Television From Your Telephone

Nov. 9, 2004 — -- Rooftop antennas, local cable TV systems and digital satellite systems are some of the more common ways television entertainment is fed into homes now. But could couch potatoes soon get their video fix via the telephone line, too?

TV via a simple telephone line is already happening on a very small scale in the United States, some industry insiders say. But as high-speed Internet connections become more prevalent in American homes, the lines between traditional telephone and television services providers are blurring.

Already, many cable TV providers are expanding their fast broadband home connections to include Voice over IP services, which allow subscribers to use the Internet to place phone calls to anyone worldwide. Since VoIP calls are carried as digital computer data, users can bypass the traditional switched phone network -- and the usual costs of telephone calls.

And such moves by cable TV companies have regional telecommunication companies gearing up to fight back.

"There's already a certainty that telecos will have to offer video services," said Vamsi Sistla, director of broadband and residential entertainment technology research for ABI Research in Oyster Bay, N.Y. "They have to hold onto their subscriber base, they have to keep churn [turnover] rates low … Cable TV [companies are] eating their lunch by offering telephone services."

But offering television over the Internet -- TVoIP -- is a technically tricky task for phone companies. Digital TV signals produce data files that are at least an order of magnitude larger than VoIP files. And such large files would choke digital subscriber lines -- or DSL, the telecom industry's high-speed Net connections that are faster than ordinary dial-up connections, but slower than cable TV's broadband.

Several companies, including software giants such as Microsoft and networking equipment makers, have been trying to further the development of TVoIP systems. And UTStarcom, a computer network solutions provider in Alameda, Calif., believes it has a TVoIP solution that could be implemented soon in the United States.

A Vision for Internet TV

The UTStarcom system, mVision, is a collection of powerful computers and software that could be installed along the various parts of a phone company's networks.

Banks of computers at a telecom's central switch office would digitally encode and store television shows in any number of digital formats. Small segments -- say, the first four minutes -- of each program could then be sent to so-called MediaSwitches installed at the various phone switching offices that serve each neighborhood, using dedicated high-speed connections.

Home subscribers would use a Media Console -- a set-top box that connects their TV to the phone company's DSL service -- to access the digitized TV content. When they select a TV program to watch, the Media Console retrieves the first small segment from the neighborhood's MediaSwitch. As that first segment is sent to the customer's home via DSL, the MediaSwitch requests the rest of the program from the computers located at the phone company's central switch office.

MVision also has its own software program to manage and track where each part of every digital program is located on the various parts of the network. That way, only the specific segments that are needed in one particular neighborhood are sent from the central computers to the switches.

What's more, the software is also designed to work with so-called digital rights management, programs that attempt to thwart digital piracy by limiting how long a particular piece of video content may be accessible to a home consumer.

Jeff Paine, vice president of strategic marketing at UTStarcom, says that this type of distributed network setup helps minimize any possible data traffic jams to the subscriber's home.

"If you try to move all this digital content around from a central location to millions of homes, you're going to load a network down and kill it," said Paine. "We have a tremendous [storage] capacity -- 40 terabytes of data -- at the network's edge, at the switch. [Subscribers] just download the parts that are needed from the edge of the network." That's roughly 40,000 gigabytes, or about 1,000 times more storage than that found on the cheapest PCs.

A Shift From Prime-Time and PVRs

Paine believes mVision's capabilities will attract both content creators and phone companies to develop a new paradigm for television entertainment.

For example, UTStarcom has already developed an mVision application called the Network Personal Video Recorder, or n-PVR. This feature would digitally encode and store every episode of a particular TV show or series and make it available to subscribers.

While current stand-alone PVRs such as TiVo and ReplayTV already offer this feature, Paine says PVR users have to understand how to set up the feature to take advantage of it. With a network-based PVR, subscribers would essentially have a video library of shows available to them at any time. So, if a subscriber is just getting into a particular TV series -- say, after they've heard friends rave about the latest police drama -- they could access the previously aired episodes online and never miss another episode going forward.

What's more, Paine believes that such a feature could be attractive to show creators and other content partners. Rather than rely on programming times, networks and ads, content providers could develop their own "channels" -- and garner revenues directly from the subscribers using mVisions tracking and billing software.

"On the macro level for content providers, they've never been in love with current distributors. They would love to get more money [for their programming] than they get," said Paine. "If you look at [mVision] as a direct-to-consumer model where middle men go away, they keep more control -- and get a larger piece of the [revenue] pie."

Will Content Get in Line for Online?

Industry analysts such as ABI's Sistla say that the new TV entertainment options that TVoIP systems such as mVision offer could definitely help phone companies compete against cable TV and digital satellite offerings.

"Telcos can say [to consumers], 'Cable TV offers you hundreds of channels that you pay for but don't watch. We'll give you just the channels that you want to watch, when you want to watch,' " said Sistla. "Cable TV and satellite systems already have invested millions [of dollars] in infrastructure that won't allow for that level of a la carte customization. At most, they have one or two channels or genres of video-on-demand. That's not good enough for the current generation that want to watch only what they want."

But getting content that commands consumer attention will be a big challenge for companies more familiar with communications rather than the legal and financial mess involved with television entertainment. For one, the telecos still have to develop a business model that would satisfy content providers, subscribers and their own bottom line.

And while TVoIP systems might work well now with current television fare, the complexities of forthcoming digital and high-definition TV systems could put a strain on current DSL connections. That, says Sistla, would mean telecos may have to step up efforts to add even faster connection methods, such as fiber optic cable, to the home.

UTStarcom's Paine says, however, that systems such as mVision are designed to scale up with increased subscriber numbers and network complexity. In fact, the company claims it is already testing mVision setups in five undisclosed global locations where the potential subscriber base is about a million each.

And while Paine would not comment on how much it would cost to add an mVision system to a local phone network, the company claims it would take less than a year for a regional phone company to see a return on its investment in the equipment. The company also says mVision systems should be available to U.S.-based phone companies next year.