Leading the cloud revolu�onleading the Cloud TV (r)evolu�on

Paving the Way to an All-IP FutureIP Migration Strategy for Incumbent CATV Operators

The consumer has spoken and the

message is clear: the most compelling

service offering is one that can be delivered

with extraordinary quality to any device,

in any place, at any time. This means

cloud-based services delivered over an

all-IP infrastructure.

There are other compelling reasons

why incumbent CATV operators would

benefit from a move to an all-IP service

delivery platform. The opportunity is to

simultaneously delight the customer and

also deliver quantifiable business benefits

in the form of network efficiencies and

reduced operating costs.

Certain challenges impede an abrupt move

to an all-IP infrastructure even though this

is what the consumers and operators want.

The costs are high, the content rights are

complex, and the regulatory environment

is uncertain. There are also the legacy

platforms that must be maintained during

the transition.

The bottom line is that incumbent CATV

operators need to simultaneously meet

consumer expectations that have been

forever changed by over-the-top (OTT)

media and proliferation of IP-connected

devices, while at the same time honoring

content licensing deals, regulatory require-

ments, and shareholder expectations that

are not necessarily pointing in the same

direction.

This paper will explore both the

opportunities and challenges for CATV

operators as they migrate to an all-IP

infrastructure and eventually, Cloud TV

services. We present what we believe is

the most sensible, cost-effective, and

ready-to-deploy migration strategy, and

show how a hybrid media gateway

solution best achieves the required

balance of objectives for the consumers,

content providers, regulators and

shareholders alike.

All Paths Paved by IPWe know where the road ends: all media delivered from the cloud over an all-IP infrastructure. The challenge is to find the path from here to there that is both compelling to the consumer and economical for the operator.

Paving the Way to an All-IP Future 1

The any time, any place, any device vision

of television consumption is not as futuristic

as it once seemed. Many elements are now

in place:

• The DVR changed consumer

expectations forever, with time-shifted

viewing now commonplace and

“appointment TV” a quaint idea of

the past.

• Massive libraries of movies and TV

programming are available for on-

demand viewing via Pay TV and OTT

services alike.

• Network capacity and advances in video

compression have made it viable to store

and stream high-definition television over

the Internet.

• Modern content licensing deals have

slowly allowed for the legal distribution of

certain premium video programming over

the Internet, accessible from a myriad of

IP-connected devices.

With these developments, the very reason

for and existence of the traditional Pay TV

operator comes into question. Wouldn’t

the consumer get the greatest value and

flexibility by simply getting their TV service

over-the-top (OTT), bypassing their Pay TV

operator altogether?

The Future is HereWe’ve long envisioned a world in which all content is available at any time, in any place, on any device. Consumers have reached the tipping point and have come to expect these things from their service provider.

Paving the Way to an All-IP Future 2

Pay TV operators hold

the lion’s share of ARPU

levels, and approximately

90% of US households

still subscribe to a Pay TV

service with only modest

declines in those numbers

in recent years.

Paving the Way to an All-IP Future 3

On the surface, the statistics would suggest

that the move to OTT and associated “cord

cutting” is a major and irreversible trend.

Consider, for example, that Netflix now

has more video subscribers than Comcast

(see Figure 1). A closer look reveals a less

alarming picture.

Whereas Internet video is here to stay

and will eventually describe all television,

traditional linear television is still the

dominant form of video consumption.

Pay TV operators hold the lion’s share of

ARPU levels, and approximately 90% of

US households still subscribe to a Pay TV

service with only modest declines in those

numbers in recent years (see Figure 2).

Despite this encouraging data, Pay TV

operators cannot rest. Consumers and

competitors alike are pushing on-demand

access to all video programming from any

device, and young consumers spend more

time viewing television on mobile devices.

At the least, operators will need to keep

pace, whereas the real opportunity is to

lead the way and create the next-generation

of video service providers in the process.

Figure 1

Figure 2

The inevitable move to

an all-IP infrastructure

uniquely provides clear

benefits to the operator

and consumer alike.

Consumer Benefits

Time-shifted television, massive VOD

libraries, and Internet streaming services

have collectively and irreversibly changed

consumer behavior and expectations as it

relates to the world’s most popular form of

entertainment, watching television.

To compete successfully for viewers’

dollars, operators must give them what

they want, Cloud TV. The ultimate winners

will offer a consumer-friendly viewing

experience that makes all video content

available in any place, at any time, on

any device. Consumers clearly want this

service, and they will reward the service

providers that make it available.

Operator Benefits

Ultimately, the consumer benefits defined

above cannot be achieved without an all

IP-infrastructure, making this a mandatory

transition for today’s operators. However,

there are other motivating factors related

to improved capital efficiency and reduced

operating costs. An end-to-end IP infra-

structure provides improved bandwidth

utilization, a unified network that reduces

operating costs, and an open architecture

that accelerates the introduction of

advanced services.

An all-IP infrastructure additionally helps

to reduce capital and operating costs in

the form of improved service scalability,

elimination of proprietary hardware, greater

vendor selection, and a move to the

ultimate objective – getting consumers

to pay for their own customer premise

equipment (CPE).

The Destination is ClearIncumbent CATV operators are presented with the unique opportunity to deliver a superior consumer experience while also reducing overall operating costs.

Paving the Way to an All-IP Future 4

With so much clarity about the benefits of a

migration to IP, it may seem that operators

would be clamoring to move immediately

to an all-IP infrastructure that enables a

universal Cloud TV service. However, as

the old saying goes, if something seems

too good to be true, it almost certainly is.

There are three primary challenges that face

any incumbent CATV operator moving to an

all-IP infrastructure:

1. Capital Costs

2. Content Licensing

3. Laws and Regulations

The scope of this paper does not allow us

to explore each of these in detail, but the

primary challenges are summarized here.

Capital Costs

Unlike telcos and IPTV operators,

incumbent CATV operators have typically

spent many years investing in proprietary

coaxial and HFC networks, proprietary

DRM systems, and legacy set-top boxes

that would have to be replaced to support

an end-to-end IP video distribution.

Content Licensing

Most operators have a wide variety of

long-term content licensing agreements

that may or may not contemplate IP

transmission. Content costs are rising

and IP streaming negotiations are tough.

This suggests we are many years away

from having all content available over the

Internet. DRM platforms also fall short of

meeting protection requirements across

all devices, especially for securing live and

early-window content.

Laws and Regulations

The legal and regulatory frameworks for

broadcast television are being tested and

are uncertain. The future of re-transmission

rights is still being determined, and the

interpretation of fair use laws are constantly

re-opened as new service models emerge.

With so many costs, complexities and even

shifting legal and regulatory frameworks

involved, there is no direct path to the

Cloud TV future.

The Path is UncertainThe stakes are high; the challenges are numerous; and the path is uncertain.

Paving the Way to an All-IP Future 5

The transition of a typical incumbent

CATV operator to all-IP is estimated to

take approximately 10 years. Beyond the

challenges presented earlier is the fact

that most incumbent CATV operators

are saddled with ongoing operations and

capital costs tied to their legacy platforms.

Even if cost was not an issue and all

content rights for Cloud TV were available,

several factors would prevent a direct

transition to an all-IP, cloud-based

service platform:

• The need to sustain the current service

during any migration period means

ongoing operations and capital costs

tied to legacy headend equipment,

which restricts availability of capital for

introducing an all-IP infrastructure.

• MPEG-2 TV transport squeezes

bandwidth available for IP Pay TV, which

requires significant capacity for delivering

content in unicast mode by virtue of

the high level of on-demand viewing

associated with connected devices.

• There are tens of millions of legacy set-

top boxes in the field that do not support

IP services. The cost and operations

complexities of replacing all boxes in

the field cannot likely justify an abrupt

transition to IP.

Despite these hurdles, the upside benefits

of IP migration are too great to ignore, and

neither the consumers nor new entrants will

allow incumbent CATV operators to stay

competitive without a move to IP services.

We believe the center of gravity for

the optimal migration strategy is in the

subscriber’s home. A prudent approach is

to deploy a CPE-based transition solution

that allows CATV operators to provide

compelling multi-screen services on their

existing networks today, with devices that

are compatible with the IP networks of

tomorrow.

Charting the PathThe benefits of IP and Cloud TV are apparent and the challenges of getting there are known. Successful operators will chart a migration path firmly focused on the endpoint while systematically navigating the roadblocks along the way.

A solution that allows

CATV operators to provide

compelling multiscreen

services on their existing

networks today, with

devices that are compatible

with the IP networks of

tomorrow.

Paving the Way to an All-IP Future 6

A CPE-based migration strategy should

meet the following requirements:

• Hybrid TV – content delivered from both

the legacy cable network and also from

Internet media services

• Bring Your Own Device (BYOD) –

support for operator-provisioned set-top

boxes as well as consumer-purchased

viewing platforms such as tablets and IP

streamers

• Legacy Platform Support – does not

require major upgrades to network plant

to support advanced Hybrid TV and

BYOD service

• Cloud TV Foundation – platform that

provides a turn-key switch to a Cloud TV

service delivery

The hybrid media gateway uniquely meets

these requirements and is the migration

strategy presented herein. Key features

of the hybrid media gateway include the

following:

Advanced Networking

A practical challenge to incumbent CATV

operators looking to extend IP within the

home is wiring. Connecting the home

with reliable IP has always meant stringing

Ethernet cabling from room to room.

However, with the introduction of video-

grade wireless and the advancement of IP

over coax technologies like MoCA, this is

no longer the case. By integrating home

networking capabilities into the hybrid

media gateway, the time and cost of in-

home installations are drastically reduced.

With integrated networking capabilities,

there is no longer a need for external

networking equipment, thereby reducing

power consumption, removing additional

points of failure and simplifying installation,

thereby further reducing the cost per

customer.

Once the connected home is established,

all IP-enabled devices within the home

can have access to rich Pay TV services,

including PPV and VOD —enabling more

possible points of purchase throughout

the home.

Tuner Sharing

The ability to share tuners is also an

important feature of the hybrid media

gateway. This functionality allows for the

termination of the QAM network at the

gateway by extending the video service

throughout the home over the IP network.

Lower cost IP devices can be used at

viewing locations throughout the home.

These devices can request access and

control of the gateway’s tuners. The

gateway then applies DTCP protection and

content is streamed in its native MPEG

format via IP to the ancillary devices.

This configuration has many important

benefits. It enables a cost-effective whole-

home digital video recorder (WHDVR)

service by enabling tuners in the gateway

to schedule recordings to a single hard

drive. Secondly, in a legacy encryption

environment, just a single CableCARD is

needed per home rather than per device

as is required with traditional cable set-top

boxes. Lastly, it brings secondary viewing

locations into the full service experience

that with traditional set-top boxes could

only be enjoyed at the main TV.

Hybrid Media Gateway SolutionA CPE-based solution provides CATV operators with the most cost-effective strategy for migrating customers from their legacy systems to an all-IP environment.

Paving the Way to an All-IP Future 7

Transcoding

A key feature of the hybrid gateway is its

ability to power the multi-screen experience.

The gateway provides a means to stream

content either from the hard disk or live

feed to mobile phones and tablets through

the use of its built-in transcoders. These

transcoders work in conjunction with a

built-in software based adaptive bitrate

server providing a smooth video experience

even at the farthest reaches of the home

network. This same experience can be

extended outside the home as well as

over cellular networks or wireless access

points. Ultimately, to the end user, this

technology is completely transparent and

the experience is the same as what they’ve

come to expect from OTT video.

Built-in transcoding has several key

advantages. It saves the operator from

having to purchase and maintain expensive

HLS and associated encryption equipment

in the headend. It also provides the

benefits of a Network PVR service without

the complicated legal issues that have

prevented its widespread deployment.

According to NPD, by 2015 there will be

202 million Internet-capable devices in

U.S. homes. Having a hybrid gateway with

integrated transcoders enables operators to

support a Bring Your Own Device (BYOD)

platform that allows them to take advantage

of consumer-owned connected devices

in subcribers’ homes, such as smart

TVs, PCs, game consoles and tablets.

This results in less operator subsidized

equipment within the home.

Encryption

Supporting both open software encryption

and CableCARD, the hybrid media gateway

provides a method of terminating legacy

encryption at the gateway while providing

protection throughout the home via DTCP.

It also provides a means of transitioning

future models where software encryption

can be extended over the home network

to IP terminals throughout the home. Such

a strategy avoids the rights issues by

working within the existing usage policies

of legacy Pay TV distribution contracts.

In other words, as long as the service is

being delivered over the MPEG transport

system to a point of interface with devices

in the home, there’s no need for additional

rights to permit distribution to multiple types

of devices as long as all the protection

requirements are met to prevent in-the-clear

access over the home network.

Remote Management

With the IP capabilities of the hybrid

media gateway also comes the benefit of

remote management. In the past, visibility

into the operational state of devices in

the home was, for the most part, non-

existent. Through protocols like TR-069,

there are many opportunities to improve

the customer experience by empowering

support and engineering teams with

advanced tools to manage and monitor

networked devices. In some cases,

problems can be identified and flagged to

support teams allowing a transition from

reactive to proactive support models.

Where problems are identified, there are

now opportunities for them to be resolved

remotely with little or no input required from

the end user.

All IP Capable

Finally, the hybrid media gateway is

also fully capable of the all IP network.

Built upon an IP software and hardware

platform, once the legacy QAM network

is transitioned, the hybrid media gateway

becomes an advanced IPTV gateway.

A gateway capable of processing any

combination of multicast, unicast, and

HLS video streaming on the operator’s

network, and translating those services

for IP capable video devices on the

subscriber’s network.

Paving the Way to an All-IP Future 8

Having a hybrid media

gateway with integrated

transcoders enables

operators to support a

Bring Your Own Device

(BYOD) platform that allows

them to take advantage of

consumer-owned connect-

ed devices in subscribers’

homes, such as smart TVs,

PCs, game consoles and

tablets.

The hybrid media gateway provides a

transitional phase to an all-IP operation.

Because the gateway is compatible with

both legacy architecture and the cloud

architecture of the future, it is the most

cost-effective strategy for operators to

provide an immediate means of powering

a true TV Everywhere experience, while

positioning them for a migration to an IP

network that supports cloud services.

It’s impossible to say exactly when the

conditions will be ripe for operators’

transition to a cloud-based operational

environment. When it comes to a

transformation in how Pay TV rights are

defined, the situation depends on forces

beyond the control of individual operators.

But it’s clear that, given the advantages of

moving to an all-IP architecture, operators

will want to make the transition as soon as

it’s practical to do so. Meanwhile,

the multi-screen service and other

capabilities embodied in a well-designed

gateway platform provide operators the

tools they need now to deliver the video

entertainment experience consumers

are looking for.

Accelerating the IP TransitionBy implementing a hybrid media gateway strategy today, operators will be well positioned to expedite the transition to a cloud-based architecture when it comes time to do so.

The hybrid media gateway

is the most cost-effective

strategy for operators

to provide an immediate

means of powering a true

TV Everywhere experience.

Paving the Way to an All-IP Future 9

leading the Cloud TV (r)evolu�on

A Ready-to-Deploy Solution for Tomorrow’s NetworkEntone’s family of Hybrid Media Gateways

is pre-integrated with market leading

DRM and middleware systems to enable

operators to quickly deploy hybrid services.

For more information about Entone’s

products and solutions, contact Senior

Product Manager, Bill Hughes at

bill.hughes@entone.com.

For more information about Entone,

please go to www.entone.com.

© 2014 Entone, Inc. All rights reserved.