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Understanding Iptv Informa Telecoms Media.9780849374159.27577

Understanding Iptv Informa Telecoms Media.9780849374159.27577

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Published by Ejaz Ahmad

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Published by: Ejaz Ahmad on May 10, 2011
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A second market driver for IPTV is the pay-TV market. In this section we
will discuss both the conventional pay-TV market as well as evolving
competition for consumer funds and the effect of this driver on the
emerging IPTV infrastructure.


The pay-TV market has evolved from cable television and satellite TV
providers to a variety of businesses that offer television shows and movies
over the Internet. Although revenues from cable television and satellite
TV providers were greater than $50 billion in 2005, whereas the rentals
and sales of movies and television shows over the Internet are currently
less than $50 million, a profound market shift is based on the following
four factors:

The substitution of broadband access for dial-up service

The introduction of the video iPod and similar products

The availability of TV shows for sale by major television networks

The growth in the number of Internet sites offering the sale and
rental of movies, music videos, and television shows

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36 Understanding IPTV

Broadband Access

The substitution of broadband for dial-up Internet access resulted in
millions of subscribers being able to download large data files within a
reasonable period of time. This in turn has created a growing market of
consumers who download movies, television shows, music videos, and
videos of special events, either for direct viewing on their computer or
for transfer to another device, such as directly onto a video iPod or by
creating a DVD that can be viewed on their television using a DVD player
or while traveling by using a portable DVD player.

Dial-Up Delays

Until broadband transmission became commonly available at a relatively
low monthly cost, consumers were restricted to using dial-up, where the
maximum data rate was 56 kbps. Downloading a one-hour television show
or relatively short movie could require 1.175 GB of data to be received.
At a download data rate of 56 kbps, this activity would require:

1.175 Gbytes × 8 bits/byte = 167,857 seconds

The above computed download time is equivalent to 2797 minutes,
or approximately 46.6 hours! This relatively long time to download a one-
hour video via dial-up explains why dial-up Internet access makes it
almost impossible to download anything but relatively short video clips.

DSL Offerings

In comparison to dial-up, DSL subscribers can select from a variety of
offerings ranging from a slow service at 256 kbps, which can be used for
Web surfing but is still impractical for downloading full-length videos in
a timely manner, to faster services that can provide data rates as high as
20 Mbps at distances up to approximately 5000 feet from a central office
or fiber termination point.

Cable Modem Offerings

Cable modem subscribers more often than not are offered a low-speed
data rate similar to those provided to DSL subscribers for competitive
purposes. However, a key difference between DSL and cable modem
rates is in their high-speed offerings. Most cable modem high-speed
offerings begin at data rates where DSL offerings stop, with, for example,

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Market Drivers and Developing IPTV Infrastructure 37

Cablevision announcing during November 2005 that it was increasing the
maximum download speed to 15 Mbps from 10 Mbps, which was already
higher than most DSL offerings.

Download Time Comparison

The rollout of IPTV services by AT&T (formerly known as SBC Commu-
nications), Verizon, and other regional phone companies resulted in an
increase in DSL data rates as the copper “last mile” is either shortened by
FTTN or replaced by the routing of fiber to the premises. This action has
resulted in some locations now being offered DSL download speeds from
5 to 30 Mbps. Table 2.3 compares the time required to download a one-
hour video at a 56-kbps dial-up rate to seven popular DSL and cable
modem rates. Download times are shown in terms of the approximate
number of hours required to download the one-hour video at each
data rate.

In examining the entries in Table 2.3, it is obvious that the higher data
rates provided by broadband communications significantly lower the time
required to download a video. Note that at a data rate of 4096 kbps which
is representative of high-speed DSL and medium-speed cable modem
services, the download time is reduced to slightly more than a half hour,
whereas at a data rate of 8192 kbps only approximately a third of an hour
is required. For many consumers, both are reasonable time periods,
especially when compared to almost 46 hours when downloading occurs
via dial-up. Thus, the growth in the number of people subscribing to
broadband Internet access increases the potential of those subscribers to
download different types of video for viewing on their PC or on another

Table 2.3Download Time for One-Hour Video

Data Rate

Hours Required

56 kbps


256 kbps


1024 kbps


2048 kbps


4096 kbps


8192 kbps


16,384 kbps


32,768 kbps


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38 Understanding IPTV

Introduction of Video Products

Although the introduction of the Apple Computer video iPod in October
2005 received considerable press attention, it is just one of many types
of portable video products to reach the market. If you travel by train or
airplane, chances are high that you will see several people in the railway
car or the airplane cabin watching a video using a portable video player.
Currently, the majority of portable video players are DVD devices with 5-,
7-, 10-, or 11-inch displays. Although the majority of people currently
using portable DVD players view purchased or rented DVDs, the ability
to download many types of video via the Internet as well as to use a
digital video recorder (DVR) to create DVDs for later viewing can be
expected to alter the use of players. This technique of viewing previously
recorded video at a different time is referred to as time-shifting, whereas
viewing video at a different location is referred to as video-shifting or
view-shifting. Because portable DVD players have a larger screen than
the Apple Computer video iPod and a virtually unlimited storage capacity
because multiple DVDs are easily packed and do not take up much storage
space, for the foreseeable future they will more than likely represent the
preferred method for viewing videos in a mobile environment.

Availability of TV Shows

A third factor that is facilitating a market shift away from conventional
pay TV is the significant increase in the availability of TV shows. First
there was Apple Computer’s agreement with ABC in October 2005 to
make several television programs available for downloading via the
Internet; then NBC and CBS announced deals with cable and satellite
providers in November 2005 that would commence operation at the
beginning of 2006. Under the deals struck with CBS and NBC, cable and
satellite providers would be able to watch popular shows anytime after
those shows were aired. The announced deals allow viewers to order
episodes of such primetime shows as Law & Order: Special Victims Unit
and Survivor for 99 cents apiece.

CBS Shows

Under the deal between Comcast and CBS, customers of the cable tele-
vision firm with digital service would be able to purchase episodes of
four primetime shows beginning in January 2006 starting a few hours after
the shows aired on the network. Although the shows would include
commercials, viewers would be able to fast-forward through them.

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Market Drivers and Developing IPTV Infrastructure 39

NBC Shows

In a separate agreement that was announced at the same time, NBC agreed
with Direct TV to make a series of programs available, including some
that air on its cable channels, such as Sci-Fi, Bravo, and USA. Unlike CBS,
NBC is making available commercial-free shows, with each show being
billed at 99 cents. The DirecTV VOD service will be available to subscribers
who obtain a new set-top box and have a TiVo set-top DVR. The recorder
will have 160 hours of recording capacity, but only 100 hours will be
available for consumers to use. The other disk space in the recorder will
be used to store approximately five hours per week of NBC primetime
television shows as well as other programming transmitted by DirecTV.
Customers can then purchase and view the stored programs.
Whereas DirecTV’s offering is not a conventional on-demand offering,
Comcast is providing a more flexible strategy by adding TV shows to its
library of 3800 on-demand offerings, most of which represent free content,
such as real estate listings. Because Comcast’s infrastructure includes many
on-demand channels, its subscribers have more flexibility than the sub-
scribers to DirecTV, although their offerings pale in comparison to the
potential of virtually unlimited offerings that can be expected to be
provided by IPTV systems.

AOL and Warner Brothers

In concluding our discussion of the availability of TV shows, I would be
remiss if I did not mention an agreement between AOL and Warner
Brothers that was announced in mid-November 2005. Under the
announced agreement by these two divisions of Time Warner Inc., vintage
television shows made by Warner Brothers, such as Welcome Back, Kotter,
Wonder Woman, and Kung Fu, will be offered free online by AOL.
Although it will be free to view the programs, the AOL–Warner Brothers
service will include 15-second commercials that viewers cannot bypass.
In addition, video delivery will occur via video feeds, which will prevent
viewers from recording shows. Referred to as “In2TV,” this service was
scheduled to commence in January 2006 with six channels providing
shows ranging from comedy to drama.
Although it is difficult to compete with a free product, the fact that the
Warner Brothers offerings cannot be time-shifted or place-shifted leaves
questions about its viability. That is, how many people will want to watch
an entire TV show on their PC screen, and will decades-old fare be a
draw? Although such questions may take awhile to be answered, the
AOL–Warner Brothers agreement at a minimum will increase the avail-
ability of TV shows on the Internet.

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40 Understanding IPTV

Cell Phone Television

Another area of pay television that is emerging as a market driver for
IPTV is cell phone television. In November 2005 Sprint Nextel Corporation
announced a deal with several of the largest cable television companies,
including Comcast, Cox Communications, and Time Warner, that lets
the cable companies sell Sprint wireless services along with their own TV,
phone, and high-speed Internet access. Under this deal, a single voice
mailbox would be available for both the cellular and the wired phone,
the amount of content available for watching on certain types of cell
phones would significantly increase, and customers would be able to
watch shows stored on their home DVRs as well as program their home
recorders via their cell phones. Although it is still premature to discuss
the fees that will be associated with cell phone television, subscribers can
expect to pay between $99 and $250 for an applicable cell phone and
approximately $15 per month for the ability to view television on the
“small screen.”

IP Datacast

Initially, the majority of television viewed on cell phones will be broadcast
TV. However, in the future we can expect a combination of digital
broadcast and the IP to provide a new broadcast technology referred to
as IP datacast over DVB-H (digital video broadcast — handheld), which for
simplicity is referred to as IP datacast.
With IP datacast, the quantity of data transmitted to represent a TV
channel is reduced to between 128 and 384 kbps because the screen on
which the video will be observed is smaller than a regular television.
This reduction in the required data rate permits approximately 30 small-
screen TV channels to be broadcast over the bandwidth now used to
broadcast a single analog channel. Because analog transmission will be
phased out over the next few years, it’s quite possible that hundreds of
small-screen TV channels could become available. In addition, because
each IP datacast-ready cell phone would have a unique IP address, it
becomes possible for cell phone users to select a particular program that
they could view on an “on-demand” channel, resulting in the development
of another screen version of wireless IPTV.

Growth in Internet Video Content

Just a few years ago, the availability of videos on the Internet was more
than likely from “hacker” Web sites that provided free copies of movies
prior to the release of the movie on DVD. In fact, many movies that made

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Market Drivers and Developing IPTV Infrastructure 41

their way to the Web were the result of a person visiting a movie theater
with a hand-held digital camcorder, which resulted in some rather interesting
movements when the person making the bootleg copy had an itch to scratch.
Today the number of pay-video sites offering legitimate first-rate movies
has significantly expanded, providing tens of thousands of music videos,
movies, and television shows. The growth in Internet video content
enables diverse subscriber viewing habits to be accommodated and pro-
vides the developers of IPTV with a potential revenue stream once the
infrastructure is developed to enable rapid downloads of content as well
as negotiate the availability of content from movie studios, TV networks,
and other content providers.


The pay-TV market consists of a series of submarkets, including video on
demand and TV shows delivered to cell phones. Although the technology
used for each submarket differs, most have a similar capability in that
they allow a subscriber to time-shift a video to a more convenient time.
Because traditional telephone companies are investing billions of dollars
in IPTV, to be successful they must be competitive. Thus, one can expect
the various types of pay TV mentioned in this section to represent
benchmarks for IPTV delivery. Because AT&T (previously known as SBC
Communications) and Verizon also operate cell phone service, it is reason-
able to expect their IPTV delivery to eventually provide a mechanism by
which subscribers can download video into their homes as well as onto
their cell phones.

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