Video DSL: Coming Soon to
A Computer Screen Near You

Video over DSL may be a working reality sooner than you think. Why mess with creating voice-based revenues at your Internet services when you could set your sites on delivering video programs to your DSL users?

by Jim Thompson
[November 29, 2000]

ISPs that endured the pain of deploying digital subscriber line services are looking for ways to make the investment payoff. One value added service at the top of the list—video.

Telly sanctum
DSL access continues to gain ground and competition for subscribers is heating up. Naturally, service providers are looking ways to increase revenues by leveraging high-speed copper lines for delivering video services.

In a new report, Video Gateways: Emerging Telecom Set Top Boxes, Cahner's In-Stat Group analyzed new trends emerging from the DSL marketplace. While most DSL providers view video services as the latest Holy Grail of value-added ventures, it may turn out to be more false prophecy than true profit.

In-Stat analysts predict that the DSL market will attain triple-digit annual growth rates through 2003. Some analysts predict that over the next three years video content via DSL delivery will be as commonplace as DSL access is now. Extrapolated, that means more than several million users would subscribe to DSL-fed video services in the U.S.

Michelle Abraham, In-Stat senior analyst, said ISP owners should start looking at video now, if they want to increase their revenues from providing DSL access in the years to come.

Reality bites video star
Unfortunately, many of these same experts question whether DSL can provide both the speed and reliability needed to deliver video services. In-Stat's Abraham said the answer depends on the specific service and the delivery method employed.

"Some providers, including a service in Canada and another in the U.K., are using ADSL to deliver MPEG-2 video to replace cable companies offerings," Abraham said. "In those cases, they are getting about 6-Mbps. They use 3-4-Mbps for a video stream, another 1-Mbps for Internet access and then there is voice and overhead. "With its Project Pronto, SBC believes it will be able to get 1.5-Mbps to all of its customers, with the majority getting up to 3-Mbps. In that case, they may not be delivering MPEG-2 video but MPEG-4 compression," Abraham added. "I have been told that MPEG-4 can deliver at 1 to 1.4-Mbps video quality that is better than VHS but not as good as an MPEG-2 video transmission."

Videoconferencing, which requires approximately 384 to 500-Kb of bandwidth, is going to be the most popular video service int he near future. In order to maintain a quality video stream, the images should be delivered at 3.7-Mbps or faster. Unfortunately, today's DSL technology can't consistently attain or deliver video at that speed—but the day that it could is rapidly approaching.

Our day will come
One barrier limiting the growth of video services is outdated DSLAMs used in central offices around the country. The newer DSLAMs, which are only starting to be installed, will allow for the smoother transport of video signals. But that doesn't solve the problem for DSL today.

In an odd market twist, consumer interest in set-top boxes is helping drive the demand for video services over DSL access.

As demand for set-top boxes increases, so to will the complexity of the devices. The set-top box that channels video programming into U.S. homes today, could be the command center of home networking controls tomorrow.

For ISP owners, this market shift means you may need to add more services to your DSL portfolio today in order maintain your subscriber base tomorrow.

In-Stat reports that telecom companies are currently active video gateway buyers at working in the marketplace. But service providers, seeking to survive off from niche markets, are following the larger players into the video space.

For example, several ISPs have already started to focus on specializing in DSL access for multiple dwelling units, hotels, cruise ships, senior housing, and hospitals.

One is a profitable number
In-Stat's Abraham said that in the early stages of deployment those ISPs offering video services should seek to supplement, rather than supplant, typical cable television services.

"If there's a choice to watch the latest movie on cable or the Internet, you might want to go with the cable service," Abraham said. "The cable is likely to have better quality and may offer additional features like surround sound."

For the ISP owner, the difference between success and failure in video services may lie in another niche—programming.

Not everything that viewers want to see is supplied by cable or broadcast television. If a view wants to pay for seeing a cricket match, and ISP could supply the feed. Yet another viewer wants to observe a discussion about how to make a quilt, and ISP could supply the programming.

As an ISP owner, you'll need to look beyond traditional broadcast outlets to provide your DSL subscribers with singular programming services.

There are many resources you could tap into for unique video programming. Zoomtown.com and F2 Network are two firms developing original programming and entertainment-on-demand services.

Think of it this way—your ISP could provide DSL subscribers personalized video programming while large DSL providers and set-top box-fed firms provide pasteurized programs for the masses. Your small, independent ISP could out maneuver and compete with larger providers, just because you understand how to serve one customer at a time.

— End

     

Related articles:
	[May 23, 2000]	VoDSL: Opportunities and Confusion for ISPs
	[Jan. 18, 2000]	Added Services Are Key to DSL Success