First Gateway Services Move Cable to New Era

Mike Fries, president & CEO, Liberty Global

Mike Fries, president & CEO, Liberty Global

September 22, 2011 – The pace of cable operators’ embrace of next-generation home gateways and core IP-based video management capabilities to distribute a vastly broader range of content and features to devices of all descriptions accelerated over the summer with initial rollouts in North America and Europe.
Liberty Global president and CEO Mike Fries for the first time publicly took UPC’s Horizon Gateway through its paces in an appearance at the IBC show in early September, “With Horizon, we’re reinventing television,” Fries told an opening day audience at the annual event in Amsterdam. “In essence this brings together cable and the Internet platform with an amazing user interface.”

With trials of the new service underway in The Netherlands in preparation for an early 2012 rollout there and in Switzerland and Germany shortly after that, Liberty is pacing Europe in the transition to hybrid premium services. The Horizon service, employing a gateway supplied by Samsung, middleware and navigation support from NDS and content protection from Nagra, taps IP sources as well as legacy cable TV services to create a seamless viewing experience with the convenience of whole-home DVR and access via an expanding array of devices beyond the TV.

The company announced it will use thePlatform’s cloud-based mpx video management system to serve as the central aggregation hub for collecting, protecting and publishing online video content and to manage authorization of online viewing of premium content by subscribers. thePlatform’s system will be used to enable the Horizon TV experience on connected devices as well as to support TV Everywhere services to all subscribers.

Still another key element to the Horizon service, namely the multi-screen back-office, will be supplied by SeaChange International. Many Liberty properties are already using SeaChange’s Adrenalin video back office as the foundation for on-demand services, the companies noted. In a late September announcement they said Liberty will use Adrenalin to automate the entire back-office workflow process for managing all content tied to the Horizon multi-screen service.

As shown by Fries in Amsterdam, the Horizon interface, utilizing the “Snowflake” overlay design developed by NDS, enables simple, graphically rich navigation with support from search and recommendation engines across all content sources, including subscriber-owned content stored at home or in the cloud. He said the company has developed applications and Web browsers for smartphones and tablets that will deliver the service along with companion device apps in and beyond the home.

Liberty Global, now serving 18 million subscribers in 14 countries, is working with international and national content providers, such as YouTube, Facebook and Twitter, to develop applications for its standards-based app store offering a full catalog of apps and widgets that will be integrated in the TV user interface, Fries said. He noted the company will soon launch a software developers’ kit for Horizon to draw more developers beyond the 60 content partners that have already developed apps for the new platform.

Fries pushed back against widely expressed doubts that European viewers, especially in countries like Germany with a tradition of conservative viewing habits, are ready to embrace whole-home DVR, blended content, multi-device viewing and the other features embodied in Horizon. “The German market has all the characteristics for this platform,” he said. “They have disposable income and will pay for value. If we can offer a value-driven service we will have great success in that market.”

Moreover, he noted that the need to convert a large base of analog subscribers to digital across most service areas allows Liberty to take a cost-effective leap directly from antiquated subscription TV to the next generation. “We have a huge opportunity to bring it into these homes without worrying about box replacement costs,” he said.

Fries considers what Liberty Global is doing to be at the forefront of next-gen cable service worldwide, as he made clear in June during an interview with the Denver Business Journal. “Today, we’re actually leading the pack,” he told the Journal. “We’re ahead of the U.S. guys, in terms of technology development.”

But while the nuances of technology development may be debated as to who’s ahead, it’s clear that a coterie of North American operators have a slight edge on Liberty in the timing of rollouts of such services. Tiny BendBroadband in Bend, Oregon shares bragging rights with giants Comcast and Shaw as being the first cable operators to introduce such capabilities anywhere.

Shaw got the ball rolling in May with introduction of its Shaw Gateway service, based on the ARRIS Media Gateway platform, in Calgary, followed by Edmonton in June. BendBroadband, also employing the ARRIS gateway, has been offering its new Alpha service since July. As previously reported (July, p. 1), Comcast, tapping Pace Micro as its gateway supplier, introduced next-generation Xfinity service in Augusta, Ga. in June.

Other operators here and abroad aren’t far behind, judging by the operator-generated RFPs (requests for proposals) now flooding the market. Time Warner Cable, for example, has let it be known it has engaged Motorola Mobility to tailor its DCX3600M Video Gateway system to the MSO’s requirements.

After a lot of uncertainty about how to create a flexible, easy-to-use multi-screen service without incurring huge network costs, operators have settled on advanced media gateways as the platforms for capturing and distributing legacy MPEG-2 and IP content over home networks to IP-connected set-tops and other devices. “A lot of operators in the last year have started to figure out what the path forward will be,” noted Stan Brovont, senior vice president of marketing and business development at ARRIS.

Indeed, Brovont added, the pace of trials has gotten so intense it’s hard to keep up with demand. “We’ve had to stagger and prioritize our responses with so many operators who need to get trials up and running,” he said. “The reason for all the excitement at the most basic level is economic. There’s no more cost-effective way to accomplish the service advances that are the highest priorities, including whole-home DVR and universal navigation.”

From a marketing standpoint, there’s a lot of emphasis on how a gateway service greatly simplifies customer experience at a time when using multiple devices to access content from service providers, the Internet and home storage has become a drain on users’ time and pleasure. “Customers are searching for a simple solution to their in-home media experience,” said BendBroadband president and CEO Amy Tykeson. “Today most homes have many devices providing the TV, Internet, phone and Wi-Fi experience; it can be complicated for our customers. Alpha puts all of these pieces of equipment together in one device.”

As reported previously (December, p. 8), the ARRIS Media Gateway includes a six-tuner, multi-room HD DVR with 500 GB HDD storage and four-port Ethernet home networking router with MoCA 1.1+ home networking technology, optional 802.11n Wi-Fi and DLNA connectivity of subscriber-owned devices. With DOCSIS 3.0 connectivity along with support for IP-based as well as CableCARD content protection, the gateway performs the processes needed to give subscribers access to both premium and Internet-based content.

BendBroadband is already offering Netflix streaming service as part of the Alpha service portfolio. “Alpha represents the next step of converged cable services in one cost-effective device,” Tykeson noted. “I think our customers will love it.”

Shaw, taking a different tack, is using the IP capabilities of the ARRIS gateway to support its own movie streaming service as an alternative to Netflix at a slightly higher price point of $12 (Canadian) per month. With multi-home DVR part of the service and other unspecified features in the offing, Shaw is banking on high customer appeal to help it cope with intense competition from its telco rival Telus.

Telus, fairly new at TV with a base of over 360,000 subscribers, has picked up tens of thousands of new TV subscribers this year as, for the first time, Shaw, like many MSOs, has begun losing basic cable customers, now down by over 34,000 on the year. The company, with a base of 3.4 million subscribers, is moving on many fronts, including raising broadband speeds and phasing out analog channels, to make room for more on-demand and linear digital as well as broadband IP video content.

But the Shaw Gateway service is an especially important step when it comes to moving to a new generation of TV service, noted Jay Mehr, senior vice president of operations at Shaw. Speaking at a recent public demonstration of the service, Mehr commented, as quoted by Canadian press, “It’s a high-end solution; it makes an awful lot of things possible. I don’t think we’ll have any trouble differentiating upmarket from what’s available [from competitors]. Demand has outstripped supply without telling anyone about it.”

ARRIS has produced some consumer research which offers solid grounds for operator optimism that a gateway service running on a well-conceived platform has significant upside potential. The unpublicized study was conducted by a professional research organization in a simulated home environment where 30 consumers representing a demographic cross section of households in a cable service area were asked to go through introduction to the service as if an installer had just hooked them up. The setup included a large-screen TV with the media gateway, a PC and a second, smaller TV with media player nearby. Respondents were asked to perform ten tasks related to determining the appeal and usability of product features.

“One of the most compelling things we learned from the study was that 62 percent of existing subscribers said they would pay five to15 percent per month in additional subscription fees to receive this service,” Bovont said. “Among respondents who were subscribers to satellite service 41 percent said they would switch to the cable company if this service was available.”

Researchers reported that the two most compelling features of the gateway service were multi-room DVR and the availability of OTT content. The six-tuner capability supporting recording across multiple TV sets and channels together with the high storage capacity was an especially powerful feature.

There was also good news for operators who are concerned about breaking with the old grid style navigation in order to bring a more compelling mode of discovery to the screen. While acknowledging the default guide used with the ARRIS system was unfamiliar to them, most respondents found it easy to learn and saw great value in its features. For subscribers who don’t want to use the new approach to navigation the system offers an optional fall-back to a grid-based guide.

“We identified very little negative feedback, despite how much difference there was between what the ARRIS Media Gateway supports and what people are used to,” Bovont said. “We learned a lot of customers are comfortable with exploring on their own without a lot of instructions. The UI (user interface) really facilitates that. Consumers today are pretty capable of playing around and learning on their own.”