Small Pay-TV Operators Courted by Video Technology Vendors

Some approaches more closely resemble the cloud-based online video deployments of major operators. Others offer in-home hardware capable of encoding and routing video around the home and even outside of it. “There are definitely two schools of thought,” said Marty Roberts, vice president of marketing for Comcast’s thePlatform, a cloud-based video management provider that has been in talks with several smaller cable operators. And, of course, it’s too soon to say which technology will win out, he said. “Just about every pay-TV operator we're talking to around the world is experimenting with everything in their labs,” he said. Smaller operators have typically outsourced most of their Web-portal operations such as email and news, Roberts said. “An increasing number of them are saying ‘we have to start developing expertise here. We can no longer outsource that video aspect of it,'” Roberts said.

Hardware vendors claim their solutions are less expensive for the pay-TV operator, allowing them to bolt on new TV Everywhere services without making drastic changes to their headend facilities, or requiring them to host and transcode servers full of video programming. “The issues that are holding them back are twofold: the content contracts they have and setting up the technical infrastructure to allow them to get content from some server up in the Internet,” said Paul Friedman, executive vice president of Monsoon Multimedia, which makes a companion set-top box called Vulkano that delivers video to any authorized Internet-connected screen. Customer premises hardware solutions come with their own drawbacks, Friedman acknowledged. “The fact that another box has to be there is an impediment on some level,” he said. Pay-TV operators such as Time Warner Cable have touted their initial TV Everywhere deployments as a path to eliminating the need for expensive set-top boxes.

Hardware-based systems such as Monsoon’s would immediately solve the rights problem, said Colin Dixon, an analyst with the Diffusion Group, which provides advisory services on digital media issues. But though such systems may be cheaper to implement up front, the costs could balloon down the road, he said. “The operator may well be better off encouraging their customers to go out and buy a Sling box,” he said. “Because if they provide the functionality, they are responsible for making sure it works. For a small operator, I'm not sure they want to do that."

For cable operators, upgrading their systems to handle multi-screen video delivery is akin the challenges the industry faced getting into the phone business in the 1990s, said Joe Jensen, chief technology officer for Buckeye Cable, a smaller operator in Ohio. Many operators partnered with Sprint or MCI to get that service off the ground, he said. Buckeye built it’s own CLEC, but “it was a very high degree of difficulty to pull that all together without significant outside support and resources,” he said. “I think the same is going to be true for TV Everywhere solutions.” For a small operator that wants to build its own service, it has to find separate vendors for digital rights management, middleware, transcoders, encoders and VOD asset management solutions, Jensen said. Scale may be important as well, he said. “There may be a need for us to provide some level of a joint development plan, a joint set of requirements working through an organization like NCTC or CableLabs to really come together and provide a significant enough volume so we can also participate in this,” he said.