Deutsche Telekom is about to emerge from under its 2007 decision to go down the Mediaroom route for its pay TV offerings, and energise its TV offerings with a new pay TV service called simply Start, a skinny 100 channel bundle for as little as €2 a month. For the first year German customers will be offered this service for €0 as an inducement to go to Deutsche rather than spend on the huge variety of OTT services on the Germany market.
This move came out on the back of a Zenterio press release, a company which told us in 2015 that it had won a contract with Deutsche Telekom for its set top Operating System, but which has not given out any further details since.
It now transpires that their relationship has taken 5 years to bear fruit and on the balance of the offering, given that a new set top will only cost a further €2.94 a month, it is likely that the bottom end set top is something akin to a Roku media player, priced at around €35 or so. Contracts for the service are for two years, while for the set top payment is for one year.
All of this seems to make Deutsche the new market disruptor, going up against pay TV services from cable and satellite operators which have monthly ARPUs in the $30 bracket and above.
Back in March 2014 when he took over, new CEO of Deutsche Telekom Timotheus Höttges, promised that his company would reach 10 million TV customers by 2017. He did suggest that this was “TV across all screens,” which includes the TV, tablets, or a laptop, although he never mentioned phones. Today Deutsche has just 3 million such customers and will have to add 7 million new customers in the next 6 months in order to achieve his promise. But perhaps after this move he has a chance.
We have been talking about a new OTT system which either plugs into the remnants of Mediaroom or entirely preplaces it, built with Huawei as the prime contractor, Zenterio providing the device OS, and Verimatix known to be in pole position as the content security provider. Outside of Germany Zenterio is also to be used, and Verimatrix, but it is unclear if the Germany operation will be used as the template for countries such as Romania, Hungary and Greece, give that Romania pioneered its own system based on Viacess Orca software.
Deutsche Telekom OS supplier Zenterio seemed to be finally ungagged this week and allowed to say something about its 5-year partnership with Deutsche with the launch of a new skinny bundle IPTV offering in Germany. This will have 100 TV channels, with 22 in HD and cost as little as €2 per month after one free year.
Deutsche will still retain its EntertainTV and EntertainTV Plus options but the new Start TV will have 20 TV channels in HD – including 1, ZDF and Skysports News – typically these have tended to be part of free to air offerings, but in Standard definition there are 100 channels, including CNN, Nictro, MTV, Sport 1 and RTL – many more in line with paid TV.
It will also offer 50,000 on demand assets with 15,000 in HD. But the key is in the advanced UI that Zenterio has made possible, the thing that Mediaroom never accommodated during its lifetime. It will have smart search across all services, 7 day replay, the ability to pause live TV, and program restart. It is unclear how this has been achieved politically, since Germany is one of the European countries where the law says you cannot store a copy of a TV channel unless you hold a separate copy for each customer. It is possible that Deutsche Telekom has painstakingly re-negotiated its content rights to include this elusive 7 day replay feature. The fact that it is not available across the board on every channel looks like this must be the case.
Entertain TV has by comparison some 45 HD channels and many of the same facilities and is now down to just €10 a month – the price of Netflix. There are also new broadband and triple play offerings which begin at €19.95 in the first 12 months, rising to €39.95 after a year. The set top for the higher levels of performance cost €4.94 a month, implying this is for a total cost of some €60 after one year – again exceptionally cheap.
For years Deutsche has been trying to totally eliminate the set top box, and at these prices this seems to be about as far as it can go right now. We are unsure at this point who makes these devices, but it is likely to be Huawei, and one of the main reasons that the Chinese firm won the contract.
About a year ago we asked Zenterio what chip is in the set top box that Deutsche Telekom uses to run their set top box operating system. That detail was covered by a non-disclosure agreement and we never got the information.
What seems clear from this week’s release is that older Mediaroom set tops are not being retained and if you want the new TV format, you need to buy a new one, however cheap it may be.
Prior talk of Zenterio installations at Deutsche had all been outside of Germany. Deutsche has more than 6.7 million pay TV customers in and around Germany, with just slightly more outside Germany than inside it.
Initially Zenterio OS was found on a system based on international rollouts in Greece, Romania and Croatia, but not previously in Germany. Those countries respectively have 499,000, 1.46 million and 408,000 pay TV customers, across multiple formats, IPTV and DTH satellite with some cable. That’s really why it chose Zenterio, somehow it needs a single operating environment and UI for all these services on cheap set top hardware, despite being delivered in multiple formats. Deutsche Telekom also has TV services in Hungary, the Czech Republic and Slovakia.
So what triggered this release is simply that the largest market with 3 million homes, based in Germany, which was to go live using Huawei software replacing or working alongside Mediaroom, has finally gone live.
The chip is still not clear in a new set top, but likely to come from a Huawei affiliate in China like HiSilicon.
The release said that “Deutsche Telekom Group, the second largest multinational operator in Europe, is working with Zenterio, on an ambitious project to modernise the TV subscriber experience in Germany with one of the market’s largest deployments of IPTV set top boxes.” More launches are planned in the near future on UHD and Satellite.
Jörgen Nilsson, CEO of Zenterio, said “In today’s highly competitive market, the customer experience is all important. Viewing habits are changing incredibly quickly as more screens are added to the mix and on-demand services become increasingly intuitive. We’re incredibly proud to be working with Deutsche Telekom to empower the TV operator to drive better TV experiences.”
Zenterio said the OS supports delivery of advanced data collection and intelligent backend integration with any set-top box model across different countries, vendors and ecosystems.
With future deployments, Deutsche Telekom will benefit from faster time to market for new services. Nilsson concludes, “This latest announcement marks the culmination of five years of collaboration with Deutsche Telekom and cements Zenterio’s position as a full-service provider of technology, value added services and consultancy for the TV industry.”