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A Technology Framework for Wholesale On-Demand IPTV
By: Venkat Krishnan
| In a wholesale market, buyers and sellers of on-demand TV services do business based on mutually beneficial market opportunities and a common technology framework - like this one. | or your margins too low. And if you are a big player and can afford these costs, you will still want to add more customers to further lower your cost base, increase revenues, and raise profits. | ||
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If you are a European telecom operator, you no longer need to own your own on-demand TV system in order to bring on-demand TV services to consumers. And if you already do sell on-demand TV, then you can sell those services to consumers who live outside your network. That's the result of European local loop unbundling (LLU) regulations. That's also good news for ISPs looking to video as a way to attract new subscribers. Broadband connectivity and discount phone service no longer have the market appeal they once did - and competition is fierce. Margins are dropping, churn rates are high and the cost of adding new subscribers continues to increase. ISPs need more subscribers just so they can attract more subscribers - by lowering the cost base. That's why ISPs want their on-demand TV - it's a much fresher value proposition - with something fresh to attract new subscribers every day. |
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That's where telecom LLU comes in. LLU opens the door to wholesaling and wholesaling opens the door to scale. Now ISPs without video services can buy from operators who do. Wholesaling lets operators share platform, content, and operational costs and increase volumes of set-top box purchases - all of which reduce costs per subscriber. Greater size also reduces the percent-age error of subscriber growth forecasts - which reduces set-top box inventory costs. It also lowers the year-on-year costs of Minimum Guarantees (MGs) for premium content - since those can be based on more precise subscriber growth estimates, which can be more conservative.
This is like electricity deregulation in the 1990s - except that then the product was a commodity. Because all players agreed on voltages and frequencies, moving product among wholesale players was straightforward. In other words, there was a common technology framework in place that enabled easy interoperability - and the wholesale market to flourish. |
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| There's just one problem: on-demand TV is expensive to build and operate. Only a handful of major operators can truly afford to create and run their own platforms. Adding to network costs is the cost of content acquisition (e.g., football and premier movies) and high subscriber acquisition costs (> $1,800 / subscriber). Then there's the cost of packaging content in way that will differentiate one ISP from another. Again, it all comes down to scale. If you're not a big player, you won't have sufficient base over which to spread costs and your prices will either be too high |
Wholesaling on-demand TV also calls for a common technology framework - again to enable efficient interoperability among players. This framework will enable any video provider to distribute product on any network, and also enable any network to distribute product er to any small operator. |
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36 Mar 2007 Definitions FREE at www.IPTVDictionary.com
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First Movers See Benefits |
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| Table 1. Example wholesaling scenarios and business benefits that result. | |
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Wholesaling on-demand TV also calls for a common technology framework - again to enable efficient interoperability among players. This framework will enable any video provider to distribute product on any network, and also enable any network to distribute product er to any small operator.
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Costs include: content licensing, customer acquisition and retention, and content delivery (e.g., bandwidth, QoS, and video expertise and capabilities). An on-demand TV o_ering is distributed under its own brand and re-branded by multiple carriers that bring that o_ering to consumers' homes An IPTV operator sells through distribution partners to expand its subscriber base over which it supports _xed costs and scales variable expenses - both capital and operating - to substantially reduce per-subscriber costs A DSL provider o_ers TV services from a third-party without taking the time or incurring the cost of building an on-demand TV system of its own A carrier with excess capacity carries on-demand TV between wholesale buyers and sellers to increase tra_c on its network EXAMPLE SCENARIOS BUSINESS BENEFITS Reduce Costs_ Enhance Value Proposition Generate More Revenue Acquire IPTV Skills Build the Brand TaTbablele 11: . E xEaxmapmle pwlheo lweshalionlge sscaenlianrigos s acned nbausriinoesss a bnende _btsu tshiant eresssu lbt enefits that result. And from Neuf Cegetel
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38 Mar 2007 Definitions FREE at www.IPTVDictionary.com

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skillful partner to provide us with a turnkey solution that could be fully integrated into our current service offering and to allow us to deliver the best entertainment and content service to our clients."
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technology barriers that would slow things down or add costs. Suppose operator A wants to play content to consumers on operator B's network. Just a partial list of possible issues would include: |
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• B's set-top boxes can't decode operator A's content streams • B's electronic program guide (EPG) can't handle A's EPG content • B's customers want content, applications or services that A's platform can't support • A's control system can't control B's set-top boxes • Content playback is not properly formatted for B's users (e.g., mobile phones) • A's playout is too fast for B's set-top boxes or network • Network B can't enforce A's conditional access • Operator A and Network B use different billing systems that don't talk to each other |
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Looking at these issues, it's also easy to imagine what technology decisions might be at fault. One would be if technology pieces were hardwired together rather than deployed as plug-and-play components using standards-based interfaces within an open architecture. Two key pieces of IPTV architecture are the set-top box and the backend software. Software in the set-top box (the client) is responsible for communications with the backend (the server). That includes interpreting control signals (like "play movie"), presenting the EPG, and on-the-fly decoding of content. |
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| Figure 1. The Players. In on-demand TV, operators will enter into opportunistic relationships based on complementary skills and assets. An obvious prerequisite is the technology base to enable these skills and assets to interoperate. | |
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When operators' clients and servers don't interoperate (e.g., my IPTV offering won't play over your set-top boxes) that probably means we're using different vendors' technologies and that there's no easy interface between them. The only option left is for one of us to throw out our technology and adopt the other's. That is likely to be a very expensive barrier to cross - just to complete one wholesaling deal - never mind implement a "white label" strategy where you plan to wholesale IPTV with many different partners across Europe.
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phone display. Other players - a white label IPTV provider, for example - may want their programming selections to populate the EPGs of many different syndication partners - regardless of how they format the overall look of the EPG.
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An open architecture would implement the client in software designed from the ground up to: 1. Be portable across different vendors' set-top boxes and customer premise equipment; and 2. Understand a sufficiently broad diversity of protocols and file formats to handle. • Different content encodings (e.g., DVD, MPEG4, HD) • Different conditional access schemes and encryption methods (e.g., Crytoworks, Nagra) • Different EPG graphic formats • EPG content from different sources to populate different formats . |
In an IPTV scenario, client-side parameters could also include: • Type of conditional access supported • Customer premise equipment (CPE) details - like presence of a hard disk at the client • Encoding format (e.g., C or Java for a mobile phone or HTML for a set-top box or PC) |
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set-top box - it is. Like a web browser, the open set-top box client is no more hardwired to particular set-top boxes than web browsers are hardwired to particular PCs. The model leverages standards like HTML, XML, and Java for a write-once/deploy-anywhere strategy. And just as web browsers can play different content encodings (HTML, CCS, Flash, MPEG4, etc.) so can an open set-top box.
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Another advantage of using web technology is, of course, access to the web itself. A truly native web implementation (as opposed to, say, a native C implementation) poses no hard integration points that prevent the TV from working as a standard web interface. This opens possibilities like playing multiplayer games off the Internet, watching videos downloaded off Google Video, or even setting an Internet-enabled home security system or a heating / ventilation / air conditioning (HVAC) system - all from the TV (or mobile phone or PC - given how the user interface is reformulated based on client context).
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40 Mar 2007 Definitions FREE at www.IPTVDictionary.com

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The Wholesale Service Backend
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to invoke the assets appropriately, and 3) That business rules processing be abstracted as a separate layer apart from the assets to which business rules are applied.
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•Support for the open client • Easy integration with partners' applications and internal IT systems • Support of core network functions in an open way, including -QoS assurance and flow control -Session management |
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Open client support
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| Figure 2. The Wholesale Service Backend. Architecting backend functions into discrete blocks makes it easier to configure the right combination of functions to fit a particular wholesale offering | |
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| agreements. The fundamentals of plug-and-play program-to-program integration are well understood, as are the specific standards employed such as XML, SOAP, DOM, and others. But plugging diverse assets together is just one step. Making diverse IP services play well together is another. That's what backend middleware does today - and will continue to do in the future in support of yet another standard: IMS (IP Multimedia Subsystem). In fact, a service-oriented middleware may be defined as one with 1) robust business rule processing; in support of 2) diverse functional capabilities; and that is also 3) an ideal foundation for IMS. |
(PDV) - i.e., some packets taking longer than others to traverse the network, and the amount of delay can vary from packet to packet. If PDV is too high, service will degrade or fail.
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The question for technology providers is whether standards are in fact employed for: • Feature extensibility • Service flexibility • Partner IT integration |
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Potential wholesale partners will plan a multitude of different applications and services and want to tailor offerings with distinctive look-and-feel, price differentiation, consumer segmentation, and value-added services such as transaction TV. That requires the ability to integrate a lot of different layered services with such core services as business rules processing and client communication. But it also points again to the importance of abstract rules processing - such as to say which three-for-one promotions or which free games are available to which consumers and for how long. 9 Specifically with respect to IT integration, consumers may not know (and probably won't care) that their broadband provider gets its IPTV services from a wholesaler. What matters is that whoever owns the customer relationship offers unified billing and customer service. That means somewhere in the technology framework a billing module exists that, again, is not hardwired to the specific services (including partners' systems) upon which it relies account information. What counts is that modules responsible for providing or processing account information do so in an easily supported transaction stream - such as via XML messages. That way all kinds of different services and service options can not only be offered as points of market differentiation - they can also be one bill - as long as they communicate to the central billing module in an industry-standard way.
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how it's done in one context versus another. As previously described, XSLT style sheets are an example of how to enforce context rules for presentation in consideration of different EPG layouts, CPE resources, and other parameters. One reason for a wholesale technology framework is to reduce technology infrastructure costs. Equally important to the operator, however, is the cost of preparing content for input into that infrastructure. The whole value proposition of on-demand TV is to present and package fresh and exciting content in ways that consumers find attractive and also differentiating from what other ISPs in the same market offer. Operators, therefore, will want to ally themselves with content experts who know how to deploy content in ways that are more scalable across content types, platforms, and wholesale partners. That includes skills in areas like: |
Content creation synergies
Content owners are concerned about theft and digital rights management issues. The rights to broadcast a particular piece of content on TV does not automatically include broadband and mobile rights. Licenses to redistribute a valuable content proposition to wholesale partners, therefore, need to be written in a way that's attractive to other companies. Content could be anything - applications, application services, video, audio, teletext, or whatever. |
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| Figure 3. Technology Framework Conceptual Overview. Based on operator-defined business rules, content passes through several functional layers before reaching the customer as a rich experience. Functions are tailored based on the content invoked at that layer - the right DRM, the right QoS solution, the right payload setup, the right CPE, and so on. The architecture allows decoupling two ways - function and context - that enable robust wholsale support. Functional decoupling means how you perform one function is not hardwired into how you perform some other function -so operators are free to choose the best implementation of each. Contextual decoupling means that the same technology investment works in all different kinds of environments - i.e., networks, QoS policies, end-user devices, or whatever - to enable virtually any wholesale strategy. For the same reason, customer accounting (not shown) is also decoupled and works in a similar way | |
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