Will Internet Protocol TV follow the path of other interactive-TV platforms, blazing onto the scene only to fizzle into a minor market that leaves pundits grasping for explanations?
IPTV is the real deal, sources said, noting that operators in Europe and Asia have already pulled off successful deployments. Many of those pioneers are telcos that earlier deployed broadband over digital subscriber lines for Internet data service and are now expanding into IP voice and video for "triple play" service.
Semiconductor suppliers, system vendors and software companies, meanwhile, have piled onto the bandwagon.
A closer look at the market, however, reveals that IPTV design requirements today are fragmented and that technology suppliers are still struggling to find sizable commercial deployments to which they can sell their products in volume. Asked what's high on his IPTV wish list, Alan Delaney, product manager for IPTV at set-top developer Pace Micro Technology (West Yorkshire, U.K.), bluntly responded, "Purchase orders."
Those already up and running with first-generation IPTV services include Fastweb in Italy, HomeChoice in the U.K., MaLigne and Free in France, Telefonica in Spain, Chunghwa Telecom in Taiwan, PCCW Ltd. in Hong Kong and Softbank/Yahoo BB in Japan. Digital Tech Consulting (DTC), a Dallas-based market research firm, estimates that subscribers to DSL-based IPTV service will total 3 million worldwide by year's end.
"The growth will accelerate dramatically during the next five years, both in terms of the size and quality of deployments, surpassing 20 million by year-end 2010," said DTC senior analyst Antonette Goroch.
But the IPTV market today is geographically fragmented by deployment type (cable, satellite or terrestrial) and by regional differences in digital-TV requirements. Whereas standard-definition TV may be good enough for an IPTV rollout in some regions, for example, others call for high-definition TV. Another variant is an emerging European trend that most chip vendors did not envision earlier this year: a hybrid box with the ability to receive and decode DVB-based terrestrial digital TV broadcasts as well as handle IPTV.
Available bandwidth and data rates also vary among DSL infrastructures. And there's no standardization among requirements for conditional access and digital-rights management.
Some operators insist on IPTV as a key element in a one-box triple-play package. Others demand that IP-based content be received on a separate set-top but be able to move freely among networked devices within the home.
Most of the current IPTV deployments are directly tied to a specific service provider, with an end-to-end infrastructure carefully tuned and managed to optimize quality-of-service. But some market watchers envision an IPTV set-top that would receive free-range IP-based video programming from a wide range of sources, both near and far, domestic and international.
Scot Robertson, director of networked media products at Analog Devices Inc. (Norwood, Mass), noted that an IPTV box that didn't rely on a single service provider would have to be highly flexible, supporting a range of data rates and codecs.
"There are two fallacies about IPTV," said Bradley Graham, vice president at broadband infrastructure provider Harmonic Inc. (Sunnyvale, Calif.). First, "IPTV does not mean that you need to use an advanced codec.
"[Second], IPTV is not a synonym for a Microsoft Corp.-based IPTV platform."
Many IPTV deployments today are still MPEG-2-based and are not using Microsoft's TV IPTV Edition platform.
Indeed, technology companies eyeing the IPTV market can't afford to bet on just one horse. "We need to be agnostic not only in terms of middleware, browser and conditional access but also in video servers and encoders," said Pace Micro's Delaney.
That said, many IPTV deployments are shifting toward programming based on HD resolution. "The next wave of IPTV will be H.264-based HD implementations," DTC's Goroch said. She singled out U.S. telcos SBC and Verizon, though she said that SBC will start out with standard definition and migrate to HD.
The transition to H.264 video is also under way in China. ADI's Robertson called it "a big change" from Chinese service providers' focus earlier this year on MPEG-4 Advanced Simple Profile-based coding.
IPTV will also begin to see deployment on non-DSL platforms, sources said. Goroch said the National Rural Telecommunication Cooperative (NTRC), a U.S. coalition of independent cable operators, has announced it will hold H.264-based IPTV trials next year.
Meanwhile, Microsoft-now positioned to serve theoretically 26 percent of the world's fixed-access phone subscribers with its own IPTV platform-has become a guiding light to chip vendors seeking access to the high-end IPTV market. Eleven operators around the world have signed up for Microsoft's early adopter program. They include British Telecom, Swisscom, SBC, Verizon, T-Online in France, Telecom Italia, Bell Canada, Bell South and India's Reliance Infocomm.
Microsoft has spelled out what it expects of IPTV set-top silicon in terms of feature sets, integration level and mass-production deadlines. "Microsoft is predefining the whole user experience," said Silvio Perich, senior vice president at digital media processing vendor Sigma Designs Inc. (Milpitas, Calif.).
Microsoft dictates IPTV chip design down to such details as the exact graphics features and video decoding processing capabilities. Microsoft-defined specs for IPTV chips include advanced features such as HD with picture-in-picture, higher security when connected to other devices, and mandatory support for Microsoft's digital-rights management scheme, as well as support for the VC-1 superset of the Windows Media Video 9 codec.
According to Perich, Microsoft specifies that the HD decoder handle 16 percent more macroblocks per second than single-HD-stream processing, to support such advanced features as high-definition picture-in-picture.
"There is definitely a sense of urgency on the part of telcos and Microsoft to add 'wow' factors to IPTV boxes" to enhance competitiveness with cable-based solutions, he said.
Sigma Designs was the first chip vendor to offer what Perich called "healthy working silicon" that allowed Microsoft to port its client software. Other vendors are now falling in line.
WISchip International (Santa Clara), for example, last month announced a chip that supports Microsoft's IPTV platform by handling high-definition AV decoding, multiple digital-rights management schemes and networking.
Once IPTV set-tops become entrenched in the home environment, content owners believe, consumers will start streaming IP-based audio and video files among networked home devices-preferably in a protected manner. Thus, WISchip is highlighting its part's ability to handle a broad range of content protection schemes, including Content Scrambling System descrambling for DVD; Self-Protecting Digital Content (SPDC) for Blu-ray; the Advanced Access Content System for HD-DVD; the Data Encryption Standard/Triple DES, 64 bits; the Advanced Encryption Standard, 128, 192 or 256 bits; and Microsoft Block Cipher. The chip integrates a special hardware block to handle encryption and decryption, leaving key transfers to a dedicated on-chip processor.
WISchip is highlighting the fact that all content going out of its chip will be encrypted or scrambled. This extra security measure follows complaints from content owners that the content going from a decoder chip to an external memory travels "in the clear."
Sigma Designs has also beefed up security features in its SMP8630. The company added a special "secure CPU," running at 200 MHz, to handle DRM separately from the solution's 300-MHz MIPS main CPU.
"A theme I have heard over and over is that while technologically it is possible to move content around devices, little will happen until content owners are convinced [the content] will be protected," remarked Michelle Abraham, a senior analyst with market research firm In-Stat.
While many IPTV set-top chips are focused on video decoding, Texas Instruments Inc. hopes to increase its presence in the IPTV market by going after triple-play feature sets. TI recently announced a residential gateway reference design that serves as a DSL modem, router and IPTV set-top box.
Designated the AR7STB, the reference design marries a popular TI DSL router with TI's TMS320DM642 media processor, built around its C64x DSP core, to allow service operators to offer both broadcast video and data services through a DSL connection.
"Service providers can go with either a one-box or two-box [a DSL modem and a standard set-top] approach," said Kurt Eckles, director of marketing at TI's residential gateway embedded systems group. By sourcing both the DSL connection and IP set-top from a single supplier (in this case, TI), "there will be no pointing fingers back and forth," he said.
Regulatory issues will figure highly in the success, or lack thereof, of IPTV, sources said.
In China, for example, a regulatory change requiring IPTV to use existing broadcast licenses caused a sudden dropoff in IPTV shipments to that market this year, ADI's Robertson said. But the company remains committed to the Chinese market, he said, adding that China "remains the largest and highest-growth IPTV market."
The country's large and growing base of broadband households and its low penetration of cable and satellite service relative to other regions provide strong fundamentals, Robertson said.
Myra Moore, founder and president of DTC, said regulatory issues have also threatened to be a stumbling block for the U.S. IPTV market. But many in the industry remain relatively optimistic, she said, adding that the big telcos' efforts to sell state legislatures on franchise arrangements are "really beginning to pay off."
The Texas governor, for example, recently signed off on legislature that allows telcos to obtain a statewide franchise to roll out video services. That sets the the telcos apart from their cable competitors, which have to win franchises one by one in each city or municipality, Moore said.
Other concerns include the scalability and management of content, billing and customer systems, according to DTC's Goroch. She said North American telcos' hurdles with the Microsoft platform in that regard have led some planned 2005 launches to be pushed back to 2006.
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