Interesting: Over-the-top (OTT) video impacts on service provider networks

Over-the-top (OTT) video impacts on service provider networks

The telco adoption of IPTV as a triple play service, just ten years old, has spurred continued growth in bandwidth to deliver multicast video to the subscriber (writes Steve Klein, Director of Marketing and Business Development at Allied Telesis).

Serving multiple TVs in the home using MPEG2 compression posed the first challenge, followed by the delivery of HDTV as MPEG4 compression became commercially available. There has been a growing need for high bandwidth to enable IPTV service in the user-bound downstream direction of traffic for linear channels, with the necessary Internet-bound upstream bandwidth primarily for voice, low bit-rate data communications and best efforts Internet access.

As service providers are just now reacting to whole-home DVR, consumers are rushing to embrace alternative video services from the Internet. Google, Netflix, Pandora, Hulu and others feed consumer demand – with PC, mobile and game station manufacturers incorporating features to support over-the-top (OTT) video services. OTT video is delivered via the Internet to set-tops, televisions, PCs and game stations rather than from a traditional broadcast.  The driver for OTT video is not only based on consumer demand – many content providers as well as advertisers see a new, lucrative market. The notion of studios and content providers fearing the Internet due to piracy has been largely dispelled in recent years.

Additionally, nearly every home becomes a broadcast studio, and each subscriber a content provider. People of all ages are using the Internet to upload photos and videos, sharing them with friends, family and the public. According to recent statistics, 73% of all Internet traffic is video content based on bits. The combination of video sharing and Internet video content downloading is making the Internet a video delivery vehicle, not merely a data network for web surfing.



Figure 1: Familiarity with and use of Netflix's "Watch Now" streaming video

The PC has become a video terminal and set-top device; often times used as much as a television by many consumers who are unable to be home to watch a program. Nearly all plasma and LCD/LED TVs today have Internet connections (USB, Ethernet, even wireless), and closely resemble the functionality of a PC. Likewise, PCs have video functionality along with interfaces as well. Digital set-tops typically have an Internet port (Ethernet), and game stations have Internet (Ethernet) ports, and can act as a DVR and set-top. An example is the Nintendo Wii, which can download Netflix videos via the console. The convergence at the consumer device level indicates the strategic importance of OTT video applications.

Still to come is 3D video and ultra-high definition video. It is interesting to note that PC makers such as NEC are already introducing 3D PCs. There is still debate on how rapidly 3D TV will be adopted, given the cost of TVs, the need to wear glasses, the dangers in viewing being cautioned, as well as economic concerns for  service providers related to encoding and transporting 3D streams.

What it means to a service provider

For years, the debate has raged on whether a telco is a service provider or a utility providing "the pipe". The answer may be both. If the value chain from the consumer side is driven by fast downstream and upstream Internet access to support services and applications they desire, then the value of the service provider network lies in bandwidth.

In the past, consumers have shopped price when choosing a service. With the introduction of high-bandwidth services, consumers willingly began to pay for the applications they were interested in and the quality of performance they desired. Network bandwidth and speed has become a value to the consumer, one which they are now willing to pay for.  If the service provider offers low performance download and upload speeds for OTT video, the consumer will not find value in the service, and instead, shop for alternative providers offering faster service and higher performance. For the service provider, it becomes a lost revenue opportunity and a customer retention issue.

A broadcast TV service model is based on linear content (channel line-up) purchased from the content provider and resold for a subscription fee to the subscriber. OTT video takes the network service provider out of the equation, and allows content providers, aggregators and Internet service providers to generate revenues directly from the subscriber.



Figure 2: How will Internet video influence next-gen telco IPTV distribution models?

Network service providers have begun to adopt a new business model for generating revenue from the IP connection. This entails charging the Internet content provider a bandwidth fee for its programming, and the subscriber for the high speed connection provided to support the application. Therefore, architecting the network to deliver and support massive amounts of OTT video allows for the network operator to monetise bandwidth – proposing a different business model of triple play from the current model where the network operator is also the service provider for content.



Network operators need to consider architecting a fibre-based access network designed to support and capitalise on OTT video (and Internet growth in general) based upon symmetrical bandwidth delivery. The ability to deliver 100 Mbps. or a gigabit in either direction addresses the need to support OTT video, and allows the service provider to capture the incremental revenues subscribers are willing to pay for OTT video and gaming services.

Google's recent announcement to launch a gigabit symmetrical to the home can be directly traced to OTT video. As one of the world's leading innovators in Internet applications and services, Google is at the forefront in creating new Internet applications, many of which are OTT-based services. With Google's announcement to offer Internet TV 'channels' and introduce its own Internet set-top, one can clearly infer where OTT video is being driven – an alternative to cable and a free-to-air broadcast programming platform.

As televisions become Internet-connected and PCs become video appliances, the functional distinctions are quickly blurred. The results are a greater number of appliances per home accessing and using video content, and the Internet becoming its own video "headend" or master signal processor and distributor. The overall amount of bandwidth consumed for video increases dramatically, resulting in the demand for an increase in capacity. 

The capital investment cost needs to be measured by the revenues generated, not merely on the costs per port, per home, or subscriber. The ability to offer subscribers a tiered Internet access, ranging from best efforts to guaranteed bandwidth packages to symmetrical service,  has the potential to represent a tremendous source of revenue. Today, the tiered bandwidth, high-speed Internet access services offered by service providers are based on downstream rates, rather than upstream or symmetrical rates.

Conclusion

In a competitive world, services become commodities over time. Whether it is telephone, Internet, or broadcast television, the market price is driven down by a combination of competition and consumer pressures. The solution relies on the growth and evolution of new applications and services that bring incremental value (and revenues) to the service provider. Therefore, it is the service network that becomes the real asset, making bandwidth the biggest value. Without the appropriate bandwidth capabilities, capitalising on new services such as OTT video is capped.

Service providers, both cable operators and telcos alike, have been scrambling for years to keep pace with new service demands through network capacity upgrades. By architecting a peer-to-peer active Fibre-to-the-Home (FTTH) network, the service provider can finally get ahead of service demands and begin creating the value networks could generate through symmetrical bandwidth.

Video, once considered an entertainment service, has now become a means of communication with the advent of over-the-top video and mobile applications. Just as texting and email have displaced voice as the primary means of communication, OTT video has become another way in which people communicate. From both the network and operator's perspective, the evolution of video as a communications tool translates to greater bandwidth demand and availability to deliver video across the network. As video provides a means of both communication and entertainment in today's society, service providers need to prepare for the performance and bandwidth levels necessary for tomorrow's consumer. 

source:  http://www.iptv-news.com/features3/features/over-the-top_ott_video_impacts_on_service_provider_networks