By Fred Dawson,
CED, September, 1998
The cable industry will soon be confronted with a paradigm shift in
interactive television that could drastically affect how operators design
their networks and even how they make money.
In a nutshell, the new challenge arises from the fact that, contrary to
previous assumptions, consumers are likely to have a wide range of
sources to choose from for access to long-form, on-demand
television via their high-speed data channels. A bevy of startups,
some with major financial clout, are positioning themselves to use IP
(Internet Protocol) technology in conjunction with high-speed
backbones and local points of caching and distribution to offer
customers direct access to movies, time-shifted TV programming
and the full range of other options commonly associated with IPTV
over telco xDSL (digital subscriber line), cable modem and wireless
broadband access links.
"Our notion is to build a presence in the top 60 markets in this
country, delivering not only entertainment on demand but providing a
video-enhanced platform for e-commerce and advertising," says
Jonathan Taplin, chairman and co-founder of Intertainer Inc., a Santa
Monica, Calif.-based firm created by Hollywood executives with
extensive experience in program production. Unlike some of the IPTV
startups, Intertainer has taken a cable-friendly stance in an effort to
persuade operators to allocate separate data channels to
accommodate its programming, rather than trying to pump TV fare
through the ebb and flow of packet traffic over cable's PC-oriented
high-speed data links.
But Taplin acknowledges that Intertainer, like its competitors, could
offer services directly to end users with high-speed data pipes without
having to strike separate deals with cable operators. "Our goal is to
be access neutral while putting together the content and e-commerce
product offerings that make us the central store that people come to
for what they want," Taplin says. And, he adds, while Intertainer is
positioned initially to deliver its programming to PCs, it anticipates the
implementation of intelligent set-top devices, such as the OpenCable
terminal, will provide users direct access to the service through their
Intertainer's service, which is undergoing market tests with Comcast
Cable in Willow Grove, Pa. and with US West starting in the fourth
quarter in Denver, operates from locally positioned servers accessing
storage disk arrays holding 500 hours worth of content that it
refreshes at a rate of 20 percent per month from its production
facilities in Culver City, Calif., Taplin says. With investment backing
from NBC, Comcast, US West, Intel Corp. and Sony Corp., the
company has secured programming support from all the major
studios except Paramount as part of a strategy to make its services
widely available over cable and telco links, he adds.
There are many other entities moving into this IPTV space, notes
Tom Rogers, president of NBC Cable and Business Development.
NBC, with still-incomplete plans to supply Intertainer with
programming content, chose the Santa Monica company as "the lead
horse to ride," he says. But, he adds, at this early stage of ITV
development, NBC's focus is not so much on providing access to its
content as it is on learning more about the market as it develops its
"This gives us a seat at the table to see how this type of service
relates to the traditional broadcast and cable service environments,"
Rogers says. "We want to know more about viewer habits, the
impact on advertising and e-commerce, the importance of
personalized media and many other factors that will drive our
decision making in this area."
While the new IP-based TV model may very well take much of the
control over interactive programming away from operators, cable will
still have a vital role to play and an advantage against its competitors
through its ability to market, localize and personalize services,
Rogers notes. He declines to speculate on what the business impact
might be long-term under the scenario represented by Intertainer, but
he suggests cable has little to fear.
"You have to have the ability to personalize choice," Rogers says. "My
own view is that cable has a huge headstart."
The cable industry has labored through much of this year to define a
standard set of APIs (applications program interfaces) that would
enable cable operators to control access to interactive TV through the
proprietary side of their digital distribution networks. At the same time,
OpenCable strategists have included cable modems as part of the
set-top design along with IP -to-NTSC format conversion capabilities
for TV display of Web graphics, believing that, offering customers the
ability to surf the 'Net via TV will be an important market driver to
OpenCable box penetration, as well as serving as a protection
against inroads by independent Web set-top purveyors, such as
Microsoft Corp.'s Web TV and its allies.
"There are two dangers here," says a source close to the OpenCable
process, asking not to be named. "You have the prospects of
customers choosing to get their interactive TV services from
providers over the Web who don't have a direct fee-sharing
relationship with the cable operator, which would tend to cannibalize
the operator's proprietary ITV offerings.
"And you have the problem of IP television clogging the data channel,
which could force operators to add more data channels," he adds.
"But that would only facilitate access to the outside providers,
possibly creating even more customers for them."
Sources say uncertainties over where the OpenCable box is taking
the industry have added to the difficulties of reaching agreement on
standards. Some strategists believe a "thin client" paradigm, where
the cable operator can use centralized computer processing to
assure themselves greater control over the data as well as TV
revenues, is the answer, while others are pushing for high-processing
capability as a means of ensuring the highest levels of interactivity are
at the premises to accommodate the growing convergence of various
appliances and their applications in the home.
"We're trying to define a very complex set of APIs without anointing
any particular set-top OS (operating system)," says Don Dulchinos,
director of business development at Cable Television Laboratories
Inc., which is spearheading the OpenCable protocol process.
"It remains to be seen where the pedal will hit the metal on the issue
of thin clients vs. computing-intensive set-tops," Dulchinos adds.
"We're in discussions with Sun (Microsystems Inc.) on the question
of how we can take advantage of Java to support applications across
the network that can run on limited computing power at the set-top."
The emergence of purveyors of long-form TV mapped to the IP
format represents a challenge to cable's strategies that wasn't there
when the OpenCable plans were first formulated nearly one year ago.
Then the Internet was deemed ill-suited to supporting any business
plan that envisioned delivery of movies or other TV programming
other than short, streamed clips. But the opening of high-speed
access routes to the home via not only cable modems but also
high-speed DSL technology and wireless broadband, combined with
the creation of ever more high-speed long distance data networking
bypasses of the Internet backbone is changing the business
Another sign of what is to come -- and the financial market's support
for the idea -- can be found in the recent changes at Dallas-based
Broadcast.com Inc., formerly AudioNet Inc., the leading supplier of
audio services over the Web. Officials at the company, now in a quiet
period following a highly successful initial stock offering, decline to
discuss details of their plans, but the company has already created a
spot on its Web site for people who have high-speed access to
receive broadband data-quality video, which typically runs at frame
rates and resolution levels below standard TV but substantially above
the levels that are possible in dial-up mode.
"Our plan is to offer movies, old TV shows and other material
on-demand over our broadband video channel," says a company
source, asking not to be named. Like other firms in this category,
including Los Angeles-based Alternate Entertain-ment Network
Television Inc. and New York-based Pseudo Programs Inc.,
Broadcast.com is using IP multicasting over specially prepared
network facilities to achieve more efficient distribution of its content
from local caching centers.
Some cable operators have taken comfort in the difficulties such
entities face in putting together the end-to-end high-speed distribution
system that would be necessary to make them formidable
challengers to cable's headend-based distribution system. But these
new entities are exploiting new implementations of IP multicasting,
directory management and other protocols in routers and switches in
conjunction with high-speed fiber links to overcome the traditional
"Twelve months ago, people were looking at (IP multicast) trying to
figure out what it was and what it meant to them and their networks,"
says Martin Hall, CTO of Stardust Forums, a consortium of about 100
vendors, service providers and enterprise users devoted to fostering
multicast development. "This year people understand what it means
to their networks and are moving to fullscale deployment plans."
In multicast mode, routers distribute a given file to all hosts that have
signaled they want to receive the material, using the Class D
addresses of the IP addressing hierarchy. This summer, participants
in Stardust began what Hall expects will be a series of interoperability
tests of products employing version 2 of the multicast protocol stack
and various techniques now under consideration for the next
generation of the multicast standard. The goal of these ongoing
developments is to provide support for very large multicast operations
dedicated to video and other bandwidth-intensive applications, Hall
Server as well as router vendors are implementing various solutions
to these requirements, including the hooks that allow for premium
pricing of multicast services, says Rod Murchison, product manager
for IP multicast at Newbridge Networks. Efforts underway within an ad
hoc group known as the "Directory Enabled Networks" initiative,
spearheaded by Microsoft Corp. and Cisco Systems Inc., are key to
turning multicast into a distribution medium with mass-market
potential, Murchison adds. "What the DEN initiative says is that we'll
create a common scheme for all the policy questions, where we'll be
able to determine the priorities and authorizations associated with
each user," he says.
Other new activities adding flexibility and scale to multicasting involve
techniques such as "IGMP Snooping," where the InterGroup
Management Protocol that is central to multicasting is enhanced to
allow layer 2 devices such as ATM (asynchronous transfer mode)
switches to segment traffic on a port-by-port basis, thereby limiting
the saturation effects of multicasting. "New switches are coming out
with multicast containment protocols built in, but existing switches
may require hardware or software upgrades, depending on the
vendor," Murchison says.
Along with support for multicasting, the Directory Enabled Networks
initiative is also promoting development of OSS (operations support
system) solutions that will give service providers the means to run
their businesses efficiently on a nationwide basis, with centralized
control over provisioning of services, billing and network
management. A key player in this domain is Bedford, Mass.-based
American Internet Corp., which has just released a new version of its
software that makes use of the increasingly popular Internet directory
system known as Lightweight Directory Access Protocol (LDAP) to
simplify linkage of information across several applications fields.
With LDAP now nearly ubiquitously available to provide the means for
gaining access to server directories throughout the IP domain, the
Internet industry has been able to add more applications through the
LDAP APIs in a way that enables service providers to take a
standardized approach to managing their networks, says AIC founder
and board member Throop Wilder. Cisco has adapted AIC's
technology to its new line of router switches, providing a built-in
means by which providers can implement these capabilities, he
"We've made a strategic decision to invest in broadband in order to
address the need for an OSS that provides the command, control
and integration that is associated with OSS in the telephony world,"
Wilder says. "The great thing about IP is that you can capture a ton of
information by being an element in the network."
AIC's system provides the linkages between the basic IP address
information of each user and virtually any type of application, starting
with the initial installation and registration of a customer and extending
to provisioning of specific services, billing and the customer care
process, Wilder says. This integration allows service providers to
more thoroughly automate operations and to scale their systems as
the customer base grows, he notes.
These developments, of course, are not lost on the leading providers
of high-speed cable data services. MediaOne's data service unit has
been using a first-generation version of AIC's system in rollouts
during the past year and is now moving to put the newly-released
second generation to work, says Tom Axbey, vice president of
marketing and business development at AIC. "We've also been
working with (the Time Warner side of) Road Runner, @Home and
Adelphia (Cable Communications)," Axbey notes.
In addition, 3Com Corp. is making use of the software to tie together
the operations and features capabilities of modems conforming to the
new DOCSIS (Data-Over-Cable Service Interface Specification)
standard, notes Niraj Jain, director of strategic alliances for cable
access products at 3Com. "Our customers have found that Network
Registrar provides the robustness, scalability and flexibility necessary
for commercial data services," Jain says.
Adding further to the momentum in the IPTV space is a new
generation of media streaming software that enables content
developers to create video and audio files that will stream data at
rates suited to the access speeds of end users. Moreover, these
tools make use of the new SMIL (Synchronous Multimedia Integration
Language) protocol recently endorsed as an Internet standard by the
the World Wide Web Content Group (W3C). SMIL permits
developers to mix text, animation and still pictures along with audio
and video in streamed media segments, greatly enhancing the role of
streaming in defining the nature of content on a Web site.
These capabilities are key components of the second-generation
Real Networks Inc. system, which was recently released for beta test
in preparations for commercial rollout, probably later this year. Other
suppliers of streaming software, including Microsoft, through its
NetShow product line, are said to be preparing to introduce similar
capabilities with the next versions of their tools.
What these capabilities add up to in terms of the transformation of
content on the Web was hinted at in some initial applications that
were available for viewing from RN's server at the time of its
"Generation 2" beta release in July. For example, the Sony Music
Entertainment unit of Sony Corp. now offers users who have
downloaded the G2 RealPlayer plug-in access to streamed music
videos which also include information about the artist and the song
that changes, along with relevant hyperlinks, as the song progresses.
Most compellingly, from a broadband access standpoint, users on
high-speed links automatically receive the streamed package at
frame and resolution rates far beyond what dialup users can access.
"There's a lot more flexibility to create interesting content with these
new tools than we've ever had before," says Jeff Garrard, senior
executive editor for CNN Interactive, which is one of about 70 entities
participating as "channels" on RN's RealPlayer Web page.
Such developments have many implications for cable providers of
high-speed access services, starting with the fact that the
SMIL-enhanced media presentation via streaming that CNN and
others are developing is in many instances superior to the
custom-made, non-streamed enhanced content that some of the
same as well as other entities are supplying to the cable providers.
Very soon, as CNN goes to higher rates and integrates SMIL more
thoroughly, cable data subscribers who download the G2 RealPlayer
will have a more compelling version of the network's online services
via its Web site or the CNN channel on the RealPlayer than they can
get through the proprietary CNN content component offered over the
branded @Home product.
@Home Network, which is providing broadband-enhanced versions
of CNN and other material using large file downloads and playback via
Apple Computer Corp.'s Quicktime multimedia software, is likely to
switch over to streaming once CNN Interactive begins offering a
high-speed version of its files to anyone with high-speed access,
whether they're @Home subscribers or not, Garrard says. "@Home
has had issues with using streamed media, especially for short-form
content, because of their need to manage their network as efficiently
as possible, especially on the access side, but the new streaming
environment probably changes some of the underlying operational
assumptions," Garrard notes. "Whether they'll go to RN or Netshow
or both remains to be seen."
If, as seems inevitable, content suppliers using RN's G2 and other
streaming systems as well routinely add a high-speed delivery option
to their streaming files, cable operators can expect users to be
pushing bandwidth contention levels well past the levels underlying
the current design parameters assigned to the typical HFC (hybrid
fiber/coax) network. Such problems, representing as they do the
availability of content with the power to draw subscribers to
high-speed services, are the kinds of problems operators should like
to have, argues Kelly Ruebel, director for marketing and sales at
MediaOne Group's Express unit.
"We're very focused on content," she says, "but, I have to say, what's
happening over the Internet at large is that there are a whole lot of
things people want to access which you can't really appreciate unless
you have high-speed service, either because of the long waits to
download files or, in the case of streaming, the limited quality of video
delivered over dialup lines."
Indeed, the expanding use of broadband-enhanced streamed media,
combined with the launch of companies devoted to long-form IPTV,
suggests cable operators can look forward to escalating consumer
demand for high-speed data links, irrespective of whether the cable
companies themselves are creating compelling high-speed data and
ITV content. The question for cable operators is whether they will
come up with the network designs and business plans that can turn
this rising tide to their advantage.