IPTV Growing Rapidly

By Gerry Blackwell

January 06, 2009

Motorola is out in front as a wave of consumer uptake swells worldwide demand for set-top boxes and in-home IPTV, both over 802.11n Wi-Fi and more cumbersome wired networks.

Motorola, a highly diversified communications technology company with $36.6 billion in sales in 2007, vaulted to the top of the IPTV market in a matter of months. The company makes IPTV set-top boxes (STBs)—nine different models at last count—and sells them all over the world, including to AT&T for its U-verse service.

I want my STB

Moto builds other components in the IPTV ecosystem as well—MPEG2 and MPEG4 head end encoders, DSL network access equipment (modems, gateways)—and provides fiber access network services; but set-top boxes are the main focus.

"Encoders are infrastructure products that are used in one location and shared among hundreds of thousands or millions of subscribers," notes Marty Stein, senior marketing director in Motorola's IP video solutions group. "For the service provider, the set top is by far the largest expenditure in his network deployment. So that's our flagship."

And the company sells a ton of them. In September 2007, it announced it had sold its two millionth IPTV set top. That was just five months after shipping the first. It recently passed the five million mark.

Stein says Multimedia Research Inc. (MRG) has ranked Motorola number one in IPTV set-top box sales worldwide. The company has about 25 percent of the global market, he believes.

This may not sound like such a commanding lead, but as Stein points out, about 65 companies are vying for a piece of the action, including major competitors such as Cisco Systems Inc. and Royal Philips Electronics N.V.

"The IP set-top market is pretty wide open. There aren't a lot of technological barriers to entry—although there are certainly practical barriers. There are a lot of vendors out there," says Stein.

It's little wonder. According to MRG, the IPTV industry will continue to grow fairly spectacularly. In its IPTV Global Forecast—2008 to 2012, the research and consulting firm predicted the IPTV subscriber base would increase from 20.4 million in 2008 to 89.1 million in 2012, a compound annual growth rate (CAGR) of 45 percent. And every one of those subscribers needs at least one STB.

MRG also forecasts that service provider revenues will grow by 50 percent a year during that period. Motorola supplies about 20 service providers in Europe, another 20 or so in North America, approximately ten in Asia-Pacific, and a few in Latin America, as well.

Some also use Motorola infrastructure equipment, but more use only the STBs. And then there are about 100 service providers, in North America alone—a few IPTV, but more cable and satellite—that use just the head-end infrastructure gear.

Software it is

Part of the secret of Motorola's IPTV success, Stein says, is software. For many of its U.S. customers, including AT&T, it builds STBs with Microsoft software. But in 2006, the company acquired its own IPTV software platform. It purchased Kreatel Communications, a Swedish company with a complete Linux-based IPTV solution, including applications, middleware, and set-top box designs featuring embedded Linux.

"The primary thing Kreatel gave us was a complete software environment—one that already ran on European-friendly [i.e. Linux-based] hardware," Stein explains. "Secondarily, but also very important, Kreatel already had a footprint in the European market, which was a fair to growing portion of the [global] IPTV market at the time."

So Motorola inherited a European customer base, and from the Kreatel technology built KreaTV, an application development environment that is now one of the company's key competitive advantages. KreaTV makes it easy for service providers and their software developer partners to create new applications that will work on the Motorola STB platform.

"It's about time-to-market and the quality of the user experience," Stein says. "That's the advantage we can provide with our set-top platform combined with the KreaTV software."

KreaTV made it easier, for example, for service providers to add interfaces for Internet services, such as Flickr, the photo sharing site, and Pandora, an online music service. Subscribers can stream Pandora music to a home entertainment system through their IPTV STB or view Flickr photos on their TV screens.

Making it easier to develop and integrate third-party applications may be a more important competitive advantage in Europe, though, Stein says. The North American IPTV market tends to be more "meat and potatoes," he says.

In a recent move, the company announced its IPTV set tops will now incorporate Motorola's NBBS device management system, making the boxes remotely manageable by service providers.

NBBS (Netopia Broadband Server) is a standards-based device management platform originally developed by Netopia, now a Motorola company, using TR-069, an open application layer protocol for remote management of end-user devices on DSL networks. The base technology is available to any STB maker.

"It gives us a competitive advantage because we're using it and others haven't implemented it yet," Stein says. "But there is nothing proprietary with what we've done with NBBS." NBBS automates some provisioning tasks, continually reports back to the service provider over the network on the status and performance of NBBS-enabled components, and also provides a remote troubleshooting capability.

"We announced this in part to show that we're more than just a set-top manufacturer," Stein says. "We have the whole end-to-end issue in mind. For service providers, this should mean fewer truck rolls and they'll be able to offer more services."

Motorola doesn't have many other unique technological advantages, he concedes. STBs include a lot of standard components—MPEG decoders, USB ports, etc.—that vary little from one vendor to another, which is why there are few technical barriers to entry.

The company has paid special attention to green issues, reducing carbon emissions in its manufacturing processes and ensuring the STBs themselves are Energy Star-certifiable. Products certified under the U.S. government-run Energy Star program must meet strict guidelines for power efficiency.

Motorola's biggest competitive advantage may just be its size and experience. It is, according to Stein, the largest producer in the world of STBs of all kinds, not just IPTV.

"That gives us a big leg up in logistics, in support, in supply chain management—intangibles you don't see in the box," he says. "And it means we can more quickly ramp up [development and manufacturing] to meet service providers' needs, or to change [manufacturing] quantities."

Because of its strong legacy in the cable and satellite TV industries, the company also has a huge research and development effort around STBs, a great deal of which benefits the IPTV products, as well.

Distribution channels

Much of that effort recently has centered around making it easier to distribute media within a home—from an STB to multiple TV sets, for example. The main focus is wireless, chiefly 802.11n, the soon-to-be-ratified third generation of Wi-Fi that can deliver up to 100 megabits per second (Mbps) of bandwidth.

"[Wireless] makes installation very simple," Stein says. "[Without it], it can sometimes be fairly onerous to put a new IPTV network inside a home."

The other challenge wireless can help meet is enabling "media mobility"—the ability to easily transfer photos taken with a phone camera to the IPTV system for viewing on a TV, for example, or transferring video recorded on a PVR to a portable media player.

But Wi-Fi is only one of the in-home distribution technologies Motorola and other STB vendors are looking to integrate into their products. Others include the wireline technologies being developed and promoted by Home PNA (media over existing twisted pair and coax in a home), the MultiMedia over Coax Alliance (MoCA), and HomePlug Alliance (media over home electrical wiring). A new version of the HomePlug technology, for example, HomePlug AV, is rated to deliver 100 Mbps over home wiring, plenty of bandwidth for moving high-quality video around a home.

It's worth trying to meet the in-home distribution challenges, Stein believes, because IPTV is clearly on a roll. While he refers to the growth trend as "steady," the MRG data would suggest he's understating the case.

Certainly the technology drivers are in place. Bandwidth in the last mile is increasing with VDSL and ADSL2+. Video compression technologies are constantly improving. TVs are getting better and cheaper. Hard drive capacity continues to increase while prices drop, making it less expensive to build PVRs.

"It's all working towards making IPTV a long-term viable service for telcos," Stein says. And even cable companies might turn to IPTV to help them deliver Internet-related applications and services along with TV, he believes.

The only damper on this rosy prospect? The economy. New ADSL2+ networks can deliver the bandwidth, but they don't come cheap. Still, if we had to pick the set-top box manufacturer most likely to sail through a recession unscathed, it would have to be Motorola.

Gerry Blackwell is a regular contributor to Wi-Fi Planet. Article adapted from ISP-Planet.com.



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