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24 September 2015

Deutsche Telekom T-Entertain falls to Huawei partner pressure

We have made no bones about chasing down the 20 odd real Mediaroom accounts and trying to work out if Ericsson has ever achieved anything good out of them since it bought Mediaroom. And while there was a clear, unambiguous decision at IBC that the largest of these Mediaroom accounts was staying with Ericsson, in AT&T – we have always said that the telling accounts would be both AT&T in the US and Deutsche Telekom in Europe. Which is why we have tried to find out who has won the account there for the past 2 years. It is starting to become clearer.

Ericsson continues to talk about Mediaroom in its new guise as Mediafirst and says that it has 79 commercial deployments in 32 countries, delivering services to over 18 million households and 36 million devices. Microsoft itself used to say it had around 60 accounts, but we can only find about 24. An analysis of the obvious ones puts something like 12 million homes connected in play at a combination of AT&T, Deutsche Telekom, Telefonica, Bell Canada, Telus, Singtel and Portugal Telecom, and that’s just 7 operators. We know that both BT and Swisscom are the only ones to completely desert the system so far. But this means the remaining operators must average as little as 100,000 homes each. So the important players are those on the list above and this is the guts of what Ericsson bought.

Ericsson has almost certainly inflated that number by including anyone that has its Multiscreen solution, partly home grown and partly inherited from its acquisition of Azuki, and since that’s now part of MediaFirst, it has included those. It may have also signed deals it cannot talk about.

Speaking at IBC to Thomas Staneker, the head of Deutsche Telekom’s TV service center in Budapest, he made it clear that none of the future business for TV services is headed in Ericsson’s direction. He described a situation where the systems outside Germany come under his team’s guidance, and a completely different team decides upon things inside Germany.

His recommendations backed a system supplied by Viaccess-Orca, which was installed at Deutsche Telekom’s subsidiary Telekom Romania in just 5 months from start to finish, precisely a year ago. Viaccess Orca may at the time have benefitted from the special relationship there seems to be between Deutsche Telekom and the Viaccess-Orca parent, France Telecom. The two companies have done a variety of “soft” asset swaps across Europe, including jointly holding EE in the UK before it was sold back to the BT incumbent.

But it seems the Viaccess-Orca solution is not likely to make it into Germany, and that the growing relationship between Deutsche Telekom and Huawei will also mean that the Chinese equipment vendor will supply the set top, the middleware and the multiscreen solution which will be used to “extend” the Mediaroom installation, rather than entirely replace it.

Huawei has become Deutsche Telekom’s partner in cloud technologies which has seen the German operator get some footing in a shared approach both in Europe and in China. Huawei has also been instrumental in supplying T-Mobile with cellular services across its European territories.

The remainder of the German solution apparently uses Verimatrix as the security element of the multiscreen service and we understand that an existing Ericsson CDN to carry OTT traffic, but that’s the only part of the business that it will retain.

So far Deutsche Telekom in Germany has only invested in a first generation Mobile First TV system using MobiTV for both software and content, and Elemental as the encoding supplier, and other components supplied by Norigin Media in a service called Entertain2Go, but this is really an interim system prior to the full multiscreen version of T-Entertain.

Staneker appeared somewhat irate at the Huawei decision, and shrugged when we asked if the Viaccess-Orca system would even get rolled out to the rest of Deutsche Telekom outside of Germany.

Deutsche Telekom has 2.3 million pay TV homes inside Germany, but a total of over 6 million throughout its subsidiaries, which makes it the 3rd largest Pay TV player in Europe after Sky and Liberty Global which are way out in front. Technically Vivendi’s CanalSat is bigger, but much of its footprint is outside of Europe, and France Telecom is neck and neck with Deutsche.

Orca and Viaccess spent five years focused on the requirements of their parent at Orange and the win at Telekom Romania was the first major one outside of its parent’s footprint, although it also picked up an impressive win at the M7 group, last year, but that was purely in conditional access, harmonizing Skylink in the Czech and Slovak market, AustriaSat in Austria and Hungary, CanalDigitaal and in the Netherlands, and TV Vlaanderen and TéléSAT in Belgium. It also runs KabelKiosk in Germany but we’re not sure if that was included in that deal.

The Romanian system also used components from Cap Gemini, Friendly Technologies, a Broadpeak CDN, Harmonic encoders, Accedo TV app store and the Zenterio set top OS and set tops from KaonMedia.

We know that the Zenterio set top OS has been installed at other Deutsche Telekom subsidiaries including Slovak Telekom and Magyar Telekom in Hungary, and know it is headed for Croatia, Montenegro, Macedonia and Greece, so it is likely that the rest of the system will be installed there, but nothing has been reported so far.

The truth is that the TV landscape is now seen as a bitter fight to the end between Cisco, Huawei, Ericsson, and to a lesser extent Nokia Alcatel, and neither one can allow the other into their mobile heartlands and want to cover all bases, but like so many large businesses, their products are partly products and partly promises to build whatever is required.

But as people watch more and more video on phones, and Ericsson and Huawei provide complete mobile systems, then they figure they must also provide the systems which drive the sources of video.

So this means that Huawei will be providing its [email protected], [email protected] and [email protected], over managed and unmanaged networks, and over LTE Broadcast, unicast over both LTE and WiFi, in a single cloud based infrastructure which can feed them all.

We said at the time when Ericsson bought Mediaroom, that it needed to, because Huawei, outside of the US where it is politically suspect, is currently trusted more by customers with video, because of the vast number of IPTV systems it has built in China and the Asia Pacific

But for Ericsson, the deal to extend AT&T’s U-Verse and merge it with its new subsidiary DirecTV, has made the purchase of Mediaroom entirely worthwhile. That deal was a slap in the face for US based Cisco, but we cannot see a single other Mediaroom contract that has come AT&T’s way so far, although Canada and Portugal may still yield some fruit.