Lowering the iTV barriers: according to the vendor community, technological advances are strengthening the business case for delivering interactive TV services over DSL networks - iTV - The cost-effective network

Telecommunications International, April, 2002 by Isabelle Mounier

Telco operators would be making a grave mistake if they ignored the business opportunity provided by broadband entertainment and interactive TV (iTV) services. The traditional telco business -- fixed-line telephony -- is shrinking and cable operators with their 'triple play' packages of digital TV, high-speed internet and telephony services are beginning to 'steal' their customers. If they are to survive and prosper, telcas need to leverage their prize asset -- the copper network.

The good news is that DSL, combined with technological advances in video compression rates, makes it possible to deliver entertainment and interactive (iTV) services over the telco's existing access network. And once these services ore marketed nationwide, broadband subscriber take-up and ARPU will increase.

Thanks to DSL, operators have already established a significant market shore in the high-speed internet market. But by entering the TV market they can become 'triple-pay' operators themselves and reap the full benefits of having the world's largest access network: telcos hove the potential to provide broadband entertainment services to an existing installed base of 1.3 billion phone lines.

But it isn't only network reach that gives telcos an advantage over cable operators. Historically, telcos have built strong relationships with their customers and so the combination of the 'customer confidence' asset and 'triple play' service -- all on one bill -- should make for a potent force within the broadband marketplace.

And triple play it has to be. Telcos would be rightly accused of short-term thinking if they chose to focus on high-speed internet access alone as prices for that market are falling all the time. To generate new revenue streams the only viable option is to develop and market new value-added services that customers are willing to pay a premium for. And bearing in mind that the installed base of TV sets is on average five times larger than the installed base of online PCs it is easy to understand that bringing new interactive services to the TV set opens a huge opportunity for revenue creation. By offering services such as video broadcasting, pay-per-view, video-on-demand and T-commerce, telcos will increase revenue per subscriber.

iTV network architecture

A wide range of proven architectures is available to deploy TV services over DSL networks. A typical architecture (Figure 1) can be divided in four parts. First of all, the head-end does the acquisition, compression, transrating/transcoding and multiplexing of video streams. The services are then encapsulated using either MPEGover-IP-over ATM or MPEG over ATM, and transported over ATM or IP. While ATM is particularly adapted to provide quality and bandwidth for video services, IF networks implementing multicast and quality of service are well suited for the provision of interactive services, such as web browsing, VOD or networked games.

Different implementations are possible also for the access network as multicast capability can be either embedded in the DSLAM or in a separate IP multicast router or ATM switch. Network operators can implement architectures tailored to their needs in terms of cost, performance and capacity.

On the end-user side, the channel is first terminated by the ADSL modem and then usually fed via ethernet to the set-top box, or directly by a set-top-box with an embedded DSL modem. Given that encapsulation at the headend is MPEG-over-IP-over-ATM, a wide spectrum of ethernet-compatible media such as wireless ethernet, HPNA (home phone network access) and wired ethernet can be used for in-home distribution. However, the DSL modem and set-top-box will eventually merge to become an essential broadband home gateway element that will enable communication with different IP devices in the home.

Multimedia over DSL is now a mature technology. As a result, and because industry players strongly believe in it, a wide choice of solutions is now available on the market. This is true at every stage of the video over DSL chain. On the consumer side, major set-top box manufacturers are releasing DSL-enabled versions. Middleware and applications are also available.

On the infrastructure side, video head-ends including low bit rate MPEG-2 encoders are available and DSLAM vendors are now focusing on video applications to provide dedicated solutions. Telco operators now have all the bricks they need to build and deploy their network for the provision of broadband multimedia services in a safe, future-proof and economic manner.

The business case

For a long time, the main drawback of DSL was lack of coverage. It was also believed that the distance constraints of this technology did not allow sufficient bandwidth to deliver video services to a large portion of the population. But two major technological improvements have removed these barriers.

First, performance enhancements and widescale deployments of DSL networks now enable telcos to provide bandwidth up to 4Mbps to a large part of the population. Second, technological breakthroughs in video compression have dramatically reduced the bandwidth required for video services over DSL networks.