Altice Adopts Security Strategy Suited to Big Expansion Agenda

Dexter Goei, CEO, Altice USA

Dexter Goei, CEO, Altice USA

MSO Says Multiscreen Solution Supports Cost-Efficient Path to UHD & IP Migration

By Fred Dawson

February 8, 2017 – Tier 1 MSO Altice USA has taken a key step toward positioning itself to be a formidable competitor across what could become a much larger fixed and possibly mobile implementing a consolidated approach to securing and managing next-generation services, including UHD.

In a departure from the norm in U.S. cable, the company has tapped Switzerland-based NAGRA to supply content protection and back-office platforms that will serve as the foundation for an aggressive expansion strategy, details of which are gradually coming into public view. The decision to tap a pay TV security supplier that has had limited penetration in the U.S comports with the company’s intentions “to bring innovative products and services to Altice USA’s Optimum and Suddenlink customers by leveraging our global operational expertise, scale, resources and key strategic partners like NAGRA,” says Altice USA co-president and COO Hakim Boubazine.

By breaking with reliance on the traditional suppliers to those cable systems, the company is blazing a trail that could have implications for other operators looking for solutions essential to getting next-gen TV off the ground. Indeed, in some respects the move is in stride with a major shift in how North American cable operators go about procuring solutions these days.

But while openness to broader selections of solutions beyond those offered by traditional set-top and other equipment suppliers has drawn a growing number of players from abroad, security has been a tough nut to crack. With an embedded base of set-tops that rely on the conditional access systems (CAS) from the dominant CAS suppliers, ARRIS and Technicolor, successors, respectively, to the old General Instrument/Scientific-Atlanta duopoly, it’s been hard for North American operators to embrace other suppliers’ solutions.

The Altice strategy suggests this barrier may soon fall as operators make the transition to a new generation of hybrid set-tops that can support UHD 4K while advancing the migration to all-IP video. From a security standpoint, the ability to manage content protection from a single platform that can cover all the bases in an increasingly fragmented device environment has become fundamental to ensuring the robust security that’s essential to delivering licensed content to every point of subscriber connectivity.

NAGRA’s Connect security platform is designed to meet these goals, says NAGRA COO Pierre Roy, not only by offering advanced CAS/DRM and multi-DRM support, but also by facilitating operators’ ability to meet the more advanced security requirements tied to UHD content, including forensic watermarking technologies and anti-piracy and cybersecurity services. Of course, such capabilities don’t amount to much unless they can be configured to local conditions, which Roy says NAGRA has demonstrated it can do here and in other markets, giving it a leg up when it comes to achieving economies of scale

“Being selected by Altice USA shows how we can be a global partner to large multi-network operators while adapting to their local infrastructures and requirements,” he says. “This creates economies of scale that reduce operator cost and increase operational efficiency through a single, flexible, global technology partner.”

Boubazine concurs. “We have been impressed by the flexibility NAGRA has shown in adapting to U.S.-specific requirements in a short amount of time,” he says, “This partnership will enable us to design integrated services to meet our customers’ expectations.”

Cost efficiencies, such as those enabled through service integration, are a major goal as well. Altice, now the fourth largest MSO following its acquisitions of Cablevision and Suddenlink, has partially justified its risky bet on U.S. cable by citing cost-cutting opportunities which, in the case of Cablevision, are expected to produce a $900-million savings within three to five years.

Altice isn’t saying much about its next-gen service strategy. But it’s clear the company is eager to move to a uniform approach to delivering services across all networks and user devices, as farther evidenced in its choice of the NAGRA MediaLive platform.

MediaLive is designed to enable a flexible all-screen backend management approach to monetizing and delivering services, explains Christopher Schouten, senior director of product marketing at NAGRA. “It can be used in set-top-only situations, multiscreen-only configurations and as a universal IP content delivery backend for both set-tops and personal devices,” he says

On the security side, Schouten adds, Connect allows Altice to automatically provide security appropriate to whatever device a subscriber is using to access the MSO’s service in compliance with licensing terms. “Each situation has different security and business rules, so it’s important to have one master system that applies to all of them,” he says.

The NAGRA solution can efficiently coexist within legacy U.S. cable systems while avoiding duplication of bandwidth and enabling an open choice of set-top box suppliers, Schouten notes.
“It’s impossible to dump 100 percent of the headend and set-top legacy infrastructure in one go,” he says. “You can imagine this would be for new customers and upgrades to more advanced services. The two solutions (legacy and Connect) will be able to be run in parallel.”

The converged security solution can be extended to mobile, he adds. “Because Connect supports broadcast, unicast, multicast and third-party services like Netflix, it can be used in any environment,” he says. “The multi-DRM management component helps unify the application of business rules across third-party DRMs like Fairplay, PlayReady and Widevine as well as NAGRA DRMs.”

Altice leaders have broadly hinted at expansion plans that could involve other cable acquisitions as well as a move into mobile, much as happened in France with the acquisition of SFR in 2014 and the subsequent combination of fixed and mobile operations under the SFR Group umbrella. In an interview last June with The New York Times, Altice USA CEO Dexter Goei made clear mobile was under consideration. “It is worthwhile knowing that every single one of our businesses in other markets are quad-play, both fixed and mobile broadband,” he said.

In one respect, the company has already expanded beyond the boundaries of its acquired cable systems through an investment in startup Layer3 TV, which it inherited with the Suddenlink takeover, as recently reported by Variety. Layer3, which has made known it intends to make its commercial service debut in Chicago with other, unnamed cities on tap in 2017, recently ran a trial of its 4K-ready service platform in Midland and Kingwood, Texas, apparently in cooperation with Suddenlink.

In its current operating territories Altice has committed to a massive fixed network upgrade plan with the intention to extend fiber in its HFC networks all the way to the premises across all of its Optimum (Cablevision) and most of its Suddenlink footprints over the next five years. This will enable “Generation Gigaspeed” services of up to 10 gigabits-per-second, the company says, noting that it “expects to reinvest efficiency savings to support the buildout without a material change in its overall capital budget”.

Underscoring the company’s belief that converged operational capabilities are key to generating efficiencies everywhere, the Holland-based parent Altice Group, now serving close to 50 million customers on four continents, has adopted what it calls the “Altice Way” as a set of principles for all its operations. These include a commitment to “developing, launching and integrating new products, services and business models, including the creation of next-generation communications access and content convergence platforms with market-leading home hubs.”

The company also said plans include forthcoming launches of Altice Studios to “create original movies and series” and the Altice Channel Factory to “create more new channels.”