|North America 2007
|Where TV will go
|Joe Hogan and Marc Price
|(Joe Hogan) CTO, Founder, Board Member, and (Marc Price) Senior Telecom Strategist
Joe Hogan is the CTO, Founder and board member of Openet. He has more than 20 yearsí software engineering experience from his years with Openet, Retix Corp. and Sun Microsystems Inc. Mr Hogan was a senior architect with Sunís European kernel development centre before leaving to found Openet. He is the principal architect of Openetís Fusionworks framework and is responsible for Openetís engineering group and CTO technology office. Mr Hogan represents the company in the IETF, 3GPP, IPDR.org and GBA forums and frequently speaks at and chairs billing mediation, IMS and prepaid conferences throughout Europe, Asia and North America.
Marc Price is the Senior Telecom Strategist at Openet, specialised in telecommunications systems, with more than 15 yearsí experience helping define strategies and deploy solutions for mediation, rating and billing. Before joining Openet, Mr Price was the lead software architect for a real-time, object-oriented rating and billing system for convergent telecommunications service providers. Mr Price holds honours degrees in Mechanical Engineering and International Relations from the University of Pennsylvania.
Sophisticated television technology – TiVOs, Slingboxes, video on demand, mobile TV, among others has revolutionised the market. Broadband providers, cable companies, mobile and fixed telephone operators and such have raised the level of competition. Unfortunately, much of the new functionality comes in a box – itís provided by a device, not as an application the service providers can charge for. By intelligently analysing their transaction data, service providers should be able to devise a new generation of services that satisfy users and build revenues.
The evolution of broadband services means that viewers can watch television no matter where they are – but where is the market going with this technology? Television technology is growing fast, with no signs of stopping. The industry is more sophisticated, bringing a wave of new products and services that challenge broadband providers to keep up. In recent years, TiVO personal video recorders revolutionized recording satellite and cable TV in the home, and Slingbox has taken it one-step further by enabling viewers to watch recorded shows not just anytime but anywhere with its remote desktop technology. Apple has announced Apple TV, which wirelessly links iTunes to television. Even mobile devices, often referred to as the ëfourth screení, are getting into the act today with TV shows, movies and other video being delivered on demand to wireless users. This new entertainment landscape is exciting – but what consumers rarely consider is what goes on behind the scenes. How are broadband providers handling these new demands? What kind of stress does this place on their networks? The emergence of next-generation services relies largely upon the introduction of new devices, rather than the emergence of next-generation networks. This leaves broadband providers struggling as they strive to devise new revenue by generating services while ensuring that they can control and charge for the services they currently provide. Broadband providers – yesterdayís television providers – face enormous challenges in todayís competitive market. Not long ago, true competition only existed between cable and satellite providers, and the only relevant service for these providersí businesses was television or video. The Internet and services based on the Internet Protocol, IP, changed that. Suddenly, cable television providers had the ability to leverage existing network plant capabilities to deliver broadband – quality data services into the home. At the same time, traditional telecommunications operators could leverage existing landline networks to offer similar service over digital subscriber lines, DSL. A significant up take in broadband services resulted, with more than 50 million US subscribers expected by the end of 2007, according to a recent ITU, International Telecommunications Union, report. Voice services were next. Cable IP voice subscriptions in the US grew from 600,000 at the end of 2004 to more than 6.5 million subscribers at the end of 2006. As cable providers have fought to win customers from traditional wireline operators such as Verizon and AT&T, these companies have launched campaigns of their own to revitalize their networks. They are now laying fibre-optic cable to the neighbourhood, to the node or to the home, and are wooing customers with nascent IPTV video services of their own. These latest competitors have been slow to achieve full launch of these services in all markets, but the battlefield is clearly defined. With IP as an enabling technology, video, voice and data services are becoming available from many different providers over different kinds of networks. Most notably, these so-called IPTV providers are promising that what they are bringing to market will eventually offer more than television does today. So, who will win the battle for the living room? Can video, voice and data really be integrated in new ways to offer services that are attractive to consumers? Thereís no place like homeÖ or is there? Consumers want to watch their favourite shows anytime they want, in the comfort of their own homes. The invention of TiVo and other digital video recorders, DVRs, enabled time shifting, allowing viewers to record and watch shows, and fast forward through commercials, at their leisure. In fact, DVR penetration will grow to nearly half of all US homes by the end of 2010, according to a Yankee Group report. Last year, ëplace shiftingí became possible with the introduction of the Slingbox but, again, this innovation came via a device instead of a service. Even more troubling for the industry, service providers were not involved in the rollout of this device, nor did they gain any new revenue from its launch. So where are the operators in the mix? Now, as always, they are racing to fulfil market demands currently being met by devices, and to design, price and deliver cutting-edge services that will allow customers the convenience of watching television at home – even when theyíre not. The challenges, however, extend beyond simply meeting market demands. Broadband providers are struggling to monetize new services and find ways to generate new revenue while at the same time integrating video and other content across different networks and devices. It is becoming clear that in an extremely competitive market, the operators that will succeed and thrive will be those that can best adapt to change. What most operators have yet to plan for, much less achieve, is enabling a common transactional control layer across set-top, broadband and mobile devices. With this layer, operators can launch, control and charge for new services in a centralized manner in customersí homes, as opposed to a distributed model in which devices are uncontrollable at the end points. Evolve or die With no ready-made network controls available, to deliver newly-conceived services rapidly to users, service providers must proactively – and quickly – build out their transactional infrastructures to adjust to shifting demands. They must figure out how to track and charge for new services to ensure that theyíre not only cutting edge but profitable, or face being left in the dust by the competition. The worlds of television and wireless have now collided. This evolution to mobile television is just the latest in a long line of shifts that have taken place in the past couple of decades. In the early 1990s, consumers could hardly fathom taking a telephone with them; today, even children have cell phones. When email was new, it was confined to the desktop – a far cry from todayís landscape, where email is delivered to a purse or pocket. Before the invention of the iPod, who would have thought to carry entire music libraries everywhere? These are all well-known products, but the services behind them are excellent examples of how broadband and wireless operators have evolved to keep up with, and make money from, new trends in consumer devices. Yet customers want fewer devices even as they want more and different services. With video in the mix, it means one-stop shopping for end users and a billing nightmare for operators. With this nightmare comes a challenge – operators need to wake up and realize that without reliable systems in place to capture data resulting from each and every transaction as well as the data behind it, they stand to lose existing and future revenue. Transactional data provides operators with an opportunity to develop and market increasingly targeted services to customers, whereas without a way to capture and analyze this data, operators will fail to find new, profitable services – working hard without ever moving forward. This is well understood in the wireless industry, where transactions are closely monitored, controlled and charged. Similarly, consumers have opted in to rewards and loyalty programmes that enable grocery stores, video rental stores and credit card companies to use and store purchasing data. This information must be handled carefully to protect consumer privacy. However, it can be aggregated to provide a wealth of data about how customers use services and, in specific cases, may be used with a delicate touch to up-sell and cross-sell promotional offerings, as is done today by Amazon and other electronic storefronts. Consumers want the best of both worlds – simplicity along with an array of services at their fingertips. Now, consumers are ever more stratified into communities and interest groups that will use their living room entertainment devices in new and diverse ways. While customers show an interest in such services as content, gaming, messaging and voting, these services must be packaged in an attractive and easy-to-use way. So the real question is, if customers know what they like, how do service providers know it too? Gathering and analyzing transactional data is the key to profiting from these new services. Conclusion In an extremely competitive market, service providers need to innovate with new revenue – generating services faster and more effectively than the competition. Quick fixes, such new devices in the home arenít the answer for operators seeking to launch new, profitable services. Service providers need to have a strategy in place to not only innovate and deliver these services but actively to track, control and charge for them. This requires centralized transactional intelligence, which will ultimately be the key to success for the next generation of companies providing TV and other services to the home. Itís a time of change for the industry and there is no limit to the places TV and related services will go. What is clear is the TV experience will differ greatly from person to person, as individuals and communities personalize their own service consumption. The generational cry, ëI want my MTVí, becomes lost as millions of voices now dictate their own desires in a milieu where every living room is a personalized media playground.