“We’re using the most sophisticated compression technology available – advanced, second-generation MPEG-4 – for U-verse, unlike some competitors that use an older standard,” says an AT&T official, speaking on background in an e-mail response. “With this advanced technology, we’re able to deliver compressed video without sacrificing video quality or performance. The benefit to customers is that they can get more and better services, with the same superior level of quality.”
The implementation of the new compression system, which sources say reduces the HDTV bit rate, not counting overhead, to 5 megabits per second even for high-action sports, tracks with assurances given by AT&T CTO John Donavan at a Goldman Sachs conference in September that the company would be able to launch a 5-mbps-capable HD service early this year. Where the company had set the limit for simultaneous HD streams at two, the new technology supports three, which is widely deemed to be sufficient to meeting current consumer demand in upscale households. However, the company says it has not implemented a three-stream HD capability at this point.
The AT&T source also notes that the company is getting more channel-carrying capacity out of the VDSL2 links by varying the bit rate according to the amount required by a given video program at a given time, in contrast to constant bit rate (CBR) delivery, which sets the rate at a level required for the most motion-packed sequences in a given program. While capped variable bit rate (VBR), which doesn’t allow the bit rate to go higher than the ceiling set for the individual SD and HD channels streams, has been used before, the caps have not always been high enough to accommodate especially high motion-intensive sequences, resulting in less than optimum quality.
Now the question is whether the cap has been lowered farther, from the previous 6 to 8 mbps, to 5. Asked whether the company is now serving HD at 5 mbps, the AT&T source replies, “It’s not that simplistic.” With variable rate encoding, the source says, “the rate required for a video stream is not constant. It varies based on the picture being displayed. For example, an image with a high level of detail or action (such as a play in a football game) uses a higher rate than an image with less motion or less detail (such as the sportscasters talking in the studio).”
That said, 5 mbps appears to be viewed as sufficient to deliver the quality AT&T is looking for. While not saying who the customer is, Cisco Systems, the long-time supplier of encoding and other headend gear to AT&T, has provided its newest MPEG-4 compression system to a “Tier 1 network operator with the highest DSL penetration,” says Bart Spriester, vice president and general manager for digital media networks in the service provider segment of Cisco’s Video Technology Group. “This is a commercially operating next-generation compression system that is delivering sports programming in 1080p format at 5 mbps” with “exceptional quality,” Spriester says. “It’s pretty impressive.”
The commercial use of the system in the U.S. and abroad puts Cisco ahead of competitors who have announced similar 5 mbps HD capabilities slated for availability in June and beyond (see April ScreenPlays, p. 15). Spriester attributes the speed to market advantage to the fact that the company relies on FPGA (field programmable gate array) processors, which provide a platform for initiating all-software upgrades as new advances are accomplished in the H.264 domain of the MPEG-4 standard.
“The rest of the industry is more reliant on ASIC (application-specific integrated circuit) technology, which limits their flexibility to pull the lever on advances,” he says. “We rely on FPGA implementations that are 100 percent software based.” Like its competitors, Cisco is pushing the envelope on H.264 by continually refining how the many extensions of the standard are implemented and by bringing new extensions into play.
As dramatic as the gains have been since H.264 went into commercial operation, there are more to come, experts say. Donavan, in his meeting with analysts last year, predicted that AT%26T would be able to go below the 5 mbps benchmark. Moreover, he noted, AT&T’s Total Home DVR service, launched in September with the capacity to deliver two live HD streams and three from the DVR simultaneously over coaxial cable in the home will exploit the compression advances to move to three live and four recorded HD streams this year, he said.
These advances have major implications for AT&T’s strategic direction, with regard to both its need to increase Internet access speeds over the same DSL lines that support IPTV and its ambitions to move away from dependence on wireline service.
Where broadband is concerned, the company announced in April that it would offer a top-tier access rate of 18 mbps exclusively to U-verse TV customers, which, with the new video compression in operation, would still leave sufficient capacity for most U-verse households to access at least two simultaneous HD streams. Because the data rates drop off at longer distances, it was unclear how broadly available the 18 mbps broadband service would be, but officials indicated it would be offered fairly ubiquitously across the U-verse footprint.
From the long-term strategic standpoint, the improvement in throughput capacity over the fiber-to-the-node network built to support U-verse could have a major impact on capital spending. Already AT&T has indicated it is pulling back on the pace of ongoing U-verse network buildouts, which CEO Randall Stephenson justified during the company’s first quarter earnings conference as a “more rational” approach to expansion insofar as the original pace required hiring more people than the company could keep over the long haul. Now, with the expansion rate reduced to under four million per year through 2011, or by about a third from the originally announced plan, there may be further capital cost reductions resulting from the fact that improved compression may eliminate the need to drive fiber deeper or to bond circuits to create twice the throughput over VDSL2, as was previously proposed.
The company reported that, as of the end of Q1, it had 1.3 million U-verse TV customers, marking a 284,000 quarterly gain compared to a gain of 264,000 in the final quarter of ’08 and a gain of 148,000 in Q1 ’08. It said its U-verse TV penetration rate was in the “mid teens” in markets where it had been marketing the service for 18 months or more.