General

IPTVComplete

Don't want to build your own cable head end? Don't bother. You can outsource the whole IPTV thing.

by Gerry Blackwell [March 4, 2005]

Big response
The partners were already convinced a substantial market would emerge. Based on the early response, they now feel they may if anything have underestimated demand. Shapiro cites a study from market research firm In-Stat, showing that 50 to 75 independent telcos in the U.S. are already offering IPTV services, and that 70 percent of the rest say they will be offering pay TV services within 12 to 24 months.

"It means that 1,000 of those phone companies are looking to get into the video business in the next 24 months," Shapiro says. "And that's just one target segment. The other main one is new broadband providers. Cable companies are another. There's tremendous interest across the board."

Cable companies may turn to IPTV because the signal quality is better but requires less network capacity. This is both because of bandwidth efficiencies and because providers don't have to broadcast full bit rate signals for all channels at once to all receivers as they do with traditional broadcast technologies. With IPTV they send only the content the subscriber requests.

New broadband providers could include municipalities, real estate developers—and ISPs. Assuming an ISP controlled its own broadband access network—which of course eliminates many that only resell telco DSL services—"there is no reason they couldn't benefit," Shapiro says.

"All the benefits for telcos and others—the benefits of being able to offer a stickier bundle, of increasing ARPU and decreasing churn—all apply just as well to ISPs. We certainly believe there is a great opportunity for ISPs to benefit. It's really just a function of how interested they are in capturing new revenue streams—and I think they will be very interested."

He had already received one, as yet unreturned, phone message from a western wireless ISP who offers Internet access and VoIP services. Shapiro quotes the caller as saying that IPTVComplete was "exactly the thing we're looking for to add video to our services bundle."

Certainly Eagle and GlobeCast make strong claims for the service's benefits, and their qualifications for putting it together. Eagle has several years experience supplying value added services, including IPTV services, to broadband providers, mostly fiber to the home network operators. It also designs and manufactures set top boxes. GlobeCast, as well as being a major satellite carrier, also offers direct-to-home and cable services in many markets.

The super cities
The partners have established two "super headends"—one in Miami, one in Los Angeles—where they aggregate content from a variety of sources, encode and encrypt it, and transmit it, using GlobeCast satellite links, to the remote headends they install at the customer's POPs. The remote headend outputs an IP stream that can be transmitted over any IP broadband network.

The remote headend alone could cost a do-it-yourselfer from $1 to $2 million, Shapiro says. Then there is the considerable up-front cost involved in acquiring content rights. "The process of securing video rights is extremely time consuming," he notes. "And if you don't have the contacts at the broadcasters and studios, you often can't even get your foot in the door. The cost associated with this process is significant."

The content offered with IPTVComplete includes all the standard network and studio content that satellite and cable TV providers deliver today, plus almost 100 channels of ethnic content from all over the world, for which GlobeCast, an international player, has exclusive North American distribution rights. The ethnic content is important, Shapiro says.

"One of the things the Yankee Group says is that broadband providers cannot just offer a me-too service, they can't just compete on price. They have to offer something better, otherwise they won't be able to lure customers away from competitors—especially if they're getting a triple-play service from the cable company. The special content for ethnic audiences allows broadband providers to differentiate their offerings. Plus, they can charge a premium price and get a higher average revenue per user."

The huge reduction in time to market—crucial if Shapiro is right about the urgency of demand in some sectors—is largely the result of eliminating the need to secure content rights. But it's not the only factor. "What we have learned from our experience in IPTV is that there are lots of steps involved, a lot of component pieces," Shapiro says, "Even if you're experienced at it and know what you're doing, it can be time consuming. If you don't, it will take that much longer."

Eagle and GlobeCast not only know what they're doing, Feldman says, they have it down to a science. "We have a standardized package of hardware and system software. If you say, 'I would like to take your service,' we package up the equipment and know exactly how it has to be installed. We take a cookie-cutter approach and will drop basically the same system in everywhere we go."

Instant IPTV. Just add broadband network and stir.

—End

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