Digital Media a Challenge for Service Providers

The International Consumer Electronics Show, by definition, showcases gadgets and the things that run on gadgets. And in years past, those are things that have been merely mildly interesting to the service provider world. This year, as the mass adoption of smartphones and third-party content have once and for all proven out consumer demand for open access, digital media moves to the forefront of everyone’s mind, and carriers should take note. Several big trends are sure to be in evidence, with ramifications for the carrier value chain that were only dreamed of in years past.

Digital Lockers. Notoriously, a lack of interoperability has proven an obstacle to free-flowing content porting from screen to screen. For instance, HDTVs, set-top boxes, and various online services use different approaches to playing a downloaded video file, meaning that, say, a Netflix movie can only be streamed to certain Netflix-ready devices. iTunes purchases will only play on Apple software. And so on.

The Digital Entertainment Content Ecosystem (DECE) is aiming to break down those barriers with a standard for digital media that will enable users to buy a file once and run it anywhere. People can own a digital locker of content that they can pull down from the cloud or off of the desktop to any DECE-enabled device. Carriers would have an important role to play in authentication, billing, class of service, location, federated subscriber identities and other network-based functionalities. Getting involved would also be a way to combat the threat of online video to their core cable or IPTV businesses.

The ecosystem so far includes Fox, NBC Universal, Paramount, Sony and Warner Brothers (Disney is a holdout), along with heavy hitters Best Buy, Cisco Systems Inc., Comcast Corp., Intel Corp. and Microsoft Corp. At CES the group is announcing that cablecos Cox Communications and Liberty Global are coming on board, along with big CE vendors Motorola, Nokia and Samsung.

Android Onslaught. Google Inc. has fired a shot across the bow in terms of marketing handheld devices, with the launch of its Nexus One and an online storefront through which Google is selling it direct to consumer, with or without carrier service. The approach makes Google into somewhat of an agent for various carriers, selling services that can be paired with Nexus One or any of the forthcoming Android handsets that Google aims to add to the marketplace. The third-party applications and services, and the content, that run on the device become by virtue of the model, completely disengaged from the carrier. So much for revenue-generating content plays?

“The cellco will merely provide the connection, losing out almost entirely on branding and customer relationship, and bringing handset purchase close to the PC model,” writes Caroline Gabriel of Rethink Research, on Google’s launch.

The Internet giant, in other words, will have near-complete control, end-to-end, of the end-user experience of the handset.

Research firm Ovum Ltd. says that for operators, success for Google “would be a much more mixed blessing/curse; managing handset logistics and holding expensive stock in channels is a complex and troublesome process. On the other hand, ‘exclusive’ handset deals are one of the few ways in which operators can seek to distinguish between their standards-based offerings.”

Share this article: Email, Slashdot, Digg, Del.icio.us, Yahoo!MyWeb, Windows Live Favorites, Furl
Add this article feed to: RSS, My Yahoo, Newsgator, Bloglines