What Are U.S. Consumers Missing Out On?

A Comparison of Global Multiplatform Markets

By Michael Hopkins

 

A lackluster No. 15 ranking in broadband penetration ... stuck with dialing 1-800 numbers while overseas viewers merely press an iTV button ... facing a potential bumpy ride on the digital terrestrial television road while free digital TV services flourish on the other side of the pond.

If it seems like the U.S. has sunk in stature in multiplatform high-tech circles, there’s a reason for that:  When compared to other highly developed nations, we’ve been taking on water for some time.  But there is big potential in terms of the nation catching up with the rest of the world.  After all, there are 112 million TV households in the United States, all of which are potential users of interactive TV services, speedy broadband connections and digital TV offerings.

In this issue of The BRIDGE, we take a look at the nation’s relative position in the arena of multiplatform high tech.  We discuss some of the reasons for our laggard status and we look at some of the “over there”  technologies that can be expected to migrate “over here.”

iTV Winners ... and Laggards

 

The United States isn’t exactly known as a hotbed for interactive TV.

Surprised?

Other corners of the planet, especially markets in Europe and Asia, have seen pay-TV companies rolling out the latest advanced video services in an effort to take on the competition.  And while some U.S. services have interactive capabilities, they apparently pale in comparison to what’s offered overseas.

iTV Competition

 

Those who closely watch the interactive TV business suggest a lack of real aggressive competition has hindered its adoption stateside.  That sentiment may have some readers scratching their heads in astonishment, given the battles today between cable, satellite TV and telco video platforms coast-to-coast.

But there is some reasoning behind the argument from iTV camps about the back-of-the-bus attitude surrounding interactive TV in the United States.  For starters, cable is well established and dominant in the U.S. pay-TV industry, with service delivered to most cable subscribers from only a handful of companies.  Because of that, some suggest the wired video incumbent isn’t all that motivated to adopt advanced services.

Also, satellite TV is often viewed as a rural phenomenon.  And telco TV is just getting out of the gate.

“I do think there is more competition in other markets than there is in the U.S.  That is largely due to the longevity of U.S. cable and the initial perception that a ‘dish’ on your house was only for rural markets,” says Tracy Geist, senior vice president of market development at California-based iTV developer OpenTV.

Lawrence Baker, a senior analyst covering the North American market for research company BuddeComm, agrees that a lack of serious competition has hindered interactive TV in the States.

“The U.S. has highly concentrated markets, whether we are talking about infrastructure in the broadband sector, TV sector or mobile sector,” says Baker.  “The lack of competition has meant providers have not had to compete vigorously in terms of innovative services, and this has left the U.S. years behind the development we are seeing” in countries like Korea, Japan and the Netherlands and regions like Scandinavia.

The U.S. video market also is a near reversal of what’s happening in other corners of the globe.

“In most of the rest of the world, satellite has been the primary delivery of digital television, and cable is just starting to come into its own,” says Geist.

The hyper-competitive environments witnessed in pay-TV markets overseas are compelling foreign pay-TV operators to offer something to customers that competitors can’t touch.

“These services are all fighting for the same customers.  And to do that, they know they need to differentiate their services,” Geist says.

Still, there are notable iTV efforts underway in the United States.

U.S. DBS platforms have become well-known for their interactive endeavors, whether it’s the multiple-screen video mosaics from DISH Network or the interactive offerings available through DIRECTV’s sports programming efforts, including NFL Sunday Ticket and its enhanced player tracker, highlights and game stats available to viewers.

On the telco video side, Verizon FiOS TV has “widgets” delivering interactive news, sports and weather, and AT&T is delivering similar content through its u-Bar application.  The IPTV offering from AT&T also has games and other features.

Cable is working on interactivity, adopting tru2way standards for delivery of two-way capabilities.  Also, Comcast and Cox have TVWorks, a provider of software solutions that power advanced cable services.

Despite the efforts, it appears U.S. consumers are missing out on some key interactive offerings.

iTV Overseas

 

Around the world, millions of viewers have become accustomed to interactive TV applications.  It could be obtaining stock ticker information in China, playing games via a platform in Latin America or engaging audiences with voting and polls in Europe.  (Got to wonder why American Idol still uses a toll-free number for viewers to call in and vote for their favorite contestants, along with text messaging votes via cell phone.)

An iTV application that still generates a lot of buzz is the so-called “red button.”

That button found on remotes worldwide allows viewers to interact with programming when prompted by an icon on the screen.  British Sky Broadcasting, the U.K./Irish satellite TV platform controlled by Rupert Murdoch’s News Corp., has become well known in industry circles for its use of the red button.

While the red button can be utilized for just about any programming property, sports has been a favorite for those using the device.  The feature enables viewers to access several different video feeds from a match, providing a selection of games that may be taking place at the same time.  That occurred during the World Cup in 2006, when viewers with interactive capabilities were allowed to view matches from multiple camera angles.

Events like World Cup soccer, or a single team playing a critical match, can drive a lot of interactivity among consumers.  They could even get viewers to upgrade their video packages.
“These events draw entire countries to the television, and operators key on these events for the launch of new and compelling services to attract subscribers,” OpenTV’s Geist says.

Nonetheless, there is a thin line between engaging a viewer with compelling interactive content and interfering with their TV habits.

“People watch television to watch television,” the OpenTV executive says.  “You don’t want to do things that will take consumers away from the viewing experience.  You don’t want to distract viewers.”

And while OpenTV has a strong focus on interactivity, the company’s biggest value to video providers is the help it delivers to connect customers with video services.

OpenTV is well known for its middleware efforts worldwide.  That middleware on a set-top box acts much like an operating system on a computer.  The technology gives the pay-TV provider an easy path to quickly add services to a set-top, no matter what box is in the home.

“Essentially, middleware ensures that the user experience is the same across multiple devices,” says Geist.

According to OpenTV, the company has 58 percent of the middleware market worldwide.  More than 106 million digital set-top boxes and televisions contain OpenTV software, says the company.

What Comes Next

 

What does the future hold for interactive TV?

A number of satellite TV providers and others, such as off-air digital TV services, are eyeing hybrid technologies to deliver content to the masses.  It’s a business potential OpenTV is closely watching, says Geist.

With a hybrid solution, a satellite dish or a terrestrial antenna connects consumers to digital broadcast signals while a wired broadband connection delivers video-on-demand fare or other ancillary programming.

DISH Network and AT&T are using hybrid technology for their joint Homezone service.

In addition, there could be a renewed focus on programming guides.  Given the growing number of video available to consumers, not only in terms of linear channels but also video-on-demand selections and titles available via in-home DVR libraries, searching for programming could be an issue in the near future.

“Consumers will want the right guide – the right user-experience - to get to content,” Geist says.  “And that could be a challenge given all of the channels, the VOD titles and PVR uses that are out there.”•

Catching Up to the Broadband World

 

The U.S. position in the worldwide broadband marketplace – when compared to its global peers – is faltering.

And that’s putting it nicely for the country known as the birthplace of the internet.
According to data from the Organization of Economic Cooperation and Development, the United States’ standing in the world in terms of broadband penetration – as of December 2007 – stood unchanged at No. 15 among developed nations that are part of the group.  In the U.S., among every 100 inhabitants, there were 23.3 broadband subscribers as of year-end 2007, states the OECD data.  That’s up from 19.6 broadband users per 100 inhabitants in December 2006 for the nation, according to the figures.

Denmark retained its No. 1 spot among broadband nations, with 35.1 broadband subscribers per 100 inhabitants as of December 2007.  That’s up from 31.9 high-speed internet users per 100 residents in December 2006.

The Netherlands, Iceland, Norway and Switzerland also were on the OECD’s top five broadband list.  A big surprise was Korea, known for years as a broadband hotbed, dropping to No. 7 on the organization’s list, with broadband services among 30.5 of every 100 inhabitants as of December 2007, states the group’s numbers.

The OECD figures have been a thorn in the side of U.S. regulators, lawmakers and others who would like to see the nation higher on the list.

Numerous culprits have been floated as reasons for the uninspiring stature of U.S. broadband when compared to the rest of the international marketplace.

Some are quick to point out the challenges of geography that make it difficult to wire every corner of the country.  While it is easier to connect users in densely populated areas (such as European nations like Denmark and the Netherlands), it’s more of a challenge to bring broadband offerings to rural areas in the States, some say.

Also, the price assessed to consumers for internet access could be a factor.

The OECD found that U.S. broadband providers charge more than those in other developed nations.  Broken down by megabit per second of download speed, U.S. rates ranged from $2.83 to $38.41 in late 2007.  For comparison, rates in Japan start as low as 13 cents for one megabit per second.

However, some also blame the perceived lack of good data on the U.S. broadband market, which has led the Federal Communications Commission to change the way it collects numbers on internet usage.

The efforts include requiring broadband providers to report numbers of subscribers by Census tract, broken down by speed tier and technology type.  Also, the FCC says it wants to improve the accuracy of the information it gathers about mobile wireless broadband deployments.
While the U.S. plays catch-up, other nations are diversifying their broadband platforms.

“What we are seeing with broadband is that more local applications are being developed,” says Paul Budde of Australia-based BuddeComm.  “Broadband is an applications business and no longer a one size fit all business.”

For example, Japan has a growing slate of e-health services, including more than a dozen diagnostics that can be done via online connections.  In addition to health care, Budde says governments are taking advantage of broadband infrastructure to deliver education and e-government services.

“Governments are coming back in this market after decades of privatization, and billions are currently invested in these social services,” Budde says.

While the overall U.S. broadband numbers may be a disappointment to some, the country is a leader in parts of the internet business.

For starters, the United States is a leader in cable broadband penetration, with 12 out of every 100 residents using a cable modem to access high-speed services.  Only a handful of other nations, such as Canada (13.8 cable broadband customers per 100 inhabitants) and the Netherlands (13.4 users per 100 inhabitants), have a higher penetration for cable-supported services, states the organization’s data.

U.S. DSL services rank towards the bottom of the list, with an average of 10 users per 100 inhabitants. Iceland tops the DSL list, with 31.1 subscribers per 100 citizens.

U.S. fiber connections are at about the middle of the list.  Korea dominates the category, with 10.4 fiber customers per 100 residents, according to the OECD data.•

Europe Boasts Top Broadband Nations

 

Global IP Traffic: Ready to Double Every Two Years

 

According to projections from Cisco, IP traffic globally could nearly double every two years through 2012.  The networking traffic includes traditional IP internet services and non-internet uses, such as IPTV and metro enterprise networks.

Video-to-PC applications today consist of one-quarter of all consumer internet traffic. However, internet video will account for 50 percent of all consumer traffic in 2012, says Cisco.

On a global basis, the Asian region could see rapid growth, with IP services generating up to 12,319 petabytes by 2012, up from a forecasted 3,151 petabytes this year, states the Cisco data.
As for the technical lingo, 1,000 petabytes is equal to 1 billion gigabytes. In layman terms, 1,000 petabytes is equal to 250 million DVDs.

If a petabyte isn’t enough, Cisco says in its research that the worldwide annual volume of IP traffic could reach half a zettabyte sometime in 2012.  A zettabyte is equal to 1 trillion gigabytes, 1,000 exabytes, or 250 billion DVDs.•

The (Terrestrial) Digital TV Revolution

 

While U.S. markets argue over converter coupons, levels of consumer knowledge, and how long one service should be forced to carry the analog versions of another, much of the rest of the world has already dived head-first into terrestrial digital platforms.

And in many places the services don’t cost a dime … or a pound or euro.

The United Kingdom, for example, has Freeview.  The no-cost service was reported to be in 14 million homes through the fall of 2007.  Part of Freeview’s success comes as U.K. consumers move away from analog TV and opt to buy a Freeview digital box or a digital TV capable of receiving the terrestrial digital product.

Freeview offers about 30 channels, ranging from BBC, ITV and Sky selections to children’s and news programming.  There also are regional networks and audio channels.

All consumers have to do is buy the reception equipment.

Freeview said it sold 9.7 million branded products last year, up 64 percent on a year-over-year basis.  Christmas sales alone amounted to 3.8 million purchases, Freeview said.  Products include standalone set-top boxes that start at $49 (U.S.) as well as DVRs that sell for $256 (U.S.).  Digital-ready TVs also can access Freeview’s programming.

Shareholders in the Freeview platform are the BBC, Channel 4, ITV, National Grid Wireless and British Sky Broadcasting, the satellite TV giant controlled by Rupert Murdoch’s News Corp.  Sky has a stake in the digital terrestrial platform despite the competition it delivers to the dish service.

The United Kingdom is not alone in embracing digital terrestrial TV.  A growing number of digital TV platforms are launching elsewhere in Western Europe, and are challenging pay-TV operators in the markets they serve, though the consumer proposition may differ from country to country.

“Some pay-DTT providers are positioning their service as a kind of ‘halfway house’ between free-to-air services and other forms of pay-TV,” says Cesar Bachelet, a senior analyst with ABI Research.  “They offer all the regular free-to-air programs, plus some premium content at an attractive price.”

Along with digital terrestrial TV, more of the planet’s television viewers also are adopting HDTV.

High-def will be seen in 44 million homes around the world by the end of 2008, states data from London-based research firm Informa.  That number could jump to 180 million by 2012, according to the company.•

MultiMAX

Competitive Landscapes

 

Visited a couple of interesting places last week.

The new Comcast Headquarters building in downtown Philadelphia.

And lunch near the DIRECTV HQ opposite the LAX runways after spending the morning with TVN.

Similar businesses ...

Sort of.

So let’s discuss something entirely different ... coming sometime soon (notwithstanding the Pivot “learning experience”) will be wireless interoperability with cable and satellite and VoIP and broadband and toothpicks, too.

The topic this morning:  cell phone usage in cars ... or anywhere else for that matter!

It is truly annoying to be bombarded with noise from idiots shouting into thin air no matter where you might be ... on the street, in an airplane, on a bus, in a streetcar, in a lobby, in an elevator ... wherever.

“My stock did what!”

“Pick me up AFTER YOU RUN THE DAMN ERRAND!”

“And then I told him ... ”

“And then I told her ... ”

“THIS IS NOT AN EMERGENCY!”

“She said what?”

“Make ‘em an offer they can’t ... ”

But that isn’t the most annoying part of the ubiquitous cell phones ... the most annoying this is driver holding the cell to the left ear while gesturing with the right hand while going something just over the speed limit while changing lanes without looking.

Why is that allowed?

The Insurance Institute for Highway Safety says the risk of an “injury crash” quadruples when the driver is on a cell phone.

And I’m sure that goes up for the idiots that are texting.

So, again, why is all this allowed?

USA TODAY reported that 27 states and that little bitty non-state on the Potomac have passed laws with some restrictions ... like, take that phone out of that ear and stick where the sun don’t shine!

Good idea.

One of the news stations should start a campaign to ban handheld usage in moving vehicles ... period!

So, in the meantime, I’ll write all my congressfolks ... unless they’re on the phone somewhere.