TRADITIONAL phone companies are drinking in the last-chance saloon. With their incomes in steep decline as customers move to mobile and internet telephony, they think they have hit on a new way to make themselves indispensable. Their plan is to deliver on-demand television and movie services to homes over broadband internet connections.
By offering a 鈥渢riple play鈥� of phone connection, internet access and a versatile TV and movie service, the telecoms firms hope to clean up. Players include firms like Swisscom in Switzerland and Telefonica in Spain, who have trial services at an advanced stage. And a number of smaller independent firms are springing up to kick off services on the back of broadband roll-out. But turning the TV-over-broadband idea into a reality is proving a hard slog.
On the face of it, it is hard to fault the logic. Standard copper phone wires can now provide homes that are up to 2 kilometres from an exchange with a video stream of 5 megabits per second using asymmetric digital subscriber line (ADSL) modems. And BT, one of the largest fixed line network operators in Europe, says improved MPEG-2 video compression means movies that once required data rates in excess of 6 Mbit/s can now be transmitted at rates as low as 2 Mbit/s without dramatically harming picture or sound quality (see Graph). But most experts agree that you need around 4 Mbit/s to provide broadcast quality pictures.
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The trouble is most fixed-phone networks are not up to the job. Most rely on data transfer techniques that are complex, old-fashioned and sometimes incompatible with the packet switching used by the internet. On these networks, video-on-demand services do not work well.
One company that has found out just how tough this kind of service is to run is London-based telecoms firm Video Networks, which offers an on-demand TV-over-broadband service to large parts of London under the brand name Homechoice (). Unlike some cable and satellite services that run content at 15-minute intervals, Homechoice offers a true 鈥渙n-demand鈥� service: you watch shows precisely when you want to. It offers not only movies and live-broadcast TV programmes, but also TV shows that you may have missed, up to a week after they were aired.
Homechoice subscribers get an ADSL modem that delivers video at 4.5 Mbit/s down their phone line. This plugs into both their TV and PC. The modem communicates with another modem at the local phone exchange, which is connected using a dedicated network directly to Video Networks content servers. A request from the PC for a website is routed to the internet 鈥� but a movie or TV channel is routed directly from the servers to the customer鈥檚 TV without passing onto the internet.
鈥淢ost fixed-phone networks rely on data transfer techniques that are old, and may notwork with the internet鈥檚 packet switching鈥�
Operators in different countries face very different problems. For instance, while Video Networks has to compete with UK cable TV services, that鈥檚 not a problem faced by say, Fastweb, a company providing a similar service in Italy, where cable TV is almost unknown. In the US TV-over-broadband is up against not only the ubiquitous cable services, but is also hit by the limited range over which high-speed broadband can operate. In the densely populated cities of Europe and Asia, the 2-kilometre range of 4 Mbit/s transmission is less of a problem than in the suburban sprawl of the US.
The advantage to Video Networks of running its own network is that the system suffers from none of the delays familiar to anyone who has streamed video over the internet. But control comes at a price. It is very expensive to create a bespoke network across a city, let alone an entire country. And the operator can end up paying a lot of their revenues to the content providers.
Part of the problem is dealing with Hollywood, according to Martin Olausson, a broadband analyst at Strategy Analytics in Milton Keynes, Buckinghamshire, UK. Telecomms firms simply lack hard-nosed tinseltown negotiating nous. 鈥淭hey simply don鈥檛 know how to buy content from Hollywood,鈥� he says.
One of the problems is that Hollywood fears its precious digital content could be unlocked and copied by pirates if novice telecom firms fail to secure their video distribution. 鈥淭he newcomers haven鈥檛 quite got digital rights management sorted out yet, but I don鈥檛 think it will be a show-stopper,鈥� Olausson says.
