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India's Leading Source for Broadcasting & Broadband Information - CableQuest Magazine
HomeInterviewsDigitisation is the fist step to Broadband

Digitisation is the fist step to Broadband

Feb 10, 2016
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CQ: What are the world wide trends in content distribution and what is the future of Pay TV?

Simon: Subscriber figures in traditional satellite and cable pay-TV has started to reach a plateau in advanced markets.   At the same time, service providers realize that, with IP video delivery becoming a technical and commercial reality, there is an exciting opportunity to focus on addressing the new market segments of TV and video content distribution. With more and more younger generation consumers going for affordable hand-held and mobile devices for viewing video content, service providers have started making lower cost vertical packages to address a diversity of consumer needs and segments. That’s an exciting development for the industry.

In the developing world, growth of digital TV content distribution services continues steadily, with telcos as well going all digital. For instance, in Latin American developing countries, where NAGRA has a leading market presence, telcos and cable operators are building more and more IP services such as video streaming and on demand services. With ever increasing global demand for IP service, equipment and general infrastructure costs are also coming down heavily, creating positive market dynamics.

CQ: What technologies are being used to provide the digital services?

Simon: IP broadband access for consumers is definitely key.  FTTH is the technology, along with Wi-Fi in the home, that will transform digital video content distribution by delivering great video experiences to consumers. Yet it is still in the initial growth stage, even in developed economies. In parallel, cable operators are using more DOCSIS and Hybrid Fibre Coax (HFC) network technology to provide a great mix of broadcast and broadband television services.  In most instances, DOCSIS offers a solid IP broadband platform to cable operators, allowing them to offer live and on-demand multiscreen TV services, using Adaptive Bit-Rate technology over IP, in addition to their line-up of broadcast channels.

CQ: Why is FTTH still growing slowly?

Simon: FTTH is still an expensive business proposition to implement, as new cabling and equipment need to be deployed in the field to reach consumer homes – the so-called “last mile cost”.  In developing markets, there is often not enough content available to help fully monetise this new network investment. Yet the new 4K and UHD content formats create new demand, and coupled with growing consumer appetite for on-demand TV consumption. This leads to high bandwidth requirements that can be easily met with FTTH or HFC Networks. Hence cable operators have to gear themselves up for this kind of competition as well as seize the opportunity they have to develop new services, particularly in growing economies like that of India. 

In India, cable operators have historically focused on TV delivery, that is now going digital.  That’s a great first step, yet cable operators face investment challenges to go beyond digital broadcast TV and offer IP-based services. They have the opportunity to focus on leveraging their cable network assets to offer high bandwidth broadband networks, monetizing multiple-play services (internet access, VoIP telephony) as well as advanced TV services (on-demand and multiscreen OTT TV) that can mechanically and sustainably grow ARPU through service innovation while lowering churn. 

CQ: In many areas it is not economically viable for Cable Operators to build the digital networks. The large MSOs do not find it profitable to build infrastructure to reach these Cable Operators with their digital services. Thus, even if these operators want to go digital, it is not practical for them to do so. How has this situation been overcome in other countries?

Simon:  Regarding broadband penetration in rural areas, all over the world, the national and regional states and regulators have given some incentives to help operators build broadband networks in remote areas. As the purchasing power of consumers is often lower in remote areas, the price of the baseline service needs to be kept low. Hence, the ARPU tends to remain low at first. This helps create a large demand. Operators providing consumer friendly services are then able to quickly build a customer base, and upsell content and new services to the more affluent and demanding consumers in a second step. It is a nice business challenge that appears fully within the reach of Indian cable operators.

In Europe, there are still many countries where cable networks are structurally small and providing next generation multiscreen digital TV services to retain customers and increase ARPU has proven to be a challenge at first. In such cases, cables operators have moved smartly by providing more on-demand services and targeted, incremental pay-TV content packages.   This way, cable operators have been able to provide their own basic service along with the on-demand services and pay-TV packages, expanding their revenues by striking the right value-for-money balance for their markets.  Such cable operators have leveraged multiscreen and on-demand TV services by tapping into NAGRA’s Cloud TV Software-as-a-Service platform for on-demand and live TV streaming.  

CQ: Liberty Global provides Pay TV services all over Europe. How does it meet the demand of different types of operators existing in so many countries?

Simon: In Europe, as purchasing power varies significantly throughout the Eurozone, we can say that there are two types of markets. Firstly, there is an advanced market, where OTT, streaming video and multiplatform TV services, often based on sophisticated gateway/PVR set-top boxes, are in high demand. 

In the second category, in countries where ARPU is lower due to local economic conditions, mostly entry-level TV services are provided with set-top-boxes that have less features, are less expensive, so that consumers still have access to the best HD content at the right price point, with the option to upgrade to a more advanced set of features at a later point.

This dual strategy has been successfully implemented by Liberty Global, a NAGRA customer with over 23M video subscribers in Europe.  This shows that core technology like content protection or middleware and backend software can apply to the whole network, while devices like STBs can then be tailored to the specific needs of a given segment.

CQ: What kind of challenges, an international TV solution and content security company like yours has to face under the present circumstances?

Simon:  In this new multi-network and multiplatform environment, delivering the right TV solution while securing the business model of service providers and providing robust content protection to get access to the best content is really a challenge. Security of content on converged hybrid IP-broadcast networks can get very complex. At NAGRA, we have reduced these complexities to a great extent for the connected environment by making important technology investments over the past years, both in hardware as well as software. 

In most countries worldwide, two different types of media distribution platforms now co-exist in hybrid mode:  one-way broadcast and two-way IP networks. On IP networks, we saw OTT on fixed networks explode over the past 3 years, and now we see that the mobile platform has increased its reach with 4G technology being rolled out.  With concurrent access remaining a challenge on mobile, we are working on new streaming technologies to help reduce bandwidth requirements and grow overall usage. 

CQ: The controversy between cardbased security and software-based security is still existing in a country like India, where majority of the networks have been using the older card based technology. What is your take on this?

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