Pay-TV operators denied that the set-top box would disappear up into the cloud anytime soon at the recent Connected TV Summit in London.
They also scotched the idea proposed by some leading Telcos that the set top could effectively be replaced by smart TVs with the User Interface then rendered from the cloud. Perhaps more surprisingly they were dismissive of network storage at least in the shorter term, arguing that consumers would continue to want their own storage and were not yet ready to entrust the network totally for access to their own content.
“Having direct storage available for my own use is important for me as consumer,” said Alan Smith, senior product manager at DirecTV, the world’s largest satellite operator, speaking on behalf of his subscribers during one of the summit’s panel sessions.
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This line was supported by at least one major Telco, Telefonica, which is currently deploying its GVP (Global Video Platform) to deliver IPTV and OTT services worldwide, based on the Microsoft Mediaroom TV software that has now been acquired by Ericsson.
“Consumers don’t want to rely on the connectivity, so they store everything in the house,” noted Francisco Jose Menendez Recio, senior product manager at Telefonica Digital, the company’s division based in London focusing on emerging multimedia opportunities.
The rights issue was also a factor discouraging network PVR, according to Charles Cerino, former VP for new media at Comcast, the world’s biggest cable operator, and now president of MoCA (Multimedia over Coax Alliance). The issue was one of control, with consumers knowing that once they have recorded a program on their own in-home DVR then nobody can take it away from them. “There is the risk of having content deleted if the owner pulls the rights, if it is stored in the cloud,” said Cerino. Consumers might be led to believe that cloud storage is the logical equivalent of home based DVR, but this is not yet the case, given that rights usually have to be negotiated separately for the two.
The ability to control the service and ensure quality was cited as a key factor in ensuring the longevity of the dedicated service box by John Civiletto, executive director of technical architecture at U.S. cable company Cox Communications during the same panel. “We absolutely today offer a full service gateway and I don’t see that changing for a few years,” said Civiletto.
The most compelling factor though was economic, according to Paul Bristow, VP Strategy, Consumer Experience & Middleware at Swiss headquartered set top and gateway vendor ADB (Advanced Digital Broadcast). Bristow argued that the capital costs of deploying dedicated boxes were invariably outweighed by the operational savings through reduced numbers of home visits to fix problems. The cost of the box is equal to just two or three home visits over its lifetime, and the incidence of callouts as well as duration of support calls is greatly reduced by having dedicated hardware on site, Bristow contended.
Yet, such views contrast starkly with the line being taken by a few of Europe’s big Telcos over their IPTV services, notably German incumbent Deutsche Telekom and Telia Sonera, the dominant operator in Sweden and Finland with operations across the Nordics and Central Europe. Deutsche Telekom has been particularly aggressive in its drive to virtualize the set top with Gerry O’Sullivan, its SVP Global TV and Entertainment, having earlier called on pay-tv operators to cut down ‘sacred cows’ and consider future business models which do not rely on hardware in subscriber households.
This has fallen on deaf ears. Meanwhile, however, Deutsche Telekom is actively pursuing this strategy in trials to evaluate whether rendering the whole UI and browser from the cloud is feasible, with the main issue being over latency, since any delay when a customer presses a button on their remote would be unacceptable. Another question is whether the network can cope with the increased unicast traffic generated by cloud based storage, quite apart from the rights issue cited by Cerino and others.
Deutsche Telekom’s set top virtualization project is being led by its T-Labs group and currently being evaluated in a yearlong pilot trial due to end December 2013 at its Croatian subsidiary T-Hrvatski Telekom. This trial looks like being successful but then the service is only being offered over all fiber infrastructure at download speeds of 1Gb/s, which are hardly typical of IPTV services around the world. By throwing bandwidth around the problems of latency and unicast overload can both be solved easily enough, and again for a Telco owning the end to end pipe support costs can be kept down.
In any case, it is not clear that Deutsche Telekom is entirely dispensing with dedicated hardware in the home since it may be relying on cooperation of smart TVs to ensure quality of service and end-to-end control. This is certainly the case for TeliaSonera, which has allied with Smart TV maker Samsung to launch an IPTV service that avoids the need for a set-top. Instead, TeliaSonera subscribers use Samsung's smart TVs for service features.
This of itself is a substantial cost and also it is not clear how smart TVs will be upgraded to support emerging features. Samsung responded to criticisms on this count by introducing its Evolution kit to upgrade its latest smart TVs by plugging in a USB stick. But this is not an ideal solution and has itself been criticized because, while it avoids need to replace the TV within the lifetime of the display unit itself which may be up to 10 years, it still requires a new stick each year likely to cost $200 or more.
The takeaway here is that the virtualized set top is still very much work in progress even for those big Telcos with the resources to deploy such platforms.