For Net video, codecs are king

San Jose, Calif. — Next-generation codecs will take the spotlight at the 2005 Consumer Electronics Show in Las Vegas next month as an enabling technology for service providers looking to send video over their sometimes bandwidth-challenged networks.

In a CES keynote address, the chief executive of SBC Communications Inc. is expected to reveal new details about his company's plans to deliver digital video services over the Internet Protocol. Other telephone companies gearing up to offer IPTV services in 2005 include BellSouth and Verizon.

Separately, Sirius Satellite Radio is expected to announce plans to deliver video over its satellite network, helping it to compete with archrival XM Satellite Radio in video as well as in terrestrial high-definition radio.

The entry of cable TV companies into voice-over-IP services is driving the phone companies into IPTV. "It's almost like a tit-for-tat thing," said Paul Erickson, analyst for IMS Research (Austin, Texas), who is preparing his first report on IPTV for early next year.

Ultimately, telcos hope to deliver full cable TV-like broadcasts, video-on-demand and digital video-recording services as well as home networking, voicemail and caller ID.

Next-generation codecs based on MPEG-4 Advanced Video Coding (also known as H.264) and Microsoft Corp.'s Windows Media 9 are the armaments in this battle, enabling reasonable video over limited copper lines and wireless spectrum. Early success stories are already being written in such markets as Hong Kong, South Korea and Japan, Erickson said.

"This is the next big consumer opportunity," said Richard Doherty, principal of consulting firm Envisioneering (Seaford, N.Y.). "High-definition DVDs may take off sooner, but more of the chip makers we talk to are excited about IPTV."

Many IPTV prototypes will emerge at CES, though few actual services will launch until late next year, Doherty predicted. Chip makers including Analog Devices, LSI Logic, Philips and Texas Instruments have reference designs for IPTV set-top boxes, and such OEMs as LG, Panasonic, Philips, Samsung and Sony have shown interest in making the systems.

Indeed, several set-top-box makers are moving aggressively into IPTV. Motorola Inc., for example, has created a new telecom access business unit around its April 2003 acquisition of Next Level Communications Inc., a company that claimed the lion's share of the video-over-DSL set-top business. Motorola also acquired Quantum Bridge Communications Inc. this year. Quantum has passive optical-networking technology for fiber-to-the-home (FTTH) networks, which several telcos are deploying.

Motorola Broadband claims it has already deployed 300,000 IPTV set-tops, including all the fiber, copper, digital

subscriber line (DSL) and asynchronous transfer mode architectures that are lumped into this broad new IPTV category. "This market has crossed the chasm," said Floyd Wagoner, manager of product marketing for the new Motorola unit.

But the market will really take off when large-scale service offerings switch on in 2006, according to several sources.

"To date in the United States there are about 30 to 40 small deployments of 500 to 5,000 subscribers each," said David Alsobrook, director of video systems in the IP subscriber networks group at Scientific-Atlanta Inc., which is also gearing up for IPTV. Next year will be "a pretty small year for deployments" while advanced codecs are perfected, Alsobrook said. He predicted that "it will be 2006 before we see large-scale deployments start."

Production services
DSL gateway provider 2Wire Inc. is also leaping into the IPTV business with its MediaPortal set-top box. The company will offer versions of the set-top that deliver broadcast video over IP, DSL or satellite for hybrid IP/satellite systems where users are relatively far away from fiber connections.

"By the end of 2005, you will see a number of production services for IP set-top boxes," said Pat Romano, chief technology officer for 2Wire.

But before those offerings become a reality, service providers will have to accomplish a great deal in terms of crafting their network architectures and packaging the transport, rights management, middleware and content needed for the new services.

"Putting all the pieces together will be the biggest challenge for the telcos in 2005," said Manuel Trujillo, senior product manager for video IP at Motorola.

"At CES, you will see Internet content providers partnering with traditional service providers to make sure their content is available on the Web for PCs and to the set-top," said Romano of 2Wire. "There's been an arbitrary barrier people have had in their heads about PC content not being available on set-tops, and this year that will fall away."

Ultimately, the industry needs a programming aggregator to pull together the content services for IPTV, Doherty of Envisioneering said.

Set-top makers are trying to stay technology agnostic while each network operator puts together its own list of requirements. Specifically, OEMs see a shift from MPEG-2- to MPEG-4-class codecs starting next year, although it is unclear whether that will be to H.264 or WM9, which Microsoft hopes to standardize as VC-1.

First-generation MPEG-4 chip sets are offering only H.264 (see www.eet.com/showArticle.jhtml?articleID=54800092), but OEMs said they expect silicon supporting both codecs to arrive in time to start developing systems in the second half of 2005. Although most of the market now leans toward H.264, SBC's announcement in mid-November that it will partner with Microsoft on IPTV is currently driving interest in VC-1.

Motorola, 2Wire and Scientific-Atlanta all said they will support both codecs in systems that they plan to deliver by the end of next year. "This is still too wide open to make any decisions about what will be chosen. The market will place its bets in 2006," said Wagoner.

The OEMs agreed that requirements stated in telco requests for proposals will drive directions about which codecs, digital rights management (DRM) technologies and home network standards will ultimately win out.

"We have our own DRM solution, but we are open. SBC is talking about using the Microsoft DRM, so we will integrate that, but we are open to others," said Trujillo of Motorola.

Alsobrook of Scientific-Atlanta said his company is looking at home nets over coaxial cable, phone lines or power lines. "We are evaluating all these technologies. Each has pros and cons," he said. "We try to remain agnostic, but we expect customers will make their decisions about them in 2005."

Various paths
Network operators have sketched out diverse plans for IP video, although details are still somewhat scarce.

Verizon claims that it will spend up to $800 million and hire as many as 5,000 people by the end of 2004 to link 1 million homes across nine states on a FTTH net. In 2005, the company expects to double the number of subscribers and launch its first video services over the new network. Last month, Verizon tapped Motorola to help build out the network.

Broadcast video will come over a QAM RF link on the fiber, but interactive services will be delivered over IP. Verizon plans data services that range from 5 Mbits/second downstream and 2 Mbits/s upstream for $40 per month to 30 Mbits/s down and 5 Mbits/s up for $200 a month.

For its part, SBC will spend up to $4 billion over three years on an IPTV network that will put 17 million homes on fiber-to-the-node (about 3,000 feet from the home) and 1 million on FTTH by the end of 2007. Construction on the new network starts early next year. In November, SBC announced a partnership with Microsoft to deliver key software for the service.

BellSouth Corp. has put out a call for proposals for a copper-based IPTV network, though details are still scarce. According to Henry Samueli, chief technology officer for Broadcom Corp., BellSouth hopes to bond dual DSL lines to deliver video over IP.

Samueli said Broadcom has silicon to enable dual-bonded DSL lines in the hands of all the major telcos. It will have the chips in production early next year, he said.

At CES, France Telecom will announce that it is ramping up video telephony services using phones and set-tops from Leadtek Research Inc. (Fremont, Calif.). The initial systems use MPEG-2 on Texas Instruments Inc. DSPs, but next-generation boxes will tap H.264 codecs to double video quality or halve bit-rate requirements, said Hon Sit, Leadtek's vice president of business development. "We have a whole line of products coming next year using H.264," he said.

Cartoons and music
A Sirius spokesman would give no details on what video plans the company might announce at its press conference at CES. The company did say it would use the event to detail "new product and new partner announcements, [and] new technology advancements in video, data and wireless transmission."

The spokesman said that Sirius has been talking for two years about its R&D for delivering video over its satellite radio network. Initial services will likely focus on cartoons and music videos that appeal to kids riding in the backseat, where dockable media players will reside, he added.

Sources said such satellite radio video services will likely use MPEG-4 compression to squeeze bandwidth from limited spectrum and ultimately will include real-time sports and news clips. OEMs including Audiovox, Delphi and Sony build satellite radio systems.

Sirius is said to have fewer than 1 million subscribers. Its archrival XM Radio has about twice as many.