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The concept of ‘through-the-middle’, which effectively describes the provision of managed over-the-top video from a service provider like a cable operator, has significant implications for how operators can monetize OTT and could even impact the net neutrality debate. The big change for consumers will be the availability of more over-the-top content on the TV screen, the inclusion of Web video services within their service provider programme guide, and probably improved picture quality and reliability for streaming video with no impact on other broadband services in the home.
As we reported previously, Ian Mecklenburgh, Director of Digital Entertainment at Virgin Media, introduced the term ‘through-the-middle’ late last year to explain the new service delivery category his company is introducing as part of its Tivo-based next-generation TV platform. As the new TiVo DVRs are deployed this year, the company will be able to offer consumers private network linear and on-demand video (classic cable TV) plus some managed Internet video, where select over-the-top services are brought into a controlled environment and given guaranteed Quality of Service (QoS) for display on TVs connected to the TiVo devices.
The 10Mbps of spectrum that Virgin Media is dedicating to managed Internet video effectively sits between the managed linear TV and VOD services on the one hand, and the open and unmanaged Internet, made available via its DOCSIS broadband, on the other. By dedicating 10Mbps of bandwidth to Internet video services, the company can guarantee that even streamed HD Internet video does not impact other broadband services in the home (including unmanaged OTT video).
This innovation is being acknowledged as a significant development for cable TV in particular, where there is the potential to eventually swap increasing amounts of broadcast TV spectrum to support DOCSIS-based OTT video that is made available inside the operator walled-garden, thanks to agreements between the Pay TV operator and online content providers. It could also be a key driver towards the delivery of increasing amounts of IP video into cable homes.
David Lewin, Director at Plum Consulting, the London based consultancy specialising in strategy and regulatory advice in the telecoms, media and Internet worlds, believes through-the-middle is a good way to respond to the threat of OTT television. He views it as a potential stepping stone towards dedicating more bandwidth to DOCSIS if the market shifts towards more volumes of switched entertainment. “Through-the-middle is a great way to leverage what you have,” he declares.
David Price, VP of Business Development at Harmonic Inc, is also an advocate of the through-the-middle approach and believes the introduction of operator managed QoS for OTT video, together with the inclusion of Web content providers in the programme guide, is the answer to how cable operators should handle OTT and then monetize it. “Cable operators can either ignore the OTT problem and end up being a dumb pipe or have a strategy that embraces it and integrates it into a combined user experience with an integrated programme guide and integrated search,” he declares.
He continues: “If you can control the point of ingest for OTT television and the control and presentation layer to the subscriber, you have stopped yourself becoming a dumb pipe.”
Price adds that ‘through-the-middle’ separates the operator-controlled OTT from the best-effort PC experience. Content owners, who would otherwise spend money seeking out audiences with Search Engine Optimisation, will welcome the prominence they are given in a programme guide and pay for that presence. Another value-add from the cable operator is metadata extraction to help content discovery.
“As a cable operator, you can invite Web content owners inside your vastly extended walled garden. That is the business model that will support a move towards IP,” he argues.
Price expects to see the integration of OTT (and social media) into the cable experience over the next two years. In his view, the cable entertainment world could start to be divided between 500 channels of managed MPEG-TS broadcast TV and VOD (classic cable TV), 5,000 ‘channels’ of managed QoS OTT services, and the 5 million channel universe that lays on the open, unmanaged Internet as a best-effort offering. Stressing that these channel numbers are offered arbitrarily simply to illustrate the different service levels, he says he expects the ‘5000’ channel mid-tail segment to offer the best of the Web TV universe, with the cable operator acting as the curator, performing the same kind of aggregation role they do today for traditional TV.
Over time, the 500 channels of MPEG-TS video can migrate into the managed OTT domain. The final outcome is that cable operators offer 5,500 channels of video that look good on a widescreen TV, accessible through their own user interface. What is more, the cable operators get what are effectively carriage fees while remaining relevant to the Internet generation. David Price believes it is the integration of OTT content into the managed cable experience, plus the delivery of multi-screen services, that will determine the speed of movement towards cable IPTV.
Stephen Adshead, Associate at Plum Consulting, also believes one of the big questions for the cable industry today is how to handle the ‘through-the-middle’ concept. “From a commercial perspective, one of the advantages of putting this content into their own walled garden is that they can start charging for prominence, because prominence is a big issue when you move into a world where you have multiple providers and services,” he says. “Prominence is all-important so that is something cable operators can charge for.”
He adds: “Something we are all wondering about is how this compares to the need for guaranteed Quality of Service. Is it sufficient to offer the prominence on the EPG but not the QoS?”
There has been some discussion about whether service providers can offer managed (guaranteed bit rate) delivery of OTT services via their broadband without upsetting regulators. However, Lewin at Plum Consulting does not believe cable operators will run into trouble. He explains that the main aspects of net neutrality are the need to give users the right to access all legal content when they want to, and the right to connect to the Internet all legal devices that they want connected. He says most regulators accept traffic management so that network operators can stop heavy users, like file-sharers, consuming bandwidth to the detriment of others. The third big issue is whether the network operator uses a dominant market position to reduce competition in the market.
“The first question is whether cable operators have significant market power. A company that can raise prices 5% above the market rate because consumers have nowhere else to go, or which is a price leader that the rest of the industry follows when they raise prices, could be said to have market power. It does not appear that cable operators fall into those categories. So offering managed OTT services is certainly unlikely to be an issue,” Lewin argues.
David Price views through-the-middle as one part of what could be a new cable TV architecture that introduces important nuances when it comes to regulators and net neutrality. He thinks the best way to deliver the broadband OTT video to the home is by using DOCSIS but in a way that routes the DOCSIS video around the CMTS (commonly referred to as the ‘bypass’ approach). This enables cable operators to effectively create a separate DOCSIS ‘pipe’ dedicated to video traffic and the inference is that the separation of the cable infrastructure into best-effort data via the CMTS and managed video services through bypass could move video out of the net neutrality debate.
Through-the-middle and net neutrality are also both tied up with the potential use of HTTP adaptive bit rate streaming for the delivery of OTT video. Ben Schwarz, CEO of CTOi Consulting, a consulting company focused on convergence and IP delivery, believes HTTP video, in the form of the different flavours of adaptive bit rate streaming, will become prevalent for this new class of ‘partially managed’ services.
Schwarz points out that providing guarantees on quality provides the foundation for monetizing OTT services in a way that was not possible before. Rate adaptive technologies make it realistic, for example, to provide the various expat communities around the world with the home ‘ethnic’ channels they want, delivered over-the-top. And he believes the use of HTTP adaptive rate streaming is also the way they can convince regulators that everyone benefits if content owners are allowed to pay for improved QoS.
“Operators want to offer QoS where people pay a bit more; that is what they are chasing,” he comments. “If adaptive streaming becomes prevalent they can say to the regulators that if they guarantee the bandwidth for certain services, nobody is going to see a blank screen. The theory, not tested on a global scale, is that if millions of people are trying to use services on the Web and there is not enough bandwidth, everyone’s bandwidth goes down a bit but eventually there is no problem. The big operators hope that regulators will accept that as an argument.”
This story is an excerpt from Videonet’s Cable IPTV report, published in February (and completely free to view). The 18 page report covers: The business justification for cable IPTV; How telcos are using IP video as a service differentiator; The cable IP home gateway; Video over DOCSIS, bypassing the CMTS; Video over DOCSIS, using the CMTS; The hybrid HFC and OTT model; A new service category: through-the-middle; Through-the-middle and net neutrality; The rise of HTTP-TV; Consolidation of headend technology around IP.