IPTV Guide

10 Things You Need to Know About IP Television

Since we launched IP Television Magazine, we have interviewed several hundred companies ranging from manufacturers and service providers and we have performed reader surveys to determine what key issues the IPTV industry is experiencing. While all these issues can be overcome, they will impact the deployment of IP Television systems and services.

#1 IPTV is a Large and Unknown Industry?

There is a lack of awareness in people and companies of the multibillion dollar IPTV industry and this is resulting in some established companies being left behind and providing great opportunities to early adopters.

It has been amazing that our research has found that many people and companies do not know what IPTV is including users of IP television services. Billions of dollars have already been spent or committed to the deployment of television over IP data networks. Early developers and implementers of IPTV systems and ser-vices are creating intellectual property (patents and copyrights) that will make it hard for companies who enter late into the IPTV marketplace to adjust to the new industry.

As of the beginning of 2005, there were already 2.1 million IPTV Customers and more than 240 systems offering IP Television ser-vices. More than 25 companies manufacture low cost IP set top boxes and at our recent round of interviews at the Supercomm trade show in June 2005, over 15% of telephone equipment and service providers had equipment that used some form of IPTV technology.

#2 Cost Quality Tradeoff?

Unlike broadcast television companies that use a standard signal format, IPTV service providers have the ability to tradeoff video and service quality to lower their cost of bandwidth. This can have detrimental effects on the perception of the quality of IPTV service.

The good news is that the initial implementers of IPTV are telephone companies and cable television systems who can control the bandwidth and the initial quality of IPTV service is relatively high.

As the IPTV industry transitions to allow independent Internet television service providers (ITVSPs) to provide television services over broadband connections, these companies can decide how much bandwidth and quality to allocate to the customer.

In 2005, the data transfer fees for Internet service provider (ISP) connections to the inter-net was approximately $5 per 100 GB ($.05 per GB) of data transfer. The streaming data transfer rate of a standard television quality digital video signal is approximately 4.0 Mbps or 500 kBytes per second (8 bits per Byte). This results in a data transfer rate of 30 MB per minute x 120 or 3.6 GB for a 2 hour movie.

It is possible to reduce the data transfer rate of the television channel to save on the data transfer cost. Medium quality IP television data rates range from 500 kbps to 1.5 Mbps. Low quality IP television channel data rates range from approximately 100 kbps to 500 kbps.what is iptv cast

Figure 1 shows how the IPTV service provider can tradeoff quality for reduced cost. This table shows the approximate cost for transferring digital video through the Internet to end users.

#3 IPTV Clogs the Interconnecting Data Pipes

Standard quality IPTV (similar to analog television quality) uses more than 240 times the bandwidth than voice and Internet browsing services and the data usage patterns for television is different. Because network capacity costs money, IPTV signals clog some of the backbones of the more advanced high-capacity broadband networks.

A typical consumer uses telephone service for approximately 60 minutes per day. The data transmission rate for a voice channel is 64 kbps in each direction (128 kbs combined). This means in a day, a user will consume approximately 58 MB.

According to Neilsen ratings, the average Internet user browses the Internet for approximately 14 hours per month (28 minutes per day). If the average broadband user has 10% activity (actual data transfer), their average data consumption is 200 kbps which results in a consumption of approximately 42 MB per day.

the average household watched television for approximately 8 hours per day (according to Neilsen ratings). Standard quality IPTV MPEG-2 consumes approximately 4 Mbps. This results in a daily consumption of approximately 14.4 GB per day.

This means that IPTV data consumption is approximately 240 to be for very brief periods of seconds to minutes long and their use is distributed over an entire day. This allows for the service provider (the carrier) to allow several users to share each communication channel. For example, loading of the system with approximately 5 to 20 customers per communication line or highspeed data channel.

Unlike voice or Internet data users, television viewers commonly watch television channels for extended periods and they often view television at the same time as their neighbors (at the end of the day). This will dramatically increase the requirements for system capacity while lowering the number of customers that can share the same network communication channels (reduced loading ability).

Another area of concern is the viewer leaving the IP set top box on (in receive mode) and receiving data even when the television is off and there may be several IP set top boxes in each home.

#4 Content is King

Content is king and content cost is traditionally high. Program content is very important to all television systems and the licensing rights to send content in television networks typically cost television service providers 30% to 50% of gross revenue.

The typical rate plan for IPTV service provides for some local programming content (local television channels)

Early providers of IPTV services discovered some of the difficulties in obtaining programming that viewers wanted. While users were provided with access to more pay per view shows than were available on broadcast systems, viewers wanted local programming channels. Many of the IPTV service providers offer unlimited viewing of local programming channels as part of their basic service rate plan.

Figure 3 shows the typical rate plan for an IPTV system. This example shows that a typical rate plan for IPTV service consists of several free local and regional channels that are paid for from the monthly subscription service and many pay per view channels

#5 Broadcast Regulatory Favoritism

The current regulatory environment for television systems has been structured for the broadcast television Industry and these regulations may prevent or limit the authorization of IPTV service providers to offer some types of services.

What frightens television, cable and satellite broadcasters is that their programming networks can bypass traditional networks. This means that the large network operators will loose their control of the distribution of media channels.

Not only can customers bypass the cable and telephone programming networks, Internet television service providers (ITVSPs) will be using the highspeed portions of these networks to bypass their own broadcast networks. This fear may cause broadcast companies to ask their governments for regulatory protection (until they can get their own IPTV systems up and running efficiently).iptv guide

While regulation may restrict domestic com-petition, unless preferred status can be implemented for new types of IPTV providers, international companies will be able to more effectively compete against existing (incumbent) broadcasters.

#6 Targeted Advertising will be a Key Driver

Revenues for IPTV operators can come from subscription fees, usage fees and advertising revenues. IPTV has the added advantage of being able to send advertisements to specific IP set top boxes (each IP set top box has a unique network address). This addressable advertising can dramatically increase the advertising revenue per impression ads more precisely reach their most desirable (target market matched) audiences.

IPTV systems that can develop detailed profiles (viewing and personal preferences) of their viewers have the potential to increase advertising revenue per impression by a factor of 10 or more.

#7 Time Zone Challenges

While IPTV systems have the potential to reach audiences in larger geographic regions (global), television programming has traditionally been divided into program block times based on the expected viewing audience such as children (morning) and adults (late night). Because IP television service providers can be located anywhere in the world, this means that traditional program time blocks are of little value to the programming and the expected viewing patterns.

Certain types of programming content that are broadcast during late hours for a more mature audience may be unsuitable for audiences at certain times of the day.

#8 Content Ratings and Restrictions

It will be more difficult to rate and restrict content on IPTV channels and the media regulation authorities of one country will have little control over channels that are broadcasted to other countries over broadband Internet connection.

Unlike web pages that may have keywords that can be easily monitored, it is harder to detect unwanted content types such as adult and violent content in streaming media. While television programs have meta tags (short blocks of text that describe the content) and there are standard formats for meta tags. However, service providers can (and often do) edit these meta tags to better market (more favorably describe) television programs to their viewers.

While it may be possible for viewers to watch any IPTV channel, viewers may select to use an IPTV service provider that restricts access or allows the viewer to control access to pornography and/or violent content.

#9 Compatibility

Broadcast television systems have relatively high reliability and good picture quality. Unlike the closed (highly controlled) broadcast TV systems, there are compatibility issues with IPTV system equipment and services and these compatibility issues are likely to continue over the early 2000s.

IPTV systems use a combination of technologies that are undergoing development and improvements. During our testing of IPTV portal directories, we have noticed that IP television channels use different media players that use and/or require different parameters. This results in inability of the viewer to play some IPTV channels.complete iptv guide

A key ingredient of IPTV systems is the IP set top box and its media player. There are several companies that produce media players and their associated video compression coders and this is resulting in the war of the media players. The winner of the media player war game will have their media player installed in hundreds of millions of set top boxes and the associated media player software licensing royalties are likely to be worth billions of dollars.

#10 Getting IPTV to the Television in the Home

Premises distribution systems are playing an important part in IPTV networks. Televisions are not typically located near a data connector and getting the signal to media appliances in the home may require rewiring and/or additional equipment.

IPTV service providers desire to sell services where the customer can self install the equipment avoiding the need for the service provider to send installation workers (no need for a truck roll). This means the IPTV service providers will be focusing on premises distribution equipment that can use existing wiring systems if possible.

We were surprised to learn that different countries have different types of home distribution systems. Countries like the United States have a large percentage of installed coax while other countries such as the United Kingdom have a larger percentage of customers that still receive their television via RF broadcast.

Premises distribution systems can use copper (wire or coax), optical cable, or wireless (radio or IR) to transfer communication of signals within a customer’s facility or home. The common premises distribution system used for IPTV distribution include telephone wiring, coaxial cable, wireless LAN, power line distribution and wired LAN.

Figure 4 shows the common types of premises distribution systems that can be used for IP television systems. This diagram shows that an IP television signal arrives at the premises at a broadband modem. The broadband modem is connected to a router that can distribute the media signals to forward data packets to different devices within the home such as IP televisions.

This example shows that routers may be able to forward packets through power lines, telephone lines, coaxial lines, data cables or even via wireless signals to adapters that receive the packets and recreate them into a form the IP television can use.


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