Fast-Moving Market Unsettles Cable Media Gateway Picture

Derek Elder, SVP & GM, Touchstone CPE, ARRIS

Derek Elder, SVP & GM, Touchstone CPE, ARRIS

By Fred Dawson

February 15, 2013 – Manufacturers and their silicon suppliers are jumping through ever more hoops to create media gateways tailored precisely to multiple cable operator strategies even as the headwinds underlying buyers’ hesitancy intensify.
 
While some MSOs, most notably Comcast, Cox and Shaw on this side of the Atlantic, are pushing forward with advanced gateway deployment strategies, many others are holding back, notwithstanding broad consensus that the gateway approach to enabling a full-throttle multiscreen service offering hundreds of live channels and thousands of on-demand selections is an appealing alternative to driving that kind of offering over the broadband network. As reported elsewhere, place-shifting capabilities have extended the gateway potential to support out-of-home as well as in-home multiscreen service while minimizing strains on network capacity.

ARRIS, with three versions of advanced media gateway platforms on the table, has been a leading force in efforts to accommodate operators’ needs for solutions precisely matched to their requirements. Most recently, the vendor has introduced the MG2402, a state-of-the-art gateway compliant with Comcast’s Reference Design Kit (RDK) and other components of the MSO’s new XG5 “headless” gateway design.

But for all the promise of the media gateway concept, real deployments have lagged expectations, acknowledges Tom Williams, vice president of marketing and product development at ARRIS. “We kind of expected the market would move sooner than it has,” Williams says. But, he quickly adds, “We’re starting to see significant movement now.”

His comment echoes the cautious optimism voiced by ARRIS chairman and CEO Bob Stanzione in a third-quarter earnings call in late October. Reporting on strong quarter sales driven in part by high demand for DOCSIS 3.0 CPE, Stanzione remarked, “We continue to make good progress with our video gateway solutions with the addition of several small operators and by adding features to meet emerging customer demands.”

While he predicted a decline in gateway sales for the fourth quarter, which ended December 31, Stanzione said the company’s video gateways were drawing interest from several large customers. Williams says Comcast is testing the MG2402 this quarter, adding, “Hopefully, they’ll roll it out.”

Gateways like the MG2402 are costly, coming in at roughly double the costs of the previous generation of state-of-the-art set-tops. But, given the level of computing power and range of features, that’s a bargain price compared to what it would have cost to accomplish such capabilities a short while ago.

Indeed, says Mike Paxton, senior analyst for Multimedia Research Group, there are significant long-term capex savings associated with headless gateways like the MG2402, which by virtue of not being responsible for actual video rendering can be located anywhere in the home to connect via MoCA and Wi-Fi utilizing the DLNA specification to get content to digital devices in either MPEG-2 or IP mode. Commenting in a recent blog, Paxton says, “The thought process behind this assumption is that a headless home media gateway which is tied to a number of low-cost, IP-only set-top boxes will eventually lower the total cost of CPE in a subscriber’s home.”

“However,” he adds, “we also expect these first-generation headless gateways to cost north of $400 per unit. This means that it will likely take a few years for the pay-TV service providers going headless to reap any reduced capex benefits.”

Significantly, Paxton notes, the gateway puts the operator in a position to support through its own managed network environment subscribers’ ability to access both premium and OTT content on any device. “What is arguably most significant about the headless home media gateway announcements is how a deployment will increase overall support for, and access to, IP video, especially in a cable TV subscriber household,” he says.

As noted by Stephen Froehlich, principal analyst with HIS’s Technology & Media group, the XG5 gateway architecture also provides Comcast and any other MSOs following this path a relatively painless way to transition to all-IP pay TV delivery over time. “The purpose of the X1 (Xfinity service) system, including the RDK software stack, is to enable the gradual transition of Comcast’s television service away from digital broadcast video to IPTV over DOCSIS at minimum cost and with no interruption to the customer experience,” Froehlich says. “Comcast’s clear commitment to X1, and in particular to the headless architecture of the XG5 specification, signals no change whatsoever to its endorsement of an in-home, server-and-client, broadcast plus IPTV multiscreen vision.”

But, of course, MSOs can’t delay offering multiscreen services until they’ve created a mass base of media gateways to handle all the IP streaming transcoding and formatting in the home. In order to reduce the threat of chord cutting or, in the case of young non-subscribers, a slowdown in new signups, operators are forging ahead with multiscreen service delivery to all subscribers, regardless of the set-top environment.

Over the past year, market conditions have pushed most top-rung operators into offering a significant share of live programming to at least some types of connected devices in the home beyond the PC, typically iPhones and iPads, Now, with Android devices surging into the market lead over Apple iOS devices, smart TVs gaining traction and Xbox Live drawing millions of users, operators are concentrating on what needs to be done to accommodate the complications of multi-platform transcoding and streaming over their broadband infrastructures, knowing that they’ll also have to reach subscribers out of the home as programmers’ loosen their licensing policies.

“We are intensely focused on testing and introducing media gateways, not just because they provide us a more efficient way to deliver multiscreen service but because they put us in position to offer a much better consumer experience,” says a senior cable executive, speaking on background. “But we’re also focused on getting multiscreen service to our customers as fast as possible.”

The core business question is what is the best way to shore up cable’s subscription TV business as ever more households purchase smart TVs or IP-connected set-tops to bring OTT content to the big screen and, with it, some of the same whole-home recording and other capabilities they’re targeting with their gateway strategies. Getting it right has become an urgent matter.

According to new research from the NPD Group, 29 percent of U.S. households’ HDTV sets are connected either directly or indirectly through IP set-tops to the Internet. NPD reports that 58 percent of those connected TV owners regularly view OTT video.

Cisco Systems reports that 70 percent of users in U.S. broadband households are now viewing professionally produced OTT video on connected devices of one kind or another at a rate of 100 plus minutes per week. TDG Research reports the percentage of broadband households without pay TV service has gone from 9.5 percent in 2010 to 12.5 percent as of yearend 2012.

Figuring out how to leverage cable’s advantage as a source of premium content not available to pure OTT users in this rapidly changing environment is the number-one headache at virtually every MSO. Some are leaning away from the high-end gateway to an all-IP cloud-managed migration path where feature-rich services leveraging DOCSIS 3.0 modems and low-cost hybrid set-tops in conjunction with network-based PVR offer the best long-term path to securing cable’s position. Others view the gateway as the best weapon to use against CE manufacturers’ efforts to own the home media space.

“There’s really no consensus,” says Derek Elder, senior vice president and general manager for the Touchstone CPE group at ARRIS. “Major operators have different ideas. Comcast, Time Warner Cable, Charter, Cablevision – they’re all pursuing different strategies.”

ARRIS, now preparing to integrate the home division of Motorola Mobility into its operations following anticipated closing of the deal with Google sometime in Q2, is prepared to compete for business no matter which tracks operators follow, Elder says. “At the fundamental level of blocking and tackling we’re putting these functions into a stable environment that serves everybody’s interests,” he comments. “Our CPE can be as complex or simple as operators want. And we’re supporting new applications for the cloud as well.”

The company’s gateway product lines are built around three middleware platforms, including the MG5000 leveraging the Moxi cloud control plane that ARRIS has advanced since acquiring Digeo four years ago; the as-yet-unreleased MG6000, leveraging the middleware partnership with NDS announced last year, and the MG2402. The first two models utilize Broadcom SoCs (systems-on-chips), while MG2402 uses the Intel Puma-6, which Elder describes as the “latest entry in the SoC arms race.”

The MG2402, along with following the prescripts of the RDK, has the flexibility to support cloud-based middleware components proprietary to Comcast or other options for other MSOs while taking advantage of “secret sauce” OS components intrinsic to ARRIS. “The MG2402 delivers the vision of an open standards, fully converged home, in one simple, easy to manage device,” Elder says.

The MG2402 is capable of bonding up to 24 DOCSIS downstream channels and providing 8 QAM channels to support traditional MPEG/DVB video. It delivers nearly 1Gbps broadband service from the network, supports four concurrent IP transcodes and DVR capability and includes dual-band concurrent Wi-Fi. The platform also supports MoCA 2.0, HD voice with an integrated DECT (Digital Enhanced Cordless Communications) base station and Zigbee connectivity for home automation and security.

Elder emphasizes the vendor’s use of RDK is not exclusive to the MG2402 architecture. Given the fact that Broadcom as well as Intel along with other chip manufacturers have licensed the RDK for use in their chipsets, the software stack can be applied in other gateway configurations as well, he says.

As previously reported, RDK, by providing a uniform means of accessing the conditional access cable card and the QAM tuners, has the potential to foster standardized chip-level execution of these interfaces in lieu of multiple approaches entering the market with each new SoC generation. However, RDK, as a porting layer between the SoC and the tru2way-compliant middleware components common to most cable gateways, is “not yet in pre-school” whereas whole-home as will be executed on the NDS/ARRIS MG6000 platform is already “out of school,” Elder says.

“In many ways the MG6000 is different” from the Comcast-centric architecture, he notes. “We’ve already done the cable card, tuner processes, all of which were implemented in the original days at Digeo. We may at some point transition those core functions to RDK, but that’s not decided.”

With MSOs’ plans still in flux there’s not much pressure to make such a decision. For ARRIS and its competitors the best bet remains to play the field, delivering the best iterations for each MSO’s strategy they can in hopes of winning the business on the strength of innovation. Where things end up in the cable industry’s evolution to media gateways remains to be seen.