MPEG-4 AVC to deliver greater bit-rate reduction in coming years

Modulus Video chairman and CEO Bob Wilson expects MPEG-4 AVC to reduce bit rates by 20 to 25 percent annually for the next couple of years.

For IPTV service providers, competing with cable operators over the coming months and years is likely to require the ability to deliver at least one or more channels of HD programming to the home.

The challenge for the majoring of IPTV service providers who don’t turn to fiber is bandwidth. An HD channel requires substantially more bandwidth than SD, and with a limited pipe into the home, that can be a problem.

However, compression advancements such as MPEG-4 AVC are offering IPTV service providers an alternative to a massive rebuild of infrastructure by reducing the bandwidth to needed to transmit HD.

IPTV Update turned to Bob Wilson, chairman and CEO of MPEG-4 AVC solution provider Modulus Video, to gain more insight on the impact that advanced video compression is having on IPTV service delivery.

IPTV Update: How would you characterize the acceptance of MPEG-4 AVC on the part of IPTV service providers to date in the United States and abroad? Will the pace of its adoption accelerate in 2007?

Bob Wilson: First of all, when people talk about IPTV, I always make sure we’re all talking about the same thing, and that is telcos putting video over their broadband networks.

We are seeing a tremendous amount of activity right now on the MPEG-4 front for both high-definition and standard-definition applications. I’m not aware of any significant deployments that are going on that are not happening with MPEG-4 right now. That’s a big shift in the last year.

A year ago, there were still some people working in MPEG-2 and still some discussions about VC-1. Since that time, it seems that well into the 90 percent range of operators have made the call that they are going with MPEG-4 AVC. It is the standard, and it is the way that both here in the U.S. and abroad people are going to be moving video over their broadband networks.

As far as the pace of adoption, we’re absolutely seeing acceleration. I was at a conference a week or so ago, which is a co-op of local telcos. This is not AT&T or Verizon but all of the other guys, about 750 members. According to their NRTC’s executive director, 200 of them already have standard-definition MPEG-2 video applications running on some level of their networks. His estimation was that in the next three years, all of them will not only switch from MPEG-2 to MPEG-4 because of the need to get to HD, but that virtually all of their members have plans to roll out MPEG-4-AVC-based video services over the next three years. So, we see rapid adoption here and a big jump in terms of what the telcos want to do with video here in the U.S.

IPTVU: Please discuss the impact of MPEG-4 AVC compression efficiency on planning for IPTV infrastructure capital expenditure.

BW: What we are able to do now with this technology is present the telcos with a viable strategy to get high-definition TV to their end users. You could put a credible service together with either MPEG-2 or MPEG-4 for standard def. But the only way you can deliver high definition in a cost-effective way is to go with MPEG-4 AVC.

The example I will give you is Verizon. Verizon is spending upwards of $20 billion to build out its network infrastructure right now, and it is running fiber right to the homes of its customers in order to do that. It felt it needed a lot more bandwidth to get its MPEG-2-based system to the point where it can serve multiple HD channels to the home and broadband services and so forth.

AT&T, which is a customer of ours, has got a similar roll-out that it is doing, and it has announced that it is spending in the neighborhood of $4 billion to do that. The real difference is the amount of investment it is making in the network. It’s using ADSL2 technology and running the broadband signals over twisted pair or over its copper service from the neighborhood to the home.

That saves a tremendous amount of money in the network, the labor and so on in order to get the bandwidth to the home. The only way it can do that is to use MPEG-4, and it has as recently as this week announced that by the end of this year, it’ll be in between 15 and 20 markets here in the U.S., providing both standard-definition and high-definition signals to its end users. So going MPEG-4 has a huge impact on the amount of investment you have to make in the network as opposed to the older and more conventional technologies.

IPTVU: Is MPEG-4 AVC efficient enough to allow IPTV operators to deliver one or two HD channels, SD channels, and data services to the home using their existing infrastructure?

BW: The answer is yes, and this is a controversial subject, so there are a lot of differing views amongst the various service providers out there. Again, there is a big difference between Verizon and AT&T. AT&T has been vocal and adamant about the fact that it is going to provide at least one HD service to its customers by the end of this year. its intent over the next two years or so, maybe less, is to get to two HD channels over that twisted pair, again using ADSL2, but pumping the video through there using MPEG-4 AVC. In the case of AT&T, it is using all Modulus Video encoders for HD services.

Everybody is protective of their bandwidth numbers, but AT&T has been pretty open about the fact that it is going to deliver between 20Mb/s and 24Mb/s to the home, and within that payload, it is going to be able to get the video services that it needs, including HD, to be competitive.

IPTVU: Is there room to make MPEG-4 AVC encoding even more bandwidth-efficient? If so, where do you anticipate data rates being for HD and SD in one year’s time and beyond?

BW: On the encoding front, we are seeing upwards of 25 to 30 percent improvement each year on the rates you need to deliver the video. A lot of people are saying you need 2Mb/s plus for standard def and somewhere between 8Mb/s and 9Mb/s for HD. And I think that was a fair number six to eight months ago. I think that with some new products we are beginning to deliver into the market, we’re seeing at least a 25 to 30 percent reduction of that, so we’re delivering standard def at 1.5Mb/s and HD somewhere in the neighborhood of 6Mb/s to 6.5Mb/s. That’s a big, big difference from where we were 12 to 18 months ago when people were saying that at this stage, we’d be expecting 10Mb/s to 12Mb/s to do HD. We have a number of customers around the world delivering HD at 9Mb/s right now, and we have at least one customer who’s committed to our new ME2600 HD encoder, the first one who will be deploying HD probably in the 6Mb/s or 7Mb/s range towards the end of this year. So, the bit rates are coming down pretty dramatically, and we would expect for the next couple of years that 20 to 25 percent annual reduction is very doable.

IPTVU: Will the emphasis on bandwidth efficiency lose its appeal as fiber to the premises/homes becomes more prevalent? Why or why not?

BW: First of all, there never seems to be enough bandwidth no matter how much you have. Just like storage, people find more and more ways to use it and more services they will want to put into the network. So, I think always finding more efficient uses of the bandwidth is critical, and I think it gives the opportunity to the service providers to improve their business models.

On the other hand, it is not clear at all that fiber to the premises will become the norm. Again, Verizon, being the biggest proponent of fiber to the premises, and I think that’s both a technology and strategic decision it’s made that it wants to make sure it has the most bandwidth possible to its end users. It’s a network provider, and its argument is, “We’ll make this $20 billion investment, and we’ll make it pay because we’ll put more services to the home.” It really seems to be standing alone there. All of the other operators that we talk to are bringing fiber to the node or to the neighborhood, but not to the home. Cost is one thing, but time is another problem. Verizon will be much slower in being able to turn up services to its end users, getting fiber to the home because of all the infrastructure and truck rolls it needs to put in place. So, a lot of folks wonder that even if they are successful in getting this done, because it will take them so much longer, is there really going to be an opportunity to compete against the cable guys and satellite at that point.

So, I think there are good arguments on both sides. But the sentiment amongst the telcos is that they will work with the network technologies like ADSL2 and will not be bringing fiber out to the premises, but just to the neighborhood.

IPTVU: Shifting gears to Internet TV for a moment, do you see or anticipate widespread use of MPEG-4 AVC encoding at local TV stations seeking to exploit the Internet as an alternate distribution vehicle for their news and other locally originated programming?

BW: It’s a great question. I don’t know. What we’ve spent most of this discussion talking about is IPTV, which is inside the walled garden — the networks that you pay a premium for to get all of these new services. Outside the wall, there is just as much activity going on with all sorts of new models being experimented with from Apple iTunes downloading video using MPEG-4 to YouTube, which uses the Flash encoder from Adobe.

I think there will be a lot of experimentation a lot of different ways in delivering and consuming video over the open Internet. I think the thing that I’ve always believed about local TV stations is that they have a vast share of the audience because their content is much more relevant to the people who are consuming it. They do the best job with local news, sports and so on. It just seems to me to make a lot of sense that they will be distributing a lot of video via their Web sites in real time and maybe in non-real time to iPOD downloads. And it seems to me that MPEG-4 ought to be at least one of the prevalent standards. But because of the different devices people will use to view that content, not always a PC, but perhaps a mobile phone over some WiFi network or some other mobile device, I think we’re going to see some other forms of encoding beyond MPEG-4 that maybe don’t deliver the same quality, but because of the limited bandwidth, at least get you a credible looking image. Things like the Flash encoder from Adobe are just such a vehicle.

IPTVU: Is there anything else you would like to add about MPEG-4 AVC, IPTV or Internet TV?

BW: It’s an exciting space. In 20 years of being in the video business, I’ve never seen so much investment happening so quickly and a whole new infrastructure being built out across the world by the telcos. We’re just pleased to be a part of it.

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