Distribution

The new digital ways content was becoming distributed

Cisco and Scientific Atlanta Converge
Convergence took a step forward Friday past as Cisco announced the takeover of Scientific Atlanta (SA). The price? $6.9 billion cash.
SA shareholders don’t get a big premium (around 4%). The markets had already priced the shares to allow for a takeover talk, of which has been ongoing for some time – Sony being rumoured as one of the prospective suitors. Conversely, Cisco stockholders aren’t too enthused with the takeover, and see the cable business as riskier than the high margin routers that have been Cisco’s cash cows.
The acquisition looks a good fit though, Cisco are keen to push their IPTV proposition, SA’s strength in the US set-top-box market (they have around 40% market share) will allow them to capitalise on the access to the home that video brings. The companies’ combined news release majors on this, John Chambers, president and chief executive officer of Cisco Systems said “Video is emerging as the key strategic application in the service provider triple play bundle of consumer entertainment, communication and online services.”
The release also notes that the coming together of the two companies “creates a world class, end-to-end triple play solution for carrier networks and the digital home”
Formed in 1951, SA has long been a market leader in Cable TV, has a healthy balance sheet and already has one large IPTV customer in the shape of SBC Communications. The critical mass of SA as part of Cisco should help it win more.
Expect both Motorola (SA’s main US competitor) and Microsoft to consider how best to respond to this strategic move by the dominant Internet hardware backbone provider.
Cisco
Scientific Atlanta
21 November, 2005
Will UK Public Sector Voluntarily Give Up ‘Spare’ Spectrum?
The UK Treasury announced earlier today that the Pre-Budget Report (PBR) will be on 5th December. This will allow the Chancellor to outline the Government’s economic priorities and focus ahead of the Budget in the spring, and provide an update on a number of reviews.
Of interest to the media and communications industries will be the final report of the Martin Cave led Independent Audit of public sector spectrum holdings. This review was announced in the Chancellor’s 2004 PBR – and generated some excitement as to the possible freeing up of spectrum held but not used by public sector organisations. In recent weeks there have been suggestions that the review won’t yield up very much in the way of ‘spare’ allocations.
The Cox Review that aimed to investigate how best to enhance the role of creativity in raising the productivity performance of SMEs in the UK will probably also get a mention. The Review is led by Sir George Cox, Chairman of the Design Council. It was commissioned by HM Treasury and has had team support led by the DTI.
Pre-Budget Report
Luke Gibbs writes regularly for Ofcomwatch.
18 November, 2005
Mesh Networks Discovered By The Mainstream
Mesh Networks are going to grow enormously by the end of the decade, according to ABI research. This ‘revalation’ is following years technical-types raving on about them.
While predicting “stellar growth rate”, they don’t think it will eat into current providers of current infrastructure, but instead new markets will emerge such as alternative service providers, municipalities and college campus’s. Oh and buy happy co-incidence, ABI have a report that you can buy about the subject, “Wireless Mesh Networking: Technologies and Deployment Strategies for Metropolitan and Campus Networks.”
Indeed, at the launch of the One Laptop Per Child event earlier in the week, Nicholas Negroponte explained that Mesh Networking was intrinsic to the success of the project, as many countries it would be used in do not have communication infrastructures.
Mesh Networks explained
Mesh Networks, have been spoken about, and set up by some, for many years. The idea behind it is simple. Each user of the network expands the reach of the network, by letting information pass through their machine to its eventual destination, be that another user of the network, or an external connection.
Using this a small community of people could share a single network connection. The network is ‘organic’ – everyone who uses it, contributes to it.
There are technical challenges. As each person on the network could disappear at any time, the routing of the information needs to be highly dynamic.
At the start of this week, Cisco announced their first Mesh network products, following their purchase of Airespace for $450 million in December of 2004.
ABI Research
18 November, 2005
Satellite Operators Consolidation To Continue
It’s not cheap to launch a satellite and, as commercial satellite operators have become prey to acquisition over the last 2 years, this has been followed by the operators consolidating. The economics of satellite distribution have fundamentally changed in the USA and Western Europe. Expect competition to be fierce in what was until recently a comfortable cartel carved out the International Telecoms Union (ITU) with constituent members many years ago.
Long term, there may be question marks over the future of satellite. While it’s currently the main method of transmitting digital pay-TV platforms to much of Europe, the threats increase. The combination of the continued increases in the efficiencies of encoding technology and additional service distribution reduce the need to rely on satellite.
Satellite does still have an important role to play as an intermediate solution, that is, providing connectivity and services ahead of the arrival of more sophisticated solutions. It will also continue as a ‘in fill’ for those places where the population is dispersed and delivery of data by other means would be uneconomic.
Increasingly telecommunications traffic is being carried by fibre – an example being sports games, that used to be delivered to the broadcasters by satellite, now routinely use fibre that is available at most major venues. This has led to many Telco’s divesting their interest in the satellite companies.
Telecommunications companies like France Telecom are increasingly selling off underused teleport facilities – they’re those places with loads of big satellite dishes pointing towards the heavens. These are being bought by satellite operators so they can offer an integrated end-to-end solution to their customers.
So expect the merged Intelsat/PanAmSat who bought PanAmSat for $3.2 billion at end of August to take satellite uplink business from Globecast (owned by France Telecom) and other European Telco’s who have traditionally up-linked their satellite services.
The metamorphosis will continue with an IPO by Eutelsat and a beefed up Inmarsat. Despite a good year for satellite companies, focus will shift to the growing markets of Asia and Africa with tighter control of costs and careful management of capacity in the mature markets.
Anyone say all change?
17 November, 2005
Digital Dividend Review: Ofcom Look At Spectrum Use After Analog TV Switch Off
Now that the Government has hit the ‘go’ button for switchover there are plenty of people anxious to know how the released spectrum will be used – and thereby how we will realise the value of it for UK plc.
In an attempt to address this issue Ofcom announced today the beginning of the Digital Dividend Review (DDR) – the project which will examine the options arising from the release of spectrum afforded by the digital switchover programme.
Ofcom estimates that the digital switchover programme will release up to 112 MHz of spectrum in the UHF (Ultra High Frequency) band for new uses. The UHF band is prime spectrum, because it offers a technically valuable combination of capacity (bandwidth) and range.
Ofcom say,
“The cleared spectrum – the Digital Dividend – offers real opportunities for wireless innovation.”
The Digital Dividend could enable the launch of a wide range of different services. Ofcom’s examples include:
- New mobile services, with high quality video and interactive media delivered to handheld devices
- Wireless broadband services, with high-speed data and voice services
- Wider coverage for advanced services in remote and rural areas. This spectrum is particularly suitable for low cost, wider-area coverage
- Advanced business and broadcasting services, such as those used to support major sporting events
- Additional television channels including possible High Definition (HD) channels carried on Freeview
Ofcom point out that this is not an exhaustive list – which will please HM Treasury since the greater the potential uses and users the higher the value likely to be realised from auctioning it.
On this point, Ofcom have a tricky job since they will have to ensure that there is enough incentive to investing the development of a particular wireless technology with no guarantee of it actually securing an allocation of the spectrum required – however it should be noted that Ofcom have stated that they will also begin work on a new auction design, with a view to ensuring that the spectrum is acquired by users who are likely to make best use of it – (i.e. best use = greatest value) – not sure how HMT will view this.
This approach means Ofcom will:
- Consider the potential uses for the available spectrum
- Set out the technical limits on spectrum use to prevent potential interference
- Draw up packages of frequencies that give flexibility to the market
- Design an efficient auction/allocation process
The proposed timetable for DDR is:
- Digital Dividend Review (DDR) begins – November 2005
- Programme team and consultants in place – end 2005
- Stakeholder meetings begin – Jan-Feb 2006
- Outcome of RRC – June 2006
- Digital Dividend Review completed – Q3 2006
- Ofcom publishes final proposals – Q4 2006
- Digital switchover programme begins – 2008
- Digital switchover programme completed – 2012
Luke Gibbs writes regularly for Ofcomwatch.
Ofcom Digital Dividend Review
17 November, 2005
Will ADSL2+ deliver in the UK?
The rollout of ADSL2+ in the UK appears to be going through a reverse-hype process, with people saying it’s not going to deliver high speeds to most people. That may be partially true, but in urban areas where people are within 1.5Km of the exchange they should get 20Mb/s+.
These speeds are enough for multi-channel HDTV. At the extreme end (extremely optimistic end?), we’ve seen Microsoft demonstrate what they call near-HDTV running at 1.5Mbps. A more ‘normal’ size for HD will be running at 2.5-4Mbps.
We can see that the delivery to the home isn’t a problem, but the back-haul (speaking between the exchange and the content provider) is another matter. Unless intelligent delivery and caching is used, shipping that amount of content to all of your customers gets very expensive.
Most people do seem to be ignoring QoS though, as having 20Mb/s downstream and 1.3Mb/s upstream is still useless for VoIP unless some of that bandwidth can be guaranteed so the voice traffic doesn’t get mixed in with everything else.
Using traditional CoDecs and then packetising them uses more bandwidth than over traditional telephony links. VoIP bandwidth can be squeezed to much lower levels, but then the calls are not what’s called toll-grade.
Broadband providers moving into VoIP are going to need to look long and hard how they actually implement services such that they are competitive (in terms of call quality) with existing analogue lines.
15 November, 2005
UK Digital Switchover Costs: Ofcom Report Questioned Again
Matthew Wall of the Sunday Times Doors section hammers Ofcom over the regulator’s recent report on digital switchover cost and power consumption issues. Wall labels Ofcom’s report a ‘dubious attempt to play down the true costs of switching…’
Read for yourself folks, but basically Wall claims that The Times / Doors estimates the digital switchover costs at about one billion GBP, while Ofcom’s report claims a ‘pie in the sky’ figure of 572 million GBP. The tone of Matthew Wall’s piece is aggressive and he suggests Ofcom is deliberately playing down the true costs of digital switchover.
My comments: Wall needs to be careful in his accusations. Ofcom did not author the report at issue. Instead it was authored by Scientific Generics. While I don’t know if this is the case with this particular report, in the past Ofcom has published third-party research without endorsing the conclusions contained therein. In particular, Ofcom’s recent third-party produced report on the Television Without Frontiers Directive proposed revisions was merely put on the internet as an interesting report for public viewing and comment. The regulator informed me that the TVWF report was useful third-party data but did not contain Ofcom’s views, per se.
That being said, Ofcom need to do a better job at handling third-party research. Some suggestions:
1. These types of reports should be tendered in a public manner. How do these research projects get sourced? I’d like to know…
2. Ofcom should publish how much it pays for these types of reports. I’ve mentioned this before and the reasons Ofcom gives for not reporting how much this research costs are not convincing.
3. The significance (or lack thereof) of these reports should be plainly stated. Similarly, if Ofcom is not necessarily endorsing a particular report’s conclusions, it should plainly state that fact. An ‘evidence-based’ regulator should be very clear as to how it treats these findings made by third parties. If the Scientific Generics report is not endorsed by the Ofcom Board, but it is merely one of many research inputs on the issue of digital switchover costs, then Walls’ claims are clearly overstated. However, it’s hard to blame the press when reports like these are published on the Ofcom website with no disclaimers, giving them the imprimatur of Ofcom approval.
On the merits, I think people should stop bellyaching about the cost of digital switchover. No expert can seriously claim to accurately predict the true cost: Qui numerare incipit errare incipit (He who begins to count, begins to err). Anyway, the cost is not the real problem – the real problem is that Freeview stinks as a platform and Wall is correct when he observes that the U.K. government tends to assume it is the standard of the future. But that’s just my opinion.
Russ Taylor writes for OfcomWatch
14 November, 2005
BT Results Analysis: Stuck Between Rock And Hard Place
Poor old BT. Now that it’s reached a settlement with OfCom that allows it to keep retail and wholesale arms under one, some would say, severely stretched umbrella, commentators emerge from cover and say it might be better if it’d spit into two (or more) parts. The cost of Openreach has been put at £70m so far and in terms of efficiency in the UK telecoms market this could well be an ongoing sore.
BT has announced an IPTV offer for the retail market that some say offers too little too late. Early adopters of Digital TV are, in the main, already committed to Sky, who will look to rapidly integrate an Easynet download capability in an attempt to beat off the challenges from BT and a combined resurgent UK cable monolith formed by Telewest and NTL. The remnants of the consumer markets’ move to digital TV that BT will attract, are likely to be those less inclined to convert to a pay TV proposition, and they’re likely to be operating with tighter disposable incomes than those who have already left analogue TV behind.
Sky’s upcoming purchase of Easynet adds considerably to the pressure on BT.
Major Telcos in Europe have, by and large, a coherent mobile strategy and BT’s deal with Vodaphone is viewed as little more than a stop gap.
Where does this leave BT?
Interestingly enough, Telefonica’s bid valuation of O2 put the value of the former Cellnet constituent of BT above that of the remainder of the UK’s juggernaut Telco- perhaps BT Group could be of interest to another global suitor?
At present there’s a danger that not only will wholesale be delivering utility-style performance but that retail may be moving into a period of decline and could it be that the future of BT is again up for a re-evaluation by it’s major stakeholders?
14 November, 2005
BBC ‘FreeSat’, Looking Even Less Likely
As reported here at the beginning of the week there seems to be a real danger of the BBC’s non-subscription card free alternative to Sky’s Freesat offering falling at the first fence.
While the BBC cosies up to Sky to help make everyone covet a shiny new High Definition display and the services that go with it, it’s reported in Broadcast that the companies who will manufacture the receivers have no specification to work too.
If a specification isn’t nailed down in the next few months, it’ll be 2007 before the boxes hit the shops. By then there could be considerable consumer resistance, with buyers prefering to wait to see what happens with any new high-quality domestic standard, and the makers of the boxes moving to newer higher tech, bigger margin products.
In short, there’s a danger that the boat may be missed.
A raft of HD services across Europe is likely to eat up scarce capacity on the high-power satellites that beam the programmes down to earth, making any system that duplicates services across platforms more expensive.
Add to all of the above the challenge of creating a clear marketing and installation message, and I can see that there could well be people in the BBC who would rather that their careers didn’t get blighted by a potential fiasco.
The BBC could be minded too by OFCOM’s view that the burdens of switching to digital delivery should not fall disproportionately on the dear old ‘beeb’. Unless priorities change, James Murdoch can relax on the BSkyb extra terrestrial UK monopoly for a bit longer.
But will the public gain too?
11 November, 2005
HD, Or The Lack Of It, Could Hit UK Commercial Broadcasters
Following the BBC confirmation of High Definition Television (HD) trials for 2006, all of a sudden it feels like there’s a plethora of High Definition services and trials in the UK next year.
At an event held in London earlier in the week, under the auspices of the Royal Television Society, Pat Younge from Discovery USA provided news of his experiences. The bad news for commercial UK broadcasters is it costs more; doesn’t bring any extra revenue from advertisers; and it doesn’t increase viewing hours … but if you don’t have it, viewers will seek it out and they’ll end up watching you competitors.
The BBC is, as usual, unwilling to be left behind in new developments. With the expectation of World Cup Soccer in High Def on D-Sat (Digital Satellite) next year, the UK commercial broadcasters, ITV; Channel Four; and Five need to be on HD, but will try and ride on the BBC’s coat tails.
Speaking at the same event, Richard Freudenstein, CEO, BSkyB, was careful not to mention what the monthly subscription will be for HD on Sky when it launches. He spent his time talking up the platforms’ HD bouquet that will include Sky One, sports and movies with an HD Sky Plus box and plenty of storage capacity.
DTT (Digital Terrestrial TV) in France (quaintly abbreviated in French as ‘TNT’) will be MPEG 4 capable and is HD-ready from go, but finding capacity on the MPEG 2 Freeview platform in the UK is going to be more of a challenge. The BBC’s Jana Bennett, Director of Television is tasked with making the UK trials a success and wants to see the offering across all platforms. She hopes that, as well as cable and satellite, broadband will be a route into the home.
Confusion still reigns
Although the industry know they must go to HD, it’s clear that they’re far from having a strong hold over it. From listen to the snippets of conversation in the halls before and after the main event, it’s clear that there also remains broadcast industry confusion over the strengths of the various picture standards. This was given away with phrases like “I think 1080 refers to the number of lines” coming from the lips of one ‘expert.’
The equipment people have to buy for their homes is still an area of confusion, not helped by the next-gen DVD industry not agreeing their standard (Blu-ray, HD-DVD).
Once they do and this combines with the widely-predicted, continuing reduction in price, those exciting big displays labeled ‘HD-ready’ will really start to fly off the shelves.
Until then it’s a case of buyer beware – if you can resist the fantastic picture.
10 November, 2005