Moves in Germany last month and last week in Italy, seem to suggest there is a growing belief that in Europe a set top has to become a retail proposition with multiple designs and suppliers, and cannot be supplied as is by a pay TV operator. At least that may end up being the conclusion if these antitrust investigations bear any fruit.
So far only Premiere in Germany and Sky Italia are been investigated on this count, and technical issues aside, of which there are many, it could lea to sweeping change for pay TV in Europe.
Clearly some aspect of a set top has to have some operator software on it, even if it is just the manner in which the encryption processes are described in order to protect content. Most conditional access suppliers run a tight ship and tell their operators that they must at least define the hardware that the conditional access runs on. But various initiatives around the world, CableCard in the US and the DVB-CI slot, have been designed to separate encryption from set top features, but so far these have only affected cable operators or been set up as a standard to add conditional access to an environment where it previously didn’t exist. And that’s the issue here. People and operators have got used to DVB-T, and because it was originally in the clear, and then encryption added later, they are asking, ‘Why can’t it be that way for cable, satellite and IPTV,’ as well.
IPTV would perhaps suffer most from this, since most of the set tops have a variety of integrations, each using different software, because of the lack of standards in IPTV. Channel change, although it is based on joining an IGMP group and IGMP is a well established internet protocol, is never carried out exactly the same way on an IPTV set top.
This is perhaps due to the immaturity of IPTV technology but it is also because the IPTV set top is seen as the start of a new service stack ‘ IP home data services, if you like, and so it is more complex and ambitious than the other forms of pay TV.
So where we have had a war for universal connectivity in say handsets, we could be about to go through the same battle once again in set tops. And who is best positioned to win that battle? In the same way that a handset can be almost the same on a GSM network as it is on a UMTS or CMDA network (where suppliers offer both) and the baseband unit can be switched out, perhaps we are now going through a period where set tops will do the same.
If we want to make it so an HD DVR can come out in cable, DTT, satellite or IPTV flavours, by abstracting the various software layers, then we are going to need a universal operating system for these devices. We kind of have that in the Java based MHP and cable’s OCAP equivalent. Or at a lower level we have the interaction defined under MHEG-5, used in digital terrestrial TV or OpenTV in satellite. In effect we already have our own little operation system war.
What that kind of uniformity, once decided, gives an industry is the ability to scale. We saw it with DVB-T set tops which have scaled to over 60 million. We have seen it in the low prices of cable set tops, dominated by Motorola and Scientific Atlanta, and we have seen the Open TV system placed into devices made by general purpose consumer electronics companies such as Thomson, Sony, Toshiba and Humax.
The point is that niche players which sit below that scale, such as Pace Microsystems or IPTV specialists like ADB and Amino, would immediately find themselves going head to head with those larger businesses. Companies that are trying to use their hegemony in conditional access, like NDS, to broaden their offering into DVR design etc.. may also find their ambitions equally truncated.
That’s not to say that Pace, ADB and Amino don’t have huge amounts of knowledge which make them attractive. That know how might suddenly put them at the focus of global mass consumer electronics businesses, who sense the sands shifting and set tops going from being a small business to being substantial.
The opposite happens at first, and as with OCAP’s Tru2way, the cable standard has stimulated the creation of lots of new smaller companies, because it provides a single platform for development, eventually it legislates against players that cannot maintain scale and the low pricing that brings.
There will be a number of people watching the outcome of these investigations both nervous of the fall-out and those looking for their own quick kill by entering markets previously forbidden them.