Techlink :: Tech Practice :: Electronics :: IP on TV

Kieth Newman discovers a revolution in the lounge as computing, telecommunications and entertainment converge on the TV set. While the government dithers over free-to-air digital broadcasting, people are buying the software and set top boxes, and programming their own multimedia experience.

This case study is reproduced with permission from e.nz magazine. Subscriptions to e.nz are discounted for Schools and TENZ members.

On Singapore airlines earlier this year I gained a first-hand insight into the capabilities of on-demand media from the in-flight entertainment system. It soon dawned on me that I was no longer at the mercy of a programmer. I could stop, rewind, fast forward or pause any of 60 movies, many of them still in cinemas in New Zealand, and a host of other content, at my leisure. And I was using six-year-old technology.

Air New Zealand is about to deliver a similar service on its new 777 aircraft, promising 50 movies and as many TV shows and documentaries, plus a wide selection of music and games. So why do you have to leave the country to experience what technology has obviously been able to deliver for some time?

New Zealanders have been digital ditherers. We're in the bottom quarter of OECD Broadband Statistics, with only 4.5% penetration for the year to December 2004 and are unlikely to have grown much beyond 10% by the end of this year.

Sky TV has had the digital market to itself for seven years, and free-to-air broadcasters are not even at the starting gate. Without visionary leadership to advance core infrastructure the piles of studies and reports have stayed in the in-tray.

Meanwhile the prime space in the lounge is the focus of some fierce marketing as the walls between computing, telecommunications and broadcasting come crashing down. The indications are that if the broadcasters don't lift their game within two years Telecom, TelstraClear and the internet service providers (ISPs) will start delivering on-demand or downloadable video.

New software developments allow you to control your own entertainment options. For example, the evolving Personal Video Recorder (PVR) records television shows to hard drive with a range of complementary abilities such as recording to DVDs, commercial skip and sharing of recordings over the Internet. The Internet Protocol Television (IPTV) platform delivers digital television using the Internet over a broadband connection. These and similar advances threaten to reshape the entire viewing experience.

New-generation DVD recorders can double as TV tuners, recording hundreds of hours of programming to play back at your leisure. X-Box and PlayStation gaming machines not only play DVDs and deliver on-line gaming, but now they also have hard-disk storage.

Last year PC and TV integration came closer when Hewlett Packard bundled the first version of Microsoft's Media Centre software. From October 2005 the latest version of XP Media Centre was offered to all PC assemblers.

Typically you'll get a box that sits alongside your DVD or component hi-fi system, or replaces some of those devices. It comes with a remote control that allows you to switch between normal computing functions and Media Centre mode for music, video viewing, photo manipulation or web browsing. Using a wi-fi or Ethernet connection you can play a music or video file on another computer.

Like new-generation DVD recorders and set-top boxes, Media Centre gives you a 30-minute buffer to rewind to the beginning of a programme while it's still recording, fast forward through the ads, and synchronise the content for use on portable devices. The electronic programming guide will not generally function here as local broadcasters have denied access to their programme codes. Sky uses the Microsoft system for its new decoder, and it will become invaluable if the other broadcasters venture into digital.

Local users will get a small taste of the future with limited access to Discovery Channel and Reuters live news feed over fast Internet. There are also plans for a couple of local "consumer-related" channels via a US server.

Meanwhile Microsoft has just released the latest version of its IPTV platform which is designed to turn phone and Internet companies into distributors of content. The software works with high-end servers and management software, and is expected to herald a new era.

Unlike Media Centre, which is a consumer product using the Internet, IPTV runs in a managed environment over telco networks into the home. Telecom is a serious contender and TelstraClear and state owned Broadcast Communications Ltd (BCL) are taking a long look.

Telecom held a three-month trial in 2003, discovering what we all knew anyway – that people prefer to watch movies on their TV sets not their PCs, and want a wide variety of on-demand content and interactivity. The trial proved that Telecom could deliver good enough quality down its copper digital subscriber lines (DSL). But before a commercial service could be considered, billing for example required a serious rethink; an average 2Gb movie would blow the data cap off most Jetstream accounts.

Meanwhile technology moved on. TVs are shifting away from cathode ray tubes to liquid crystal display and plasma screens which are more compatible with computer and video content. Windows Media Centre, in particular, opens up a direct line to the TV screen.

Now Telecom is engaged in small-scale trials of Microsoft's IPTV platform to test its ability to deliver video to the TV across its DSL lines and its fibre optic network. It is also committed to delivering DVD-quality video over fibre optic cable to 500 homes in the Manukau suburb of Flatbush, still under construction. It's already rolling out cable and roadside cabinets for the $10 million Flatbush trial which will help decide how to approach rolling out fibre to customer premises.

The timing of any commercial offerings will depend on next generation supercharged subscriber line technology (ADSL2+) and Telecom's "triple play" Next Generation Network, now being rolled out by Alcatel. All new DSL cards installed will be ADSL2+ compatible by the end of this year, allowing speeds of up to 15Mbit/sec for users within 1km of the cabinet.

But Telecom remains cautious. Ralph Brayham, head of the new media business development group, has been playing with a highspeed Jetstream connection and a set-top box in an attempt to learn from what Microsoft, TiVo and DirectTV are doing overseas. "It's fantastic but it's not ready for prime time. The number of users is still relatively small and it's still too expensive for most Kiwi households."

So what will change that? Mass production of highly capable PCs at extremely cheap prices. You still need a 200Gb hard drive, high-end video and TV capture cards, lots of RAM, a remote control and a copy of Microsoft Media Centre or something similar, plus a digital TV or plasma projector. "You can't use a $1000 PC, you still need the Porsche or Mercedes Benz of the PC industry and you can't use your 15-year old Sony 21 inch TV."

Mr Brayham has just moved across into a special projects role at Telecom where he's hoping to help take "some cool stuff to market," but wouldn't be drawn on specifics.

Internet service provider ICONZ intended to enter the digital video-on-demand business but was forced to back off by Telecom's Internet access charges. "If the market had opted for unbundling the local loop ICONZ would probably be delivering a service by now," says ICONZ research and development manager John Russell. The recent Commerce Commission decision requiring Telecom to deliver 2Mbit/sec streams to ISPs is a step in the right direction but "it's still absurdly expensive and hard to get a great deal of data to a customer's home," he says.

The incumbent carriers don't want anyone else to play until they've worked out how to win the game. While ISPs and customers push for faster, cheaper Internet connections without the data cap, they're typically told there's already more than enough bandwidth for web browsing.

"As long as it stays that way web browsing is all we'll get. No one's going to develop interesting, new and innovative content when they can't push it out to the customers or let the customers interact with it at a reasonable speed," says Mr Russell.

While the free-to-air broadcasters are keen to make themselves available through as many outlets as possible, their own delivery platforms are at risk; and they may end up becoming content providers for Sky or Telecom unless they move quickly. Sky has shown only token interest in creating local shows in the past 15 years, preferring to operate as a digital distribution channel for other parties.

As the dominant player in the digital and pay TV market, Sky has been herding its potential competitors – the free-to-air broadcasters – under its wing and signing them up to exclusive contracts.

It has CanWest and Prime locked into five-year contracts, and Telecom and TelstraClear are contracted to deliver mainly Sky content on their platforms. TV1 and TV2 run unencrypted but are in deep, collaborating and even considering joint programming and bidding on programmes. Their intimacy may increase should TVNZ be privatised.

Sky Network merged with Independent Newspapers this year, becoming the country's biggest media company. It had 619,000 subscribers at April 2005, about 87% of them on digital.

The My Sky PVR, to be launched in December, allows the recording of two channels at once; and its buffer technology lets subscribers pause and rewind "live TV". It can store about 60 hours of programming on a 160Gb hard drive. The electronic programme guide will make it simple to determine what to watch and when.

Sky is commissioning five new transponders on the Optus D satellite from mid-2006, giving it the capacity to double its channels to around 160. It already offers movies, news, sport, free-to-air, music, games, gambling, weather and pay-per-view movies served up from an nCube server at TelstraClear's data centre in Wellington.

The only competitive offering is from TelstraClear itself, which has finally upgraded its Saturn cable TV delivery to digital status, serving 40,000 customers in Wellington and Christchurch. Subscribers must have a TelstaClear phone line. With a cable modem and set-top box they can have up to 10Mbit/sec broadband plus free-to-air TV channels, traditional Sky packages and 27 payfor- view movie channels. Video-on-demand is a possibility. This bundling approach typifies the "triple play" (data, voice and video) standard that Telecom is working toward.

Free-to-air broadcasters have been digitising their internal systems for five years in preparation for the next logical step, but have been left in the dark for close on a decade, battling with bureaucrats over how much spectrum they can have and how much it will cost.

All the while the broadcasters, including TVNZ which has a public service charter, are watching the digital broadcasting potential being undermined by new Internet-based technologies and Sky's head start.

The broadcasters can't invest in transmission systems unless they have the spectrum, and an affordable deal with BCL to deliver digital terrestrial television on their behalf. No-one knows how much that will cost, or what investment in technology will be needed.

BCL will need to install new digital terrestrial microwave transmission equipment at many of its 400 locations. The fact that it invested $40 million upgrading its microwave backbone network to digital is old news. And it's not new to digital broadcasting, which it has been trialling for over a decade.

BCL has undertaken a thorough analysis of the technical and deployment options, but won't move unless it has a business arrangement with the broadcasters. It's reluctant to discuss its plans until a preliminary report is considered by the Transmission Holdings Ltd Group Board possibly in December.

William Earl, TVNZ's special adviser on policy and planning, says that unprecedented co operation will be needed to make digital television happen, with agreement on the operating platform, set-top boxes, satellite and transmission facilities.

The New Zealand Television Broadcasters Council (NZTBC) comprising free-to-air players CanWest TV Works, TVNZ, Sky, Prime and the TAB, has almost reached consensus to deliver digital terrestrially to most cities and towns and by satellite to outlying and difficult-to-reach areas.

Currently only one satellite covers New Zealand effectively – the one Sky uses. Unless broadcasters want additional dishes pointing in other directions they'll each have to strike a deal with satellite owner Optus. If they want terrestrial, they'll all have to be in
agreement when they work out the details with BCL.

Bruce Wallace, executive director of the NZTBC, says the government's own report shows there's a large amount of unused UHF spectrum. "Proper" digital terrestrial TV needs to offer new content and technical features. "It is illogical and confusing if we have to buy that extra frequency. As well as investing in internal equipment to broadcast to transmitters there's the cost of distributing analogue and digital signals concurrently with the same advertising revenue stream."

So where will the cash come from? The only option seems to be from budgets set aside for the development of local content and interactive services. Mr Wallace insists that the transition to a sophisticated digital platform is in the public interest, and argues the government need only allocate free spectrum, as governments elsewhere have done, providing an incentive for broadcasters to invest.

TVNZ has been running technical and operational digital TV trials for a year, using BCL's Waiatarua site in the Waitakere Ranges to broadcast to 150 staff members in different parts of Auckland. The outcomes of the trial are shared with Prime and CanWest.

There's talk of a deadline for digital but no specifics. Mr Earl says there's no point if analogue is not going to be switched off, or if there's no clear return to free-to-air broadcasters. Questions still need to be answered: Can the broadcasters give really good reasons for converting to digital? Will they agree to do so? And using what transmission approach? No-one is ready to answer yet.

John Allen, director of operations for CanWest, has looked at all the options and considered pay TV or webcasting, but remains convinced there's still a place for digital free-to-air broadcast television. But the lack of any concession from the government on frequencies is a concern, and as the months tick by he's worried the old analogue networks and transmitters are nearing their use-by date. "No-one's making that technology any more".

While interactivity may bring in additional revenue it remains a niche product. Mr Allen explains that if people are downloading different things at different times, extra transponder space and massive back office and transmission infrastructure are needed.

Meanwhile the conclusions from the May 2005 report Public Broadcasting in the Digital Age continue to echo around the industry, suggesting the only solution to the "pervasive air of paralysis" is incentives and "the stick of regulation".

Paul Norris and Brian Pauling of the New Zealand Broadcasting School and Christchurch Polytechnic Institute of Technology, warn in an update to their 2001 report for New Zealand on Air that without government leadership and public funding free-toair television will decline.

With broadcasters likely to be competing directly with telecommunications companies in the new converged space, they believe it may be time to follow the UK and Australia by creating a regulator responsible for both.

The report says that if TVNZ is to fulfill its role as a public broadcaster, leadership is needed to ensure digital programming is accessible to audiences anywhere, any time, regardless of device or delivery platform.

The report remarks on the striking failure of broadband, the cornerstone of an effective digital communications environment, to proliferate. "The evidence is well documented, as is the pattern of incremental creep only when the government threatens action or regulation. Competition is essential if new services are to emerge and flourish." It suggests the government's ideal of establishing nationwide 50Mbit/sec broadband access by 2010 is a long way from reality and may require further intervention.

Meanwhile New Zealand on Air's CEO Jo Tyndall, on secondment to the Ministry of Culture and Heritage as its digital project manager, has the task of pulling the loose ends together and making digital TV happen. She signed off the Norris-Pauling report, and it is hoped that she is what the industry needs. She admits that some balancing of interests is required between the government's roles, ranging from spectrum manager to shareholder in TVNZ and BCL, and between its digital strategy and broader public policy interests.

Some technical and commercial policy work has been done; Ms Tyndall says now is the right time to engage with the free-to air channels with a view to a solely digital future. A successful transition will need a partnership between industry and government, which she is hoping to facilitate.

Elsewhere around the world, she says, household investment in equipment has been driven primarily by the content on offer and the quality of reception, before an analogue switch-off date has introduced compulsion – something it is "obviously desirable to minimise".

Meanwhile the video stores are fighting back, offering boxed sets of TV series only a season behind the air date, and sometimes pre-empting the on-air plans of some channels. Sky TV is also hedging its bets with "no late fees" DVD hire.

And technology continues to march. The Internet has opened up an on-demand world for information and entertainment, raising expectations. People's tolerance of free-to-air television timetabling, interrupted by the highest ratio of ad breaks in the world, is being sorely tested.

There's more incentive than ever to pre-record selected TV programmes and skip the ads, which is easier with new DVD recorders and set-top boxes. While there are international sites from which movies can be downloaded there are legal and logistical obstacles to a local offering. Meanwhile piracy, having compelled the audio industry to shift up a gear, has turned its attention to DVD copying and downloading of movies and TV series.

The battle is on for the 99% of homes that now have two or more TV sets. While we wait for digital free-to-air and for Pay TV or IPTV to up their offerings, New Zealanders are increasingly becoming their own programme directors, compiling audio and video content for playback at their leisure. Ask them what channel they prefer, they'll probably tell you Channel Me.