I'm at the SNRC/Accel Symposium today, the topic is "Next Generation Media Networks: the future of content delivery". I'll liveblog as much as I can, but I have a meeting back at my office later this afternoon so there will likely be a hole in my coverage.
The first session is moderated by Ping Lee, topic is "IPTV: will the triple play be a home run".
Panelists include:
Jon Cioffi, Stanford
Kenny Frank, Alcatel
Balam Nair, Qwest
Adam Tom, RGB Networks
Balan hits the key question: why do telcoms want to get into this game when they don't have any experience with content networks? The answer is that the traditional voice business is a commodity market with lower cost of entry and the slice of the pie is getting smaller. On the data side of the business, bandwidth wars between telcos and cable providers have begun and will continue. Telcos look at video as a service to replace lost revenues and pay for plant upgrades. The technology has been around for 5 years, and new compression and band plans make video over twisted pair very competitive. The inclusion of video in telco offerings ensures that telco remain in the consumer markets. Balan also points out that cable and telcos have managed to piss off at least 20% of their customer base, so video is the ideal swapping strategy to bring customers to replace defections.
He talked in some detail about the various fiber options, but the net takeaway is that fiber is great for new construction, but not so good for retrofit of older structures. Fiber is great for video, offering up to 20mbs.
Interesting slide on services, what caught my eye is EPG (enhanced program guide), full line up HD, network-based PVR and control applications (home automation). Most of the other items were the usual suspects, e.g. a la carte programming.
My impression on Balan's take on the market is that it's a very rational and logical thesis. The point about their customer service reputations and swapping customers is interesting. It's clear that over the next couple of years we will see telcos invest heavily in this area, which would suggest that M&A activity, but I would be cautious about expecting too much considering that Qwest's stock price is $3.75 for a $7b market cap, which is representative of all the telcos so they may not have a lot of currency for doing large deals.
Adam Tom is up from RGB Networks. This company seems to predominately deal with cable and satellite networks, which isn't surprising considering that video is almost exclusively available on those networks. Tom's thesis is that video will become much more personalized (I've been hearing that for a long time, but I'm inclined to believe that market and technology conditions are finally ripe for this prediction to be realized). Tom points out the catalyst for this being the transition to fully switch gigabit ethernet networks from expensive ATM/Sonet infastructures that telcos have traditionally relied upon.
There are a couple of slides on the existing cable network infastructure, the takeaway is that there are a lot of services required to be able to deliver video over a switched network, mostly along the lines of managing buffers, timing, and bandwidth modulation. This makes me wonder whether or not telcos are going to be able to get this online and the requisite learning curve tackled in the 2006 timeframe. The cable operators clearly have a headstart, but as HD programming has proliferated in response to consumer demand, the cable guys are also facing bandwidth constraints.
We're getting into what RGB does, and it's really interesting. In a nutshell, they concentrate on processing very large numbers of streams simultaneously while reducing the cost of switched video networks.
John Cioffi from Stanford is up at the podium talking about dynamic spectrum management. Lot's of slides with graphs and stuff, will check in later...
Kenny Frank from Alcatel is up now. He made an interesting point about North American telcos leading the charge on IPTV with 100% of the carriers developing or launching services. In Europe and Asia, only 80% and 30% respectively are investigating or rolling out, perhap because those regions don't face the corporate threats that NA carriers do with the cable operators. Franks estimates that by 2010 there will be 72 million IPTV users generating $28B in annual revenue.
Frank also makes a very good point that IPTV isn't content over IP networks, it's digital quality video with high qualty of service, digital services, and multiple video windows with faster digital channel changes. This is a good slide because it clearly differentiates what the telcos are doing from startups in this space and new market entrants.
On bandwidth, it's clear that doing HD IPTV will require a 20mbs connection at a minimum, so it's going to be interesting to see how fast the telcos upgrade their networks, and integrate the things like policy managment, security, QoS, and so on in an integrated and predictable manner.
Frank also points out that IPTV changes the telcos business model significantly, even to the point that changes in their union agreements will be necessary. Interesting.
Alcatel and Microsoft have a partnership to bring Microsoft TV to sevice providers. Frank emphasizes that this is not "internet TV", it's a better TV experience featuring a user centric approach.. whateve that means.
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