Satellite Provider IPTV Packages Enter Orbit

Long-promised turnkey packages from satellite operators SES Americom and Falcon finally launched in June. Just a few months before, Eagle Broadband’s offer hit the streets, and Loral Skynet is considering joining the trio this fall.

Announcing their managed, end-to-end IPTV packages as early as November 2005, satellite providers experienced what seemed like endless delays in launching their offerings. Setbacks occurred as providers claimed they were awaiting key equipment (set-top boxes) and software (middleware), or availability of more advanced technology, such as MPEG-4 video compression.

While it is commonplace for individual IT products to be delayed, the long and interrelated ecosystem, including content, needed to make up these packages likely contributed to the delays, as all components had to be integrated and tested for interoperability in provider labs.

The turnkey packages use shared headends to dodge capex for telcos, and include hundreds of channels of content (including HD), set-top boxes, middleware, edge routers, broadband access gear such as DSLAMs, conditional access and security software, video compression systems and more.

However, it’s likely unclear to prospective customers what the packages will cost as two of the vendors declined to discuss pricing, with the third only outlining its pricing structure. All three are sold on an individual case basis.

That aside, mid-tier and smaller telcos — lacking the deep pockets and vast staffs, but often facing speed-to-market challenges — are seen as fertile ground for these packages. While many began deploying video years ago, most still are grappling for TV options in their ongoing competition with cable operators and the likes of DISH Network and DIRECTV.

One industry expert sounded a note of cautious optimism, stressing that a solid business plan and substantial consumer base are just as important to IPTV success as a turnkey service package.

“At a high level, it makes great sense to use a turnkey package, especially from the rural telco perspective. But when you take a step back, one of the fundamental issues is that IPTV is not necessarily a slam dunk business proposition,” says Vince Vittore, senior analyst at the Yankee Group. “Unless you can absolutely guarantee that you’re going to get an extremely high penetration rate, any form of video has the potential to be a very expensive mistake. That said, rural telcos have always been the Magellans of the U.S. telco market, and we believe they have a great opportunity to succeed in becoming significant video players in their markets.”

SES Americom’s IP-PRIME

Originally announced in late 2005, SES Americom’s highly anticipated IP-PRIME package just became commercially available in late June.

SES acts as a wholesaler, providing the service to telcos who then resell it to their customers. The company handles the first level of customer and tech support, with the service provider customer responsible for additional consumer needs.

And while SES had said in the past that volume shipments of equipment such as set-top boxes had delayed the service’s launch, cutting content deals for the offering’s now-broad programming lineup also devoured precious time.

“We initially believed that what was wanted was a few hundred channels of SD programming,” recalls Bryan McGuirk, president of media and enterprise solutions for SES and a former content industry executive. “But we soon realized what was really needed was more channels, and especially HD.”

SES Americom’s Bryan McGuirk

The process of integrating all the pieces in the package at SES labs was no trivial undertaking, however, and likely accounted for some of the time that elapsed between the announcement of the service and its actual launch.

The same held true for MPEG-4 encoding wares, which SES decided to provide instead of simply launching with systems that only supported lower-level MPEG-2 technology. McGuirk adds that the company spent a good deal of time with multiple beta customers before advancing to commercial availability.

SES, which operates a fleet of 36 satellites, says its IP-PRIME package partners include Alcatel-Lucent, Amino Technologies plc, Calix, Cisco Systems Inc., Dascom Systems Group, Harmonic Inc., Irdeto, Myrio Corp. (now part of Nokia Siemens Networks), NDS Ltd., Occam Networks Inc., Pannaway Technologies, Scientific Atlanta (A Cisco Company) and TANDBERG TV (part of the Ericsson Group). ETI Software Solutions Inc., Globecom Systems, IneoQuest Technologies Inc., International Datacasting Corp., Patriot Antenna Systems Inc. and Tribune Media Services Inc. fill out the lineup.

Falcon’s Donald Cook

IP-PRIME comes with existing transport agreements with more than 275 television channels and more than 100 digital music channels. That lineup includes more than 20 HDTV channels, pay-per-view programming and the ability to offer VoD. Customers can pick and choose which channels to include in their lineups, and easily can integrate local programming.

McGuirk claims SES can get a telco up and running with its package in as little as 90 days. However, he declined to discuss pricing for the service or outline a pricing structure.

Falcon’s IP Complete

While SES operates its own satellite fleet, Falcon resells capacity on satellites owned by Intelsat. Meanwhile, Loral, which said in late June it’s evaluating the North American market opportunity and is merging with Telesat, owns its own satellites.

Falcon’s package includes TANDBERG TV receivers; edge routers from Redback Networks Inc. (now an Ericsson company); Occam Networks’ broadband access gear; STBs from Thomson; Verimatrix Inc. content encryption; as well as headends, middleware, VoD servers and transcoders from Grass Valley (a division of Thomson).

As far as content, the Falcon package includes 107 SD channels, 44 channels of premium programming (which includes popular movie channels), 16 HD channels and 56 channels of audio programming.

While pricing for Falcon’s “bird-to-box” system is designed to offer cost flexibility, the company prices it on an individual case basis, which makes it difficult to determine its actual expense.

“There’s no minimum charge or subscription fee for the service, so that telcos can pay-as-they-grow,” says Falcon President and CEO Donald Cook. “Customers pay the same fees based on the number of licenses they want for set-top boxes and middleware. This lets them grow as slow or as fast as they want to.”

And while DVR service is increasingly common for cable operators, Cook doesn’t expect to offer it as part of the Falcon package until the third quarter of this year. By contrast, AT&T and Verizon, as well as DISH Networks and DIRECTV, among others, have offered DVR for many months now.

The last piece of the pre-launch puzzle was MPEG-4 encoders. The service can work with MPEG-2 technology if needed, Cook notes.

Beyond the hardware, software and content that make up the Falcon IP Complete package, the company provides the first line of support for all customer care for the end-to-end package, claims Cook. “We also have in-house engineering, handle the installation for the service, and provide tech support and our own test labs.”

Eagle’s Approach

Eagle Broadband, having launched IPTVComplete much earlier this year, takes a much different tack with its offering. Instead of essentially wholesaling the service to telcos for deployment to their residential customers, Eagle sells IPTVComplete to a series of companies that already provide VoIP and high-speed Internet service, and who use its video component to sell triple-play bundles to telcos. As of July, Eagle had signed on a trio of such triple-play bundle providers, including companies in Florida and California, and plans to expand that list over time. Eagle customers are responsible for all service, customer and tech support. They also set prices for the video component of the bundle.

The Eagle approach differs as it looks to offer telcos much more than just IPTV. Its video service comes with such trimmings as VoD and DVR.

Eagle says its full range of IPTV and interactive entertainment services can more than double subscriber ARPU, and helps save $1 million to $2 million or more in upfront capital expenditures required to design, purchase and install an IP headend, secure the necessary video content rights, provision circuits, aggregate content, operate and maintain the headend, and more.

Eagle’s IPTV offering has many commonalities with its rivals that just launched services this summer. Eagle says its IPTVComplete combines its IP video content rights and expertise in delivering IP video services and IP set-top boxes with carrier-class IP network and global IP satellite distribution capabilities.

The service’s menu of options, beyond sharing a headend as opposed to buying one, includes more than 200 channels of programming from major content providers with full IP multicast rights. In addition to VoD and DVR, Eagle’s content lineup includes pay-per-view, digital music and HD programming. The company also provides ongoing management and maintenance of programming content rights.

On the physical video ecosystem front, Eagle can provide video network and headend design, integration and installation and video content aggregation and IP encapsulation.

Eagle, Falcon and SES all list speed-to-market as their No. 2 benefit. In fact, Eagle says its offering reduces the time to launch IPTV service to as little as 60 days, versus what it claims is “the industry average of 12 to 18 months.”

The Lowdown

At the mid-year mark, SES had just launched IP-PRIME, Falcon was in deployment with its first commercial customer, and Eagle had signed up three distributors, with Loral waiting in the wings.

While interest in turnkey IPTV packages has been strong with rural telcos and other low-tier operators, dating back to the fall of 2005, it remains to be seen if demand translates into paying customers and if any or all of the long-purported benefits are realized.

The actual, real-life experiences of early commercial deployers will determine whether the turnkey IPTV packages will soar or come crashing back to Earth.

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