The IPTV/VOD Landscape
[Editor's note: This article first appeared in the April/May issue of Streaming Media magazine. Click here for your free subscription.
The convergence of the PC and TV experiences has been anticipated since stuttering video images first appeared on a computer. The Holy Grail of convergence is widely believed to be IPTV/VOD (internet protocol television with video-on-demand capability) on HDTV in the living room. (While definitions of "IPTV" vary, in this article we’ll use the term loosely to describe any process through which content is delivered via IP to the television.)
Today, through myriad free, pay-per-view, and illegal services (e.g., Hulu, iTunes, BitTorrent, etc.), users have gained access to an expanding variety of full-screen content on their PCs, including most network television series and feature films in SD and HD. But the bandwidth required for a quality video experience on a PC is a far cry from that necessary for an equivalent experience on a 55'' HDTV.
In the online video world, HD is often defined as content delivered at 1Mbps or better. For television, bitrates for 1080i HDTV encoded in VC-1 or H.264 are more likely in the 7Mbps–9Mbps range. While media "extender" software and devices enable users to extend streamed or downloaded content from their PCs to their televisions, the quality differential between low- and high-bitrate streams becomes more apparent on the larger screen. Meanwhile, another class of technologies and services, including those offered by major telcos, are bypassing the PC and delivering HD-quality IPTV/VOD content through set-top boxes (STBs) directly to the television. Key differentiators between IPTV services of all types are image and sound quality, comprehensiveness of content libraries, number of simultaneous streams available, and price.
Since the origin of the internet, demand for bandwidth has exploded, driving U.S. telco operators to spend billions on expanding the capacity of their broadband networks. At the same time, cable and other VoIP services have cut into the telco’s traditional voice revenue. Thus, the telco’s entrance into the IPTV market has been motivated in large part by a need to fill ever-expanding pipes with revenue-producing data. Cisco predicts that by 2012 half of all consumer internet traffic will consist of internet video to the PC or TV. Telcos hope to deliver and monetize that video.
IPTV delivery offers telcos some advantages over well-entrenched cable and satellite TV providers. Cable and satellite broadcasters send signals to all TV channels simultaneously, and the consumer chooses which signal to watch. IPTV operators use switched IP to deliver only the channels that the consumer chooses, leaving more bandwidth available for higher image and sound quality or more content choices to feed DVRs and multiple televisions in the home. IPTV also allows telcos to market the same "triple-play" bundles of voice, data, and video services that cable companies already offer. Among telcos entering the IPTV market, AT&T and Verizon are the early leaders.
AT&T U-verse
AT&T first offered its U-verse IPTV product in 2006, and expects to service 1 million customers in 69 markets across 15 states by 1Q 2009. U-verse’s future adoption depends on the progress of AT&T’s $4.6 billion Project Lightspeed, a problem-plagued broadband network expansion that aims to deliver fiber to the node (FTTN), plus last-mile high-speed DSL (VDSL2) to 19 million households by 2009. AT&T currently offers download speeds of up to 18Mbps, with U-verse video content encoded at 1.5Mbps–2Mbps for SDTV and 8Mbps–9Mbps for HDTV. In 2009, AT&T will enable up to three simultaneous HD streams, but with decreased data rates of 5Mbps–6Mbps. The company has also begun testing the idea of limiting data downloads. (In 4Q 2008, Comcast began limiting residential downloads to 250 gigabytes per month.)
Figure 1. AT&T first offered its U-verse IPTV product in 2006. It expects to service 1 million customers in 70 markets across 15 states by 1Q 2009.
AT&T charges a range of monthly subscription fees for programming and internet packages, plus additional VOD charges. The AT&T Total Home DVR allows users to play back recorded shows from a single DVR to any connected TV in the house, and to record up to four shows simultaneously. In addition to U-verse, AT&T offers Homezone, a hybrid IP/satellite partnership with DISH Network, which enables VOD downloads from Blockbuster’s Movielink. AT&T is also planning to capitalize on its status as exclusive iPhone service provider in the U.S. and link iPhones with U-verse. Eventually, subscribers could listen to their iPhone voicemail on their TVs or download shows from their DVRs to their iPhones.
Verizon FiOS
Verizon is spending $20 billion to bring fiber to the home (FTTH) all the way to 18 million residences by 2010. Those fat pipes can accommodate up to 50Mbps of voice, data, and IPTV. While AT&T’s U-verse is a 100% IP platform, Verizon’s FiOS delivers most content via standard RF broadcast signal, with only VOD content and interactive features delivered over IP. It is expected to cost Verizon $1,750 to connect each home—compared to $450 for AT&T—but some question the ability of AT&T’s last copper mile to handle the bandwidth that will be required in the future by households with several HDTVs.
Figure 2. FiOS offers features similar to those offered by AT&T’s U-verse, including more than 300 digital channels and up to 100 HD channels with superior picture quality and 5.1 surround sound.
FiOS offers features similar to those offered by AT&T’s U-verse, including more than 300 digital channels and up to 100 HD channels with superior picture quality and 5.1 surround sound. Verizon’s Home Media DVRs enable three different recorded shows to play back on three different TVs simultaneously. Verizon boasts more than 11,000 VOD titles—including 1,000 in HD—and free, next-day access to ABC’s programming in HD. However, in a possible harbinger of things to come, Verizon disables fast-forward capabilities for the ABC VOD streams. How well that will go over with a commercial-averse, DVR-familiar culture remains to be seen. Like AT&T, Verizon charges a range of monthly subscription fees for programming and internet packages, plus additional VOD charges. Unlike AT&T, Verizon currently has no plans to limit monthly data downloads.
Both U-verse and FiOS will offer remote DVR control, through which users can program their DVRs over the web or through mobile devices. And because they control their own networks, telcos can offer the quality of service (QoS) that consumers have come to expect from their television content providers. But as telcos spend billions upgrading their networks to deliver their own IPTV services, internet TV that is delivered "over the top" (OTT) of existing networks gets a free ride. Telcos that try to filter OTT traffic, limit OTT QoS, or charge a premium for network access risk running afoul of the principles of Net Neutrality.