NDS Connect on Tru2way , Comcast Closing Tru2way Gap , Cox Guides Tru2way Forward, and Another Operator Shuns Tru2way .)

The TiVo IP backchannel option is gaining in popularity because it steers MSOs away from the Cisco Systems Inc. (Nasdaq: CSCO)/Motorola set-top duopoly; loosens their connections with traditional cable guide and navigation products from Rovi Corp. ; offers a retain path and a way to distinguish their services; and speeds the deployment of applications.

Additionally, TiVo's plans for thin-client boxes could give MSOs a way to stop buying boxes from Moto and Cisco completely. (See TiVo's Crafting a Whole-Home DVR.)

And don't forget the coolness factor: TiVo can receive over-the-top content from sources like Netflix Inc. (Nasdaq: NFLX) and Amazon.com Inc. (Nasdaq: AMZN), if that's what an MSO wants. (TiVo can also block those services at an MSO's request.) That creates an on-demand option for operators that haven't deployed -- or can't afford to deploy -- VoD.

The IP-backchannel route could have drawbacks, as MSOs would get attached at the hip to TiVo, relying on the DVR pioneer to respond quickly when something goes wrong. Operators have lamented the Cisco/Moto duopoly for years, but they could find themselves in a similar predicament if TiVo can't meet their expectations.

— Jeff Baumgartner, Site Editor, Light Reading Cable

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