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The importance of the home gateway in the age of OTT, it will be a key enabler of Big Data.

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I wrote this blog entry in planning my visit of the BBWF 2012 show floor.

OTT is creating a deep shift in the TV value chain. Most cord cutters or thinners actually leave their traditional pay TV service to go somewhere else, or trade down to a cheaper subscription. Someone out there is profiting. Even if a 100$ monthly spend becomes 10$, that’s still 10$ of fresh ARPU for the new guy.

But Hulu, Netflix, Roku, Amazon, Google, Apple, Microsoft beware: pay TV operators and even dusty old Telcos have realized that they too can be the new kid on the block when it comes to OTT TV.

But why would I be interested in an old pay TV operator, let alone a Telco, when all the sexy OTT upstarts are vying for my business?

One answer is data, or rather what has recently become known as Big Data. It’s adding fuel to traditional CRM and data mining, but also brings radically new service possibilities.

Like data mining Big Data is basically about aggregating data from user’s interactions with a given service and then number-crunching it in huge data centres to provide marketing teams with customer intelligence. One main goal has always been to improve and better target products to different markets and customer segments.

 

Data mining started as far back as the 1970s and by the 1990s it was an industry in its own right. But it has mainly been one dimensional, querying against a single relational database, or just maybe two or three interlocking databases. The most typical example is of a Supermarket chain analyzing data on the contents of shopping baskets to "mine" combinations of products that are purchased together (there's been a lot of mileage out of the good old beer and diapers case from the 1970s, where a marketeer - who wasn't yet called that - after analyzing shopping basket contents, realized that more beer could be sold if it was positioned in an aisle "on the way" to the diapers at least during weekends).

What’s new though is the explosion in different types of data, i.e. from all the screens in the house, and there’s also a huge increase in the amount of external data that can be collected from a range of sources including social media and messages. At the same time scalable cloud-computing architectures have come along to enable the data crunching to be powerful enough to get closer to real time answers, even when petabytes of data are involved.

So now instead of just realizing why subscribers behaved in a specific way in the past, Big Data will enable operators to optimize a service so it best suits what they will do in the future. For example providing near real-time content or service recommendations based on what the family is doing at the moment …

This is where Big Data will not only serve the interest of incumbent operators by giving them ammunition to fight off some of the OTT upstarts, but also bring new services to the end user. A few decades ago advertising was fun. But today TV advertising has become that period of time you either use technology to make disappear (i.e. with a PVR) or disappear yourself during the break. The truly personalized advertising that Big Data can enable could make it relevant and therefore interesting and oh so much more valuable.

 

You may be wondering what has this got to do with BBWF. Big Data has voracious appetite. This is where a broadband service provider can come in. 3G is often too slow, and is still capped in most markets, while 4G is still only in its infancy, so most content consumed in the home over IP will come through a broadband provider.

This means that a Home gateway is about the only place almost all user interactions go through. The gateway is also the hub of the home network where in-home usages like a child streaming a film dozens upon dozens of times can be captured to help personalize a service (who doesn’t have a few worn out Pixar DVDs that always amaze by still being playable despite all the scratches).

Where almost all operators have fared badly with their ambitious content plans, often closing down channels they created, OTT is giving them a second chance, thanks to the central role of the home gateway. Companies that are exclusively in the Cloud will never get such a complete picture of home usage.  Operators with coherent gateway strategies on the other hand will be best placed to harness Big Data by combining the cloud and the home network most effectively.

 

So at this year’s BBWF I’ll be looking out for companies that will enable my vision of the future. I’ll post something after the event, but I know I’ll look out at least for:

  • ADB that has extensive tools for monitoring home network usage,
  • Axiros that have championed and extend TR-069 to get it to carry more information than in the original spec,
  • Broadpeak who has made me curious with their new nano-CDN technology,
  • Cisco who’s new acquisition NDS have been championing Big Data for a while,
  • SoftAtHome with a compelling hybrid CloudAtHome approach,
  • Witbe and any other QoE companies that are monitoring retail devices.

See you there?

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IBC 2012 Takeaways

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I didn’t actually see much Web-TV as I had expected to (see previous blog), but several IBC 2012 write-ups I have read so far, including those from people I respect like Giles Cottle or John Moulding have said say that there was no new “big thing” this year. I disagree or otherwise, there never is anything radically new – it depends on your point of view. Below is what I picked up as genuine game changers:

  • The Telia Soneria STB shrunk into a Samsung TV app is a true paradigm shifter.
  • VO’s second screen “Deep” app is also a breakthrough innovation; with the “doh-why-didn’t-I-think-of-that” magazine approach to content browsing.
  • Sony's 4K consumer TV hit me in the stomach just as hard as when I first saw an HD display about ten years ago.
  • Huge progress in the way data can be extracted from devices with extensions to the TR-069 protocol shown at the ADB, the SoftAtHome or the Mariner Partner’s stands to name just a few (bit expect more detailed reports after BBWF next month).
  • All this data will need to be crunched, paving the way to a major 2013 theme, which will be Big Data.
  • NDS showed their Solar project that is all about bringing this Big Data approach to TV. Project Fresco (ex project Surfaces) was also being demoed behind closed doors, and even if it's hard to see this impacting the market for many years, it is a mind blowing demo using a massive 6k display.

In my forthcoming write-up also expect an update on Verimatrix’ never ending successes, a sexy start-up called Klia with a CRM product delivering part of the Big Data promise before anyone else, HEVC news or lack thereof, Kit digitals strong attempt to reassure and updates on Zappware, Harmonic, Capablue, Visual Unity, Broadpeak, never.no, Corpus Media labs.

If one of these subjects is of more relevance to you than others, let me know, I’ll be sure to cover it more thoroughly … detailed write-up coming soon.

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Back to the future with Web TV

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This is the final-preparations-for-IBC time of year. So In speaking with friends and colleagues, David Gillies, who runs isis digital, told me about some of the streaming companies he was planning to see. David feels there is some matchmaking to do between them and the T2 and T3 operators. Only the big T1s can put together OTT strategies by calling all the shots. He’s right of course and that’s one area where independent consultants like us can bring value. But his plans for IBC 2012 sparked a moment of realisation in my mind that we were talking about something very familiar. Oh yes, wasn’t this kind of streaming supposed to happen like 15 years ago? Web TV was one of the drivers of the Internet bubble.

 

After NAB 2001, the next tradeshow I went to when I was still getting to grips with digital TV and what was becoming IPTV was « Narrowcast 2002 ». The Internet bubble had just finished bursting and the telecoms one was still exploding. Some of the first generation Web-TVs were still alive, although not really kicking anymore.

A bright young employee from TF1 that I spoke to on the show floor confidently predicted that this Internet nonsense would never take over TV - TV would take over the Web. His proof was that one of France’s highest traffic websites was his own one from TF1, France’s number one TV station (the conference was in Paris).

 

Since then all the Web TVs have died and faded into distant memory, but it doesn’t look like TF1 benefited much. In fact TF1’s TV market share has lost about 50% in the last 10 years and despite remaining an attractive Web property, they haven’t compensated the broadcast losses with Web traffic however which way you measure it.

 

First generation Web TV had two flaws in their business plans, either of which could sink any initiative, however much money they raised and raised again. Firstly of course, the network just wasn’t ready during the Internet & Telecoms bubbles at the end of the last century. Not only do you need broadband, but you need it in multiple megabits per second not in the hundreds of kilobits per second of early broadband.

But more importantly, the overriding concept « Content is King » still wasn’t really understood throughout the telecoms industry or with many start-ups. Traditional players like my friend at TF1 had a stranglehold on any content that might draw a big and regular audience. Ten years on, User Generated Content or UGC, one of the early Web TV’s promises to replace prime time content, is still only just taking a sliver out of the hours-consumed-per-day pie charts.

In 2012, the next big thing is called the cloud. For anyone remembering Larry Ellison’s vision of a Net computer dating even further back than my Narrowcast conference, this should start sounding a bit déjà vu, non?

A powerful, fast, responsive and service enabled network with simple devices to consume directly from it. Hey, not only is that going back to the mainframe computing model, but it’s also mimicking the broadcast paradigm to a certain extent, just without the broadcast technology. In his 2009 book called The Big Switch (Rewiring the world, from Edison to Google) Nicolas Carr used the commoditization of electricity a century ago as a parallel to what IT infrastructure is currently transforming into with Cloud computing. In the heyday of the Industrial revolution, any industrial project had an electricity generating part to it. It would have been unthinkable otherwise. In the same way broadcasters have today installed a huge amount of kit in peoples homes and find it often unthinkable to do otherwise. But if that kit, otherwise know as Customer Premise Equipment or CPE, were to be commoditized into the Cloud so any humble device could receive the service, wouldn’t that be just what Web TV was all about?

 

The two Web TV killers of ten years ago are gone: sufficient broadband penetration will now support a monetized business as any Netflix subscriber user can show. Content owners saw what happened to a music industry that tried to ignore then resist the Web and are now more responsive. They will actually talk to network operators, and even the Hollywood majors will experiment new things (OK only small, low-risk things but it’s a marked improvement on their head-in-the-sand policy of 10 years ago).

 

So now is the time for Web TV to rise from the ashes like a Phoenix. But rather than a mythical return, my friend David Gillies & I are convinced this time it will turn into a real and sustainable challenge to the existing broadcast TV market. The market moves so much faster than it used to and I’m sure we’ll know if we’re right by the time we prepare for IBC2013. But ponder on your way to IBC this year if you have figured out how to use the Web TV 2.0 to your advantage.

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Infographic on the death of TV

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Nice infographic from ONLINECOLLEGES.COM
It's a bit US-centric, but then so is the whole chord-cutting debate. Good food for thought in any case. The Death of TV

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2020 lookout for value added services

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According to Oliver Johnson, CEO of Point Topic, Consumer Value Added Services (VAS) Revenues are to Triple to $420 Billion in 2020. Wow! Tripling in 10 years is a compound annual growth rate of about 14%.

Johnson used the following graphic during a presentation at CommunicAsia 2012 earlier this week:

Point Topc's take on 2020 VAS revenues

 Source Point Topic (CommunicAsia 2012)

Who wouldn’t want to operate within such an industry?

That got me thinking, who indeed?

Much of what makes up these VAS aren’t yet in the scope of global juggernauts Apple & Google. On the contrary, all seem to be very Network operator centric.

So why then are my friends at major European Telcos so gloomy?

Point Topic have looked at current VAS and projected them to 2020. That’s a good approach to get an idea of market size, but doesn’t show who’ll be selling the services by 2020 i.e. in an IP lifetime.

Let’s run through Point Topic’s 8 VAS:

1. IPTV – this may still be Telco’s exclusive hunting ground but as I just wrote in a white paper, IPTV is being complemented with OTT. By 2020 there will be no distinction between IPT & OTT. If Google and Apple take too long to get their TV acts together the Netflix’ of the world will have carved out a big piece of this pie for themselves. Otherwise for Telcos to stand a chance of staying on top of this market, they’ll need the support of regulators and crazy laws like ACTA to exterminate what’s left of Net Neutrality.

2. VoIP – again what could be construed as Telco hunting ground, is already dominated globally by the likes of Skype so isn’t voice is destined to become free? I asked Point Topic to explain why they see so much VoIP revenue in 2020. Oliver told me “VoIP currently has the largest share of fixed line consumer VAS & will still grow slowly (see chart).” So what about free VoIP? “While operators are offering free VoIP, it’s often only free to other VoIP connections and sometimes only to users on the same ISP. There are still going to be plenty of calls to mobile and standard fixed phones and along with those ISPs that do charge for VoIP as part of a bundle this still adds up to a pretty good revenue stream”.

3. Gaming – Gaming is classified as just another VAS, but this industry obeys its own complex rules. Most gaming industry pundits believe that the big editors like EA or Valve will lose out to more innovative smaller outfits. Operators have been trying to capture some of the value here for over a decade. I don’t see why they should be any more successful in the future than in the past.

4. Music downloads – I’m surprised that this market is still seen as existing by Point Topic. At the last party with dancing, that I went to, people asked for a Deezer connection to play their songs, rather than hooking up their iPhone. To justify downloading, the size of files must be large relative to available bandwidth. If there are say, stereoscopic 4k videos in 2020, then maybe video downloading will still exist, but I don’t see how downloading will remain relevant for sound files in 2020. So if this revenue is generated from streaming, then network operators might just scrounge the scraps, with the lion’s share of this market remaining with service providers like iTunes or Spotify.
So I asked Point Topic why they kept this segment until 2020. Oliver answered: “streaming will become more popular, but it can still be patchy. Unless you want to use your mobile bandwidth while out of reach of free WI-FI, or eat your much larger fixed allowance then just for efficiency’s sake, users will want to download once and share that file amongst their devices. Memory/disk space if just cheaper and more reliable than having to be in the cloud the whole time. In addition we still retain the desire to 'own' something, even if it's bits on your disk drive, having something to hand is more convenient and more desirable. Just look at the Megaupload case to see what can happen to your data if you trust it to someone else.”
That’s where I beg to differ, because I think connectivity will be so much better and even more ubiquitous in 2020.

5. Security – I have no doubt that there will be a gold rush on this market. Of course anyone selling spades will make a fortune, but beyond the obvious B2B market, the jury is still out as to whether the public at large will spend significant budget on remote sensors, cameras, and the like. If the segment were to include home automation, it might stand a better chance. But it’s still a level playing field so anyone could come out on top.

6. Home networks – this is a new frontier, which I’m excited about. People are in pain and we don’t even know how to start fixing their problems. Part of the solution will include more robust and simple networking technologies, some monitoring and helpdesk services, content discovery and DLNA approaches to in-house content sharing. But if home networking can’t be made easy very soon, it may never make it as a mass market, because the Cloud is already here...

7. File transfer / cloud – I would have guessed this would be the big one in a 2020 market. Watching Dropbox make an impact in both business and consumer segments in parallel shows that there is a clear demand here. In an 8-year window I could easily imagine the descendants of Dropbox taking a slice out of whatever I’m willing to pay for access to content. Amazon seams to believe in the link between hosting services and the content therein. The experts at Point Topic have plotted a line based on today’s typical file transfer service. Again I have no issue with the method to get to a market size, but this is an area where services in 8 years will be so very different, that it probably doesn’t mean much anymore.

8. Teleworking – Teleworking was always going to be so very important so very soon. The technology has actually been available for many years. The success or otherwise of teleworking will now be driven by what is socially and / or professionally acceptable in terms of behaviour and work ethics more than by any new service or technology. So I see no reason for the tiny size or the stakeholders of the Teleworking market to change over what is - for social change - a short period of time.

You can see Point Topic’s press release here.

 

 

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Why CAT-iq matters

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It is a fair bet that not many people even in the broadband and broadcast community have yet heard of CAT-iq, while at the same time they may have forgotten about its predecessor DECT, the digital cordless telephony standard. Yet DECT is still very much alive and well, while CAT-iq (Cordless Advanced Telephony – Internet and Quality), has emerged as a very important wireless standard for the home network that will run alongside WiFi. It can be regarded as the next generation of DECT, but is more than that, since it goes beyond voice to place a stake in the emerging world of converged home networks that will bring together all the digital media and communications needs of the home within a single infrastructure. CAT-iq does not do the whole job, because it is a low bandwidth standard for voice, data and home automation, leaving Wi-Fi to distribute broadband services and HD video. But as the name suggests, CAT-iq brings convergence with the Internet, while adding support for high quality of service focusing primarily on high definition voice, specifying mandatory levels for various quality parameters. For these reasons it is of great interest to vendors of home operating platforms such as SoftAtHome, which has become the first software provider to gain certification on an Home Gateway for CAT-iq 2.0 from the CETECOM laboratory, one of the official qualification laboratories of the DECT Forum.

CAT-iq represents a new level of ambition for DECT, since it breaks away from the purely voice focus to take on other, so far better known, RF (Radio Frequency) technologies for low power audio, signaling and automation communications within the home, notably Zigbee and Bluetooth. The reason for CAT-iq’s ability to take these on lies in DECT’s pedigree as a long proven technology for distributing voice and data within the home with very low electromagnetic emission and power consumption, which have become more important with the growing focus on energy use and green issues. It also avoids royalty payments, and is low cost because of the economy of scale already achieved through a large community of DECT system manufacturers, while unlike the other RF technologies including ZigBee and Bluetooth it is immune from interference from Wi-Fi interference in the 2.4GHz band. The latter is very important, because WiFi is the only game in town for short range wireless HD video delivery, and so whatever low power technology is used for home automation will have to coexist with it. For these reasons we will be hearing a lot more about CAT-iq, even if it does not quite become a household acronym.

[blog written by Philip Hunter for Videonet]