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IPTV, in High-Def?

A year ago I was sceptical, but now I have my doubts. Although that’s an obvious play on words, it is nonetheless a statement of something close to reality.

I have no doubt that high-definition IPTV can eventually become a mainstream service to the general public. The question is when, and whether there’s a business case that makes it worth doing properly.

The public demand for high-definition content is surely growing. I’ve recently joined the ranks of those who demand HD. I bought myself a 46-inch LCD TV, and while I really enjoy the larger image area, I’m also now more acutely aware of the deficiencies in the standard-definition signals arriving in my home.

The main weakness usually associated with standard-definition video is a lack of spatial resolution. At the typical screen sizes of the old CRT TV sets, 29 inches diagonal, or smaller, SD pictures were acceptable, given a good RF signal reception. But at the larger screen sizes now available for LCD and plasma displays, the resolution of the typical SD signals arriving in my home is easily seen to be somewhat lacking.

SD signals received over a digital terrestrial network look far better than those on the analogue terrestrial TV service, and the native 16:9 format of the DVB-T or DMB-TH SD services are highly appreciated. One can’t help sensing a feeling of ‘wastage’ when viewing a 4:3 service on a 16:9 screen. But the lowest SD signal quality is that of the channels arriving over my IPTV service. Despite being digital, the IPTV SD signals are less than what we typically call ‘broadcast quality’ because they show significant compression artefacts. Bandwidth is the scarce commodity in an IPTV service, and compromises are being made by compression of the television signals beyond the usual accepted broadcast norms.

For content where fine detail is evident (the Beijing Olympics opening ceremony, for example), there’s no substitute for genuine spatial resolution, and that’s where “True HD” wins by a large margin. I was in an electrical appliance shop in Hong Kong watching the Beijing Olympics opening ceremony, and I stood there enthralled at the clarity of the live high-definition images of the spectacular event on a 46-inch ‘true HD’ LCD screen. That was the tipping point for me, culminating in my purchase of a 46-inch LCD receiver.

Terrestrial free-to-air broadcasters are typically using around 12 Mbps or more for the HD transport stream in the DTV multiplex. That alone is more bandwidth than most domestic broadband Internet services provide. The usual upper limit for VDSL services to a home is 10 Mbps, and then only if the home isn’t too far from the telco’s exchange. The supplied 10 Mbps bandwidth has to be shared between the IPTV stream and the Plain Old Internet Service (POIS) – a term I just invented as the modern equivalent to “POTS” a well-worn term that refers to a Plain Old Telephone Service (fast becoming a thing of the past).

The major challenge facing IPTV service providers revolves around the high data rates required for “true HD” images. We noted the same challenge facing SD signals over an IPTV connection two years ago. But I can safely say that, in Hong Kong at least, the SD challenges have been well met by PCCW for their “now TV” service.

There are four costly aspects to transporting HD video over a broadband Internet platform:

1. The cost of bandwidth on the network backbone
2. The cost of bandwidth into the home, over the so-called “last mile”
3. The cost of the IPTV set-top box
4. The cost of the IPTV head-end infrastructure

The first aspect, the cost of the bandwidth on the network backbone is not a simple thing for those of us outside the telco’s inner circle to ever know. What we do know is that for decades, telcos have charged their network out to the public in terms of “minutes.” And we know that the traditional usage of a telco network for voice calls, telexes, faxes, and other short duration connections makes it feasible for millions of telco subscribers to time-share the telco’s network.

But a broadband TV service requires continuous connections of long duration. And the consumer’s perception and expectation of a television service is that it’s always there. So for IPTV a portion of the telco’s network has to be sectioned off and permanently allocated to carry the television data. Consider an IPTV service with forty SD channels at 5 Mbps each and ten HD channels at 10 Mbps each. That makes a total of 300 Mbps, permanently booked, and geographically omnipresent throughout a whole city. That represents a huge cost in terms of the telco’s infrastructure used.

The second aspect, the cost of bandwidth into the subscriber’s home, is a complex matter because the typical city has millions of homes of widely varying age. Some buildings were constructed fifty to a hundred years ago, long before the Internet existed. It’ll be a costly and time-consuming project to upgrade the Internet bandwidth into the older buildings where the copper cabling from the curb to the individual apartments may need complete replacement. Older European cities like Paris and Rome have an even bigger problem in terms of the age of buildings and even the roads that may need to be dug up for the laying of broadband network cables.

Unlike a terrestrial TV service such as TVB in Hong Kong or a satellite TV service like SkyLife in Korea or BskyB in the UK, broadband TV isn’t available to every resident of a city from Day One. It could be some number of years before every apartment and house is “wired” with enough bandwidth to support a high-definition IPTV service. For some buildings and housing estates, the IPTV service might never come. Or it might eventually arrive in SD, but never in HD.

For a more sprawling suburbia such as Sydney, Australia, the challenge is not so much from the curb to the home, but from the telco’s exchange to the curb. The tyranny of distance blows out the cost of passing the homes of the full population living in such a wide geographical area. Residents in high-rise cities like Hong Kong, Singapore, and Seoul are much more efficiently serviced with bandwidth due to the inherent high density and compactness of the housing within confined estates.

The third aspect, the cost of the IPTV set-top box, is critical because if the IPTV service provider supplies the set-top box for free, it becomes a huge financial overhead for the business. If a set-top box costs 100 U.S. dollars, and there are one million subscribers to be serviced, then it adds up to a 100 million U.S. dollar investment to be recovered. If the IPTV subscription fee is 20 U.S. dollars a month, it’ll take five months of subscription revenue to pay off a set-top box. It’s probably more like six months to pay off the box if we include the cost of sending an installer to the home to set up and test the unit.

The installation of an IPTV set-top box isn’t always simple. It’s not unusual to need up to three electronic devices to provide one IPTV gateway. First, there’s the ADSL modem. Then there might be a small 4- or 5-port Ethernet switch. And then there’s the IPTV set-top box. It would be ideal if these were provided as an all-in-one unit, but it isn’t usually the case, yet.

For my IPTV service at home, PCCW provided two devices for my “now TV” service: the ADSL modem (or ATM-to-Ethernet bridge) and the IPTV set-top box. But then I had to add my wireless broadband router into the mix. And then there’s the DMB-TH set-top box for the digital terrestrial services, and the DVD player — and the surround-sound amplifier. All together, that adds up to seven devices requiring seven power points and five remote controls!

Let me list them out for you, because even I had trouble believing it at first:

1. LCD or plasma monitor
2. DVD player
3. Surround sound amplifier
4. Digital terrestrial set-top box
5. IPTV set-top box
6. ADSL modem
7. Wireless broadband router

PCCW is doing the right thing for their HD set-top box. They’ve integrated a DMB-TH digital terrestrial receiver in the same unit. So that reduces the above list to six items rather than seven. But why not integrate the ADSL modem and the wireless broadband router into the IPTV set-top box as well? A single unit with a single remote control and a single power point is potentially capable of replacing items four to seven on the list above.

Of course, the price for an all-in-one set-top box, incorporating devices listed as items 4–7 above, would be more expensive than a simple IPTV set-top box, but I believe more subscribers would be willing to pay for the unit from their own pockets because it adds a lot of value to the equation — it cleans up the existing rat’s nest of cables and power points behind every modern domestic television receiver. Just like the original iMac solved the problem of proliferating cables surrounding a desktop computer, so too the all-in-one set-top box would clean up the mess of A/V and power cables in the world’s living rooms.

Finally, there’s the cost of the IPTV head-end infrastructure. H.264 (MPEG-4) is the commonly preferred encoding scheme for HD signals, but the encoders don’t come cheap. Decoders for MPEG-4 are also significantly more expensive than their MPEG-2 counterparts too, so even the HD signal monitoring infrastructure for the IPTV head-end comes at a premium price.

“We get what we pay for” is a well understood maxim. So the higher price of an IPTV head-end isn’t argued, at first. Where the arguments begin is in presenting the business case. It’s like the first question you’re likely to hear as an accident victim arriving at an American hospital’s emergency room reception desk: “Who’s going to pay for this?”