AT&T, Verizon Want to Wholesale IPTV

It's early days, but AT&T and Verizon are already looking ahead to licensing their IPTV platforms.

Mari Silbey, Senior Editor, Cable/Video

March 8, 2017

7 Min Read
AT&T, Verizon Want to Wholesale IPTV

A definition of platform licensing: Once you've invested the resources to build something massive for yourself, why not also sell it to others for a profit?

At Mobile World Congress this year, both AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) touted their new IPTV platforms as wholesale video service solutions. Not only do they want to sell their IPTV services to consumers, but they also want other network operators to pay for the opportunity to do the same.

There's a question, however, about whether these new platforms are robust enough for business customer use. So far, AT&T has suffered several highly publicized outages with DirecTV Now, and Verizon hasn't even launched its next-generation Fios service yet despite years of preparation. Do the AT&T and Verizon platforms deserve consideration by other network operators? Or is this a case of putting the cart before the horse?

The AT&T model
When AT&T bought the Canadian company Quickplay last year, the telco went from being an external customer to an internal one of the Toronto TV technology specialist. However, even with many of Quickplay's resources wrapped up in supporting AT&T's DirecTV Now service, the acquired company continues to sell its technology stack outside the halls of its new corporate parent. (See AT&T to Buy Streaming Expert QuickPlay.)

Figure 1: Quickplay was front and center in the AT&T booth at Mobile World Congress 2017. Quickplay was front and center in the AT&T booth at Mobile World Congress 2017.

Calling its solution a virtual pay-TV infrastructure service, Quickplay offers virtual video headend capabilities, middleware, a virtual set-top software client, content management functions, billing integration and personalization features. Early versions of the technology have been used by operators like Rogers Corp. , Telus Corp. (NYSE: TU; Toronto: T) and Singapore Telecommunications Ltd. (SingTel) (OTC: SGTJY) to launch TV Everywhere services. But with the DirecTV Now product, Quickplay has ventured into powering a complete, standalone OTT video service. And it wants to bring more customers for that OTT offering on board.

In Quickplay's favor, VP Kavi Maharajh says the company is already processing around 20,000 on-demand views per month and more than 1,000 linear channels through its headend. Maharajh also claims that implementing Quickplay's platform can save customers as much as 70% versus building an IPTV service in house and increase speed-to-market significantly. The goal with the platform, says Maharajh, is "to be able to launch products in nine months or less."

Maharajh believes the sweet spot for Quickplay's technology is North American mobile operators, in addition to video service providers of all types internationally. He also predicts that many Tier 2 and Tier 3 operators will make their decisions about launching new OTT products either this year or next, giving Quickplay a near-term window to secure new business.

Adding to the story, CenturyLink Inc. (NYSE: CTL) in the US recently announced that it's evaluating the DirecTV Now solution as a possible alternative to mounting its own IPTV product. (See CenturyLink Embraces OTT Video.)

Figure 2: DirecTV Now was everywhere at the AT&T booth in Barcelona. DirecTV Now was everywhere at the AT&T booth in Barcelona.

However, there are potential pitfalls with the Quickplay platform as well. As Maharajh points out, going in-house with AT&T has given Quickplay access to substantial new data center infrastructure, which should improve overall service performance. Yet it's specifically a lack of reliability that has tainted DirecTV Now, powered by Quickplay, in its early months after launch. The service suffered several serious outages in December and January, and yet another glitch that affected program guide delivery in late February.

AT&T SVP Tony Goncalves has put these early problems down to "pure volume" and suggests that AT&T is still working the kinks out of operating the platform at scale. However, if AT&T can't make the IPTV service work consistently for itself, will it be able to offer anything better to potential licensees? And should the telco be extending itself further when resources are already an issue?

Next page: Verizon launches Exponent

Verizon launches Exponent
Verizon has been marketing video services to content providers for years, but with the launch of its new Exponent business unit, the company is now consolidating all of its wholesale services in one place. (See Verizon's Exponent Exports Its Expertise.)

Figure 3: Verizon showed off its new Exponent media services at MWC 2017. Verizon showed off its new Exponent media services at MWC 2017.

Media services are just one piece of Exponent, but they tie in a lot of the expertise that Verizon has developed (and acquired) over the last several years. Through Exponent, Associate Director Martin Busse explains, Verizon can sell an end-to-end video platform that includes video ingest, a white-label video client, reference hardware, features like cloud DVR, data analytics and targeted advertising.

"Fios is a customer," says Busse, noting that the next-generation IPTV platform Verizon plans to introduce as an upgrade to its existing Fios service is the model for what the telco plans to sell to other operators. (See This Is the New Fios TV From Verizon.)

Figure 4: Verizon's Martin Busse held up one of the company's new IP set-tops for its next-generation Fios pay-TV service at Mobile World Congress. Verizon's Martin Busse held up one of the company's new IP set-tops for its next-generation Fios pay-TV service at Mobile World Congress.

The problem with Verizon is that it's arguably even less proven as a pay-TV platform provider than AT&T. On the one hand, Verizon has gotten very good at video delivery. Walt Disney Co. (NYSE: DIS) is one of its customers. On the other hand, many of the other components that go into Verizon's end-to-end solution have been in development for years internally, and the telco still hasn't launched a full-fledged, premium IPTV service.

Want to learn more about pay-TV technologies? Sign up now for Light Reading's Cable Next-Gen Technologies & Strategies event on March 21-22, at the Curtis Hotel in downtown Denver.

To understand the historical context, Verizon announced its acquisition of Intel Corp. (Nasdaq: INTC)'s OnCue business with great fanfare in early 2014, saying its goal with the buyout was to introduce more IP-based services into its Fios offering. Specifically, the company said at the time that it expected to use the OnCue assets to "integrate IP-based TV services with FiOS video to further differentiate FiOS video from traditional cable TV offerings and reduce ongoing deployment costs." (See Verizon Snatches Intel Media Assets.)

Three years later, and Verizon has introduced its Go90 mobile video service, but there's still no next-gen version of Fios available. According to one industry source, the IPTV launch has been plagued with delays, and while Verizon hasn't said so publicly, it appears the product development process hasn't gone quite according to plan.

As with AT&T, Verizon may very well iron out the wrinkles with its IPTV service, but it hasn't done so yet even as it's already marketing the platform to other providers.

Licensing can work
Platform licensing can be a very effective model. In the pay-TV industry, Comcast Corp. (Nasdaq: CMCSA, CMCSK) has already proven as much with its X1 video service, which the cable company now wholesales to Cox Communications Inc. , Shaw Communications Inc. and Rogers. The difference between Comcast and its telco counterparts is that the cable operator perfected its next-gen video platform internally before selling it to others. (See Rogers Dumps In-House IPTV Product for X1.)

There's another challenge facing AT&T and Verizon too. There are a lot more competitive IP services entering the market now. YouTube Inc. unveiled its TV service just last week, and Hulu LLC is expected to launch its pay-TV product within months. (See Will YouTube TV Hit OTT Sweet Spot? and OTT Went Big in 2016, Aims Higher in 2017.)

It's not yet clear how many of these offerings the market will ultimately be able to support, and it's also not clear whether AT&T and Verizon will be able to stand out from the fast-growing crowd. At a minimum, the two telcos need to prove that their services work for their own subscribers.

Then maybe they can move on to a successful IPTV wholesale business.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

About the Author(s)

Mari Silbey

Senior Editor, Cable/Video

Mari Silbey is a senior editor covering broadband infrastructure, video delivery, smart cities and all things cable. Previously, she worked independently for nearly a decade, contributing to trade publications, authoring custom research reports and consulting for a variety of corporate and association clients. Among her storied (and sometimes dubious) achievements, Mari launched the corporate blog for Motorola's Home division way back in 2007, ran a content development program for Limelight Networks and did her best to entertain the video nerd masses as a long-time columnist for the media blog Zatz Not Funny. She is based in Washington, D.C.

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