UPC Broadband this week ordered Euro DOCSIS 3.0 cable modems from Technicolor, now a bit of a fading light, but once one of the biggest set top makers in the world. Back in May, UPC and its parent Liberty Global, made a bold statement in procuring an Intel based, over the top, set top, from a combination of Intel, NDS, Nagravision and Samsung.
While these two moves seem to contradict one another, we suspect they don’t. What we think is happening here is that UPC will adopt a two strand strategy ‘ one within its footprint, where it will push for top end devices, which will show off its much vaunted 300 Mbps broadband capability, and another outside its footprint, where any broadband line can give access to a TiVo class experience of over the top video, which will appear to be both a list of broadcast stations and VoD films, and this will use the new NDS designed, Intel powered, set top.
Eventually it is anyone’s guess what customers will buy when they are inside the company’s footprint ‘ they could take either. It may be that a 300 Mbps broadband line is all that anyone will ever need for TV, and that the Euro DOCSIS order with Technicolor may be the basis of a marriage between the two product lines ‘ creating a fat broadband pipe for the delivery of homogenous TV services across any type of network.
That is certainly the long term aim of the Pay TV networks in Europe, while also introducing TV Everywhere services, which cement their relationship with customers, offering free, over the top services to existing customers, to fight service churn.
Right now UPC has over 12.9 million cable customers across a fragmented European territory, taking in Germany, Switzerland, the Netherlands and much of Eastern Europe in countries like Hungary, Poland and the Czech Republic, as well as Romania. In these countries alone there are a total of 87.9 million TV homes. UPC networks passes 22.7 million homes, but this means that UPC has to be content only being able to address about a quarter of Europe ‘ and that’s in the territories where it has launched. It has no service in places like the UK, France, Italy, Spain and Scandinavia. An Over the Top strategy like the one we suggest will significantly stretch its footprint, and using top end Euro DOCSIS devices has been shown to win the broadband battle against incumbent Telcos in other regions like the US.
Liberty Global has experience with DOCSIS 3.0 from the deployment that began in 2007 at Japan’s J:COM, which launched a 160 Mbps version in all four of its regional operations. It sold J:COM last year to KDDI for $4 billion. In September 2008 UPC also began rolling out slightly slower versions of early Euro DOCSIS at between 60 Mbps and 120 mbps in Netherlands, then Austria and Switzerland.
The DOCSIS device that Technicolor will supply is its enhanced multimedia terminal adaptor (EMTA) which will include a new, premium offering which has both wired and wireless networking.
Technicolor has been installing similar devices for around 18 months now with other cable companies, notably where it is strong at companies like Numericable.
Last year Technicolor shipped a total of 24.8 million access devices down from its 2008 total of 29.1 million, and this included 8.3 million satellite set-top boxes, 5.6 million cable and hybrid set-top boxes and cable modems and gateways, and around 10.9 million IP set-top-boxes, DSL modems and telecom gateways. In February it announced that it has reached the milestone of delivering 100 million digital set tops since it entered the market in 1994, about half of them to DirecTV.
And in late July Technicolor signed a three year contract extension to provide set tops, including HD devices, to DirecTV in the US and said it was now the preferred provider of 3D services there. DirecTV is in the throes of a 3D channel launch, expected out before Christmas in the US.
It was critical to Technicolor’s future that it retained DirecTV’s goodwill throughout its 3D rollout, and with that in the bag, it can look at branching out into some of these critical European cable upgrades, such as the UPC order.
This new order will almost certainly have had US supplier Arris and US rivals Cisco and Motorola, sniffing around, trying to undermine Technicolor and land one of the key accounts in Europe.
Over the past two to three years US cablecos have been installing DOCSIS 3.0 rapidly and as that scales down, Europe is expected to take up the DOCSIS flag and run with it.
The new Technicolor devices will be rolled out in several European countries by UPC, including the Netherlands, Poland and Austria.
‘Through Docsis 3.0, UPC will be able to deliver unrivalled bandwidth to the home with state-of-the-art home networking technology. Technicolor will provide UPC a real competitive edge to deliver the advanced features that their subscribers demand.’
The TWG870 will be the basis of the UPC devices and it incorporates voice telephony with a four port gigabit Ethernet router and 802.11n wireless. It also allows channel bonding which is part of the EuroDOCSIS spec and can bond up to eight downstream channels, which is where the 300Mbps comes from.
Recently TiVo won out for a top end device at Virgin Media, where we expect a similar strategy to UPC ‘ pushing both on-footprint and off-footprint customer acquisition with TV services.
The May announcement of the OTT device will see Samsung building the device, Intel supplying the chips, and the middleware and user experience coming from Israeli conditional access firm NDS. This will be built around Adobe Flash and use the MediaHighway middleware of NDS and its Snowflake UI, with Nagravision the incumbent conditional access supplier.