Cable 2007
By John Latta, WAVE
0710 8/10/07
May 7 – 9, 2007
Las Vegas, NV
The theme is “Competition Works – Consumers Win.” Good tag line but a dominant player in a market seldom willingly accepts competition. When it is mandated the accepted recourse is to address how good it is. The competition in cable runs both ways. The cable industry has won with its telephony solutions but has long feared the impact of satellite delivery of video and now the telephone companies are coming with video content. But there should be no misunderstanding that Cable 2007 is a carefully crafted event to present the cable industry in its best light.
Dynamics Around OCAP
The WAVE went to the OCAP, OpenCable Application Platform, developer conference, which was held for the first time. There were also threads related to these dynamics at the opening session. Rather than a recount each discussion this report will collect sound bites to describe the state of cable and the market pressures it is under, vis-a-via OCAP.
OCAP requirements can be traced back to the Telecommunications Act of 1996 that required that navigation devices be available to the public. This implies that the set top box would be come a retail purchase item. The cable industry has spent 8 years developing the specifications for OCAP. Operators are expected to begin roll out OCAP set top boxes in late 2007 and 2008.
OCAP middle ware is an operating system layer that defines what the set top box does but it is also an applications platform. The conditional access requirements for content protection are supported by Cablecard 2.0, which is called separable content security. Some MSOs are requiring that implementations of OCAP support Cablecard 2.0, which implements a duplex path.
The cable companies have done consumer surveys on the acceptance of retail purchase of the STB compared to leasing from the MSO. These surveys indicated 15% to 20% would prefer to purchase their own set top box. Further, there are now television sets with OCAP built in – one is in the Panasonic booth. One question was – with the declining prices of flat panel televisions why would a consumer pay a $300 adder on the price of a television set?
The major advantage of OCAP is that applications written for it will run on any OCAP box. OCAP is based on Globally Executable MHP (GEM) and is Java based. Application examples include: eCommerce, online banking, Electronic program guides, and digital video recording. However, there is no web rendering engine thus OCAP does not support convergence with web content. OCAP, in spite of its name, is not open to outside applications providers.
The applications running on OCAP as stated during the developer conference seemed lame. This included: weather, traffic and caller ID on a television screen. But one operator stated – when consumers are running out the door with their children for school the television is a better place to deliver the weather than the Internet.
An OCAP application would reside at the servers in the head end of the MSO. The code for the OCAP STB would be downloaded from these servers and code frequently used would be stored in flash memory on the STB. The important point is that the MSOs control the applications which reside on the STB.
The CE industry has been hostile to OCAP in that it could run on CE products but the implementation favors the cable companies. The argument has been made that this closed platform does not allow the CE companies to innovate in cable. One way that CE companies could provide applications is to bundle these with the retail products. Those that include a DOCSIS modem could begin to offer converged solutions independent of the MSOs.
As push back on “open OCAP applications” the cable industry believes that allowing applications to run on OCAP without MSO control could damage the network. This is a similar argument to that voiced with the original Carterfone decision which opened the then AT&T telephone network. This decision placed the burden of proof of damage on the telephone industry. One concern in the cable industry is that OCAP applications could disrupt the bandwidth management over the cable network and thus cause damage the programming delivery.
One way in which the cable industry can control OCAP is its licensing structure. The following has been reported as the rates:
Via Licensing announced the basic OEM license fees for OCAP 1.0 in fall 2006. They are $1.50 per device for product licenses, and $0.30 per subscriber per year for service providers. Service providers also have the option to obtain a one-time, five-year license for $1.50 per sub.
It was asked – is not OCAP bloatware? In a Web 2.0 environment applications lie in the cloud and the user interface is on a web browser which are based on widgets and gadgets. In response it was stated that OCAP does not have a web rendering engine and this could be overhead for the processor. Further, web rendering is a specialized function which continually changes as the web changes. It would be hard to keep up with evolving web rendering technology. Another argument is that the underlying technology in the STB is MPEG and not the web.
OCAP 2.0 could have a presentation engine and run a smaller JVM thus better able to support web based applications. An announcement of OCAP 2.0 is provided at:
http://www.cablelabs.com/news/newsletter/SPECS/MarchApril2002/news.pgs/story2.html
Note that OCAP 2.0 extends the platform with the addition of web-based technologies like XHTML, XML, and ECMAScript.
Companies have built Java based HTML web rendering engines, which could reside as an application on top of OCAP. However, this could create considerable overhead in the OCAP execution compared to a platform which is optimized to support web page rendering.
Off line one individual with extensive cable application development experience stated that the beginning of web based OCAP applications is closer than one would expect – due apparently to the support of web rendering in software.
Advertisers are driving the discussion on the role that cable plays in the integration of cable and the web. They are asking – we want an integrated campaign from the web to traditional media. The cable platform cannot provide a converged platform and OCAP is not that integration engine.
Comcast stated that they invested $120m in developing Comcast.net. There were no expectations that this would become a profitable platform. However, with the recent Yahoo deal they expect to reap $1b over 6 years from advertising revenues. Comcast considers this a significant return on that investment and it is a statement about the value of a converged platform.
It was asked – some youth have never had cable and their video experience is largely based on the web. It was asked – how is it possible to get this youth to the platform?
On one hand it was stated that OCAP based set top boxes are coming in later 2007 and 2008, it was also asked – will these deliver the economic benefit to the MSOs they hope? At the center of this is control of the platform which the MSOs have and how their will be an encouragement to develop applications. The discussion was largely centered on the ability of existing content sources, such as ESPN, to provide an element of interactivity with the content.
There were doubts expressed on the level of maturity of the OCAP platform. One individual asked – is the platform capable of running multiple applications at one time? This only left open the concern - is the cable platform based on OCAP ready for prime time?
This situation of opening OCAP applications outside the cable industry is not dissimilar to the cell phone industry where the operators rigidly control the cell phone platform and extract high tolls to get on the network. Given the 8 year gestation period for OCAP there are continuing questions if its time has passed and if the platform will net its benefits. This poses a dilemma to the cable industry, that to comply with the Telecommunications Act of 1996 it has to do something.
There was considerable discussion on the rate of innovation in cable industry. Pushback from executives on the pace of innovation came were related to the inertia of the business. The business can only move so fast. The plate is full with initiatives such as voice, mobile voice and business services. One innovation which seemed to capture of interest of cable is the iPod. It was speculated that if Apple could make Apple TV OCAP compliant this would really shake up the industry.
Cable Business and Disruption – Is it a threat?
This report will be the summary of many booth discussions and the opening session today.
Having spent $100b upgrading the cable plant since 1996, the cable industry is reaping the rewards. At the same time, it feels that their innovations in VoD, content, data delivery, voice have made the cable offerings compelling. Today Brian Roberts, Comcast, showed DOCSIS 3.0 performance in excess of 140Mb/s. A big deal was made that this was only 11 years after Brian did a similar demo of the first cable modems. With the advent of DOCSIS 3.0 Brian called ADSL the “future dial up.”
When asked at the Supersession what the threats and opportunities were for their companies the executives were upbeat. Concern was voiced about piracy and the potential for disaggregation of the business models. But when the discussion turned to the Internet these are considered small revenue streams compared to the core business and that the cable companies are BIG companies which can easily outlast the emerging companies, in part because they cannot scale.
The relationship between the cable companies and content providers is critical. For example, in order to offer VoD on broadcast content as part of the no-charge VoD service the operators have agreed to disable fast forward – effectively keeping the commercials. With the success of VoD cable companies see going to all content on demand.
The discussion has shifted from Triple Play to Quadruple Play – which brings mobile to the mix. It was cautioned that this does not mean the cable companies will be offering cellular service. The leader here is Comcast with its joint venture with Sprint Nextel. They are offering a service called Pivot, available in select markets. This will bring local television content to the phone. It is expected that Pivot will support in the future retrieval of home voice mails, view TV schedules, and control digital video recorders via cell phone. One cable executive described the engagement with cellular operators as increasing due to recognition by operators that video programming is difficult – it is something we know best. This provides an excellent in road to mobile by leveraging the core competency of cable operators. Further, it was stated that there are 1B Internet connections, 1B televisions and 2.5B cell phones – cable cannot ignore the cellular industry.
Most cable operators spoke on the need to cut deals with the Internet side but the imperative to do so was higher with the content companies. That is, the content providers, such as MTV and Disney, do not want to leave out a possible lucrative distribution channel. Certainly today the Internet and its advertising potential is high on the opportunity list. This could put the content companies at odds with the cable companies, as they provide content to the telcos and the Internet delivery companies. But this is just business in a competitive environment.
Competition will Drive the Cable Industry
We continue our exploration of the potential for changes in the cable industry, and in particular what changes are likely to happen beyond the delivery of commercial content.
The BOCR (Bidirectional OpenCable Receiver) was being shown in both the AMD stand in the CableNet 2007 booth and in the vidilogic booth nearby. Vidilogic is responsible for the OCAP stack. The first BOCR products are not expected until late 2007 or early 2008. This will be sold by OEMs, HP being a likely candidate and more. The expected price point is $400. The applications which run on OCAP will be downloaded from the MSO and it is still under debate if the OS, i.e., the OCAP stack, will also be downloaded from the MSO also.
Both vidilogic and vidiom systems have OCAP stacks for licensing. Each also has included the ability to access the data portion of the cable and thus bridge to the Internet. Getting access to the data portion is no more than a DOCSIS chip on the circuit board. They termed this as having access to in-band (video) and out-of-band (data). The ability to support Internet access from a device which hosts OCAP is not a technical issue. Yes, this will happen in OCAP 2.0 but both companies already provide the feature. Allowing the rendering of web components is just Java code.
The reason there is a focus on OCAP 1.0 is simple. The platform is mature and stable. It is felt that more needs to be done to mature OCAP 2.0. and it can be debated if 2.0 is necessary since there are already implementations of OCAP 1.0 which provide out-of-band access and web functionality.
Vidion systems has a sister company, osmosys, in Europe which supplies software for the cable and interactive television markets. In the booth was a demonstration of the integration of interactive television and OCAP. The one shown was a tuner for Internet radio stations. It is completely controlled from the television. The content is pure Internet but the access is via OCAP.
In Europe the development of OCAP applications is more advanced by its iTV providers. A key reason is that it is a very competitive market. It is not unusual to have 10+ providers in a local area. The view in Europe is that the iTV service providers are at the same level of service, capabilities and content as the cable companies in the US. The iTV providers are looking to provide services or features which will give them a competitive edge. For example, it was stated that one was offering a photo sharing site. Although the transition to web based authoring and Web 2.0 integration has just begun the competitive pressures are such that as the scope of Web 2.0 applications increase they will proliferate rapidly. The playing field will not stay uneven very long.
The market conditions in the US are quite different. There is a go slow approach driven by the large MSOs. There is no competitive reason to even offer interactive television capabilities let alone Web 2.0 like functions and services. Thus, it is the programmers with their channel content, such as the Weather Channel, which are experimenting with OCAP based applications.
Bottom line, given that video programming, including interactive, has already been integrated with Web 2.0 and the OCAP software stacks are already in place, The decision to accomplish this integration in the US is a business issue not a technical issue.
Content protection remains a difficult issue. One of the key reasons which cable fears is an assault on its network. Its encryption technology has not been broken. Digicipher II is being used on Motorola and Powerkey by Cisco. Yet, many of the other content encryption technologies have been broken. If these two are broken, it would undermine the essence of the cable business. Thus, the more the cable companies can do to protect its content the less likely the MSO business is at risk.
Today the DRM and copy protection implementations are decidedly consumer inflexible. The CableCard is not portable and its instance with the image chain at the client is married. There is no uPnP. While in Europe with DVB-CI it is possible to move cards and in Japan the movement of cards is very uPnP like with there no hardware marriage. Broadcast content would be more consumer friendly if fair use could be applied. The application of disabled fast forward on broadcast content is an example of consumer inflexibility. The net effect is that this rigidity in content protection has the potential of alienating consumers. iTunes and iPod demonstrated the value of reasonableness and now there is the prospect of fair use being implemented in music.
.Return to the top of the page
|
