IPTV not a priority for cable operators

CABLE TV OPERATORS should first go all-digital, before they can dream about IPTV. And if they do venture into IPTV, Video On Demand is clearly the only current advantage, as CATV has the upper hand.

That was in a nutshell the message of the presentation and discussion panel with Raúl Malisani from Interlink SRL among others, dubbed "the CATV operator's dilemma: digitize or jump to IPTV?" at the first day of the Triple Play 2007 conference down in Cordoba, Argentina.

He wasn't alone in that opinion: one could clearly see two camps with very different ideas of what "Triple Play" would bring, first the CATV operators who only have to implement Voice-over-IP over their existing networks to provide Triple Play. They have the easiest part, as they already offer TV and broadband over Fibre-Coax hybrid networks (HFC).

Going "all digital" is the first priority for CATV operators, while "keeping an eye on IPTV developments"

The CATV operators along with HFC kit providers claim fibre-coax networks are "the best solution out there" for triple play. On the other hand there's the "pure IP" IPTV peddlers, aiming at the telcos, who admit that "it would be very difficult to implement pure IPTV service and compete with the established cable operators on price alone", and which are thus peddling "Video on Demand" and "pay per view" systems as the next Holy Grail, and citing Google's YouTube as an example of "what the customer wants", in other words to "watch what they want, whenever they want".

If I had to choose the most convincing arguments. I'd say the CATV camp has a point: turning off the current CATV channels broadcast and switching all the TV signal transport over IP would not only be very expensive but would also give little benefit to the current viewer. Just picture this: getting a IP broadband modem -and remember not every current CATV viewer is currently also a broadband user-, and an IPTV tuner box for TV service behind it, plus a VOIP box added to the mix is an explosive combination just waiting for disaster, it's not only a great expense for the service provider, it can also be a configuration and tech support nightmare. It was mentioned several times and by several of the presenters, that IPTV STBs suffer from one noticeable downside: changing channels is slow, noticeably slower than doing so over a traditional CATV STB.

Internet-based video services are growing. Adding Internet services to every CATV network is "urgent"

Things are not easier for telcos: while there are some combo devices out there -say ADSL modem and SIP VOIP gateway all rolled into one-, the competition of pure IPTV over the established CATV providers will be an uphill battle, a battle that they will only win if the TV viewers embrace the "pay per view" and "video on demand" model rather than the current "basic package of signal feeds plus the occasional premium channels" offered by traditional cable television. In that sense, CATV operators look at the "on demand" video business model as a distant future opportunity to increase revenue, in other words, a value-added service to be provided on top of their current offering.

In this presentation, it was repeated several times that the move straight to analogue to IPTV wouldn't be a worth it right now, and that CATV operators should centre their efforts first going to "all digital" STBs, -something the cable operators are doing anyway for their own reasons, not to benefit the customer- first to eliminate signal piracy and second to optimise bandwidth on the companies' HFC networks. The move to IPTV, won't be a subject of concern for CATV operators "until some years down the line", citing the "lack of maturity" of the first-generation IPTV hardware and the high cost of Set Top Boxes for it, adding that CATV companies can allocate some of the "huge bandwidth" of their HFC networks to IPTV and video on demand services "when competition conditions or the customer demand it". The "upper hand" was confirmed by Patricia Tomasini from back-end IPTV technology provider Claxson, who also referenced the more noticeable delay that is present on IPTV STBs when changing channels.

"CATV has the upper hand" in South America, claim

In Argentina, considering Buenos Aires city and the Buenos Aires province -home of about one third of the country's population- there are three major players in the CATV arena: Cablevision, Multicanal, and Telecentro. The first two are merged into one big juggernaut, and will be a force to be reckoned with, as both represent a 60% share of the Argentine cable market. Media conglomerate Clarín offers all three parts of a triple play service, but through different subsidiaries: cable TV through Multicanal and now Cablevision; broadband through Prima -under the brand names Ciudad Internet and Flash-; and lately has moved into VOIP, through Vontel. It only lacks integrating all services into a single bill, which means it is the user who must contract all services separately.

Clarin's cable giant announced a USD $600M investment plan last year at the time of the Cablevision acquisition to "digitize its network", which means that eventually all subscribers will have their analogue STBs replaced with digital ones -the company is currently installing Motorola's DCT-700 digital set top box throughout its network.

Going back to Raúl Malisani's reference to the CATV operators' "upper hand" in going into triple play and his reference to the "huge bandwidth" of HFC networks, developments like Broadlogic's TeraPIX promise to reduce 80 legacy analogue television signals to a mere 50 MHz, giving HFC networks a whopping 4.5 Gbps bandwidth to the home. Only time will tell if the phone incumbents -if ever allowed to get into broadcasting- will be able to grab any noticeable share from the CATV juggernauts. As of right now, I'm betting on the CATV operators.

As someone next to me told me at the conference while we collectively laughed at the idea of incumbent telcos-delivering TV: "Telefonica and Telecom doing TV? what crosses my mind is a frequently-interrupted stream with the message: Buffering.... flashing on the TV set". But since it's them -the telcos- who have the deepest pockets, only time will tell.µ

L'INQs
Argentina sports "the highest cable penetration in Latin America"
IPTV sucks, claim
Motorola's DCT-700 "All-digital" STB
Triple-play in Argentina: Clarin is a potentially serious threat to telcos
TeraPIX, cable's "secret weapon" to maximize HFC bandwidth

See Also
Argentina ends 2006 with record-breaking e-figures
Intel creates software R&D unit in Cordoba, Argentina
Expocomm Argentina 2006 - INQ coverage