Internet Protocol Television (IPTV) looks set to revolutionise the world of entertainment. However, like any new technology, there are roadblocks to negotiate before profits can be realised. And one of the biggest challenges to IPTV is the flexibility of back office applications such as OSS and billing systems. Simon Gleave looks at the issues
Just when the telecoms industry has come to terms with the billing challenges of next generation networks, along comes a new technology that presents equally tough obstacles. This innovation is IPTV, the television service that provides real-time interactive experience for the viewer.
Downloading a favourite film, music video or sitcom whenever you want it, will become possible with this entertainment system, not to mention bringing other interactive delights such as home shopping, television gambling, and video games on demand into the living room.
In short, television will evolve into something that its inventor, Logie Baird, never dreamt of. It will offer the variety of on-demand content that is currently associated with the Internet, providing consumers with the opportunity to watch whatever they want to, whenever they want to.
Technology vs. delivery
Technically, IPTV is very different from any service that telcos have previously deployed in their networks -- for a number of reasons.
Firstly, the consumer data created by the IPTV network is immense, which provides both a challenge and an opportunity for the CSP. It would require an advanced mediation system with which to capture and correlate the disparate records being fed into it, but once this is completed, supplies the CSP with detailed information on its user base -- what they watched, what adverts they clicked on/skipped. Providing valuable information with which to attract advertising revenues and upsell promotions for its own products.
Second, IPTV is enabled by large amounts of sophisticated software, as opposed to hardware, for traditional voice and services. This provides a higher abstraction level of the service, which enables the CSPs products to more intelligently interact with the network and thereby create more advanced services.
Third and most importantly, IPTV differs from satellite and cable television in one, very important way -- it's not a unidirectional broadcast technology where everyone receives the same signal. Although it does use IP multicast for standard channels, the video head-ends are in direct contact with the viewer's set-top box, and it is able to react instantaneously to requests. This gives the user much more control over what is viewed, when and how. For example, a video-on-demand would start instantly, instead of just being scheduled at regular times. Enabling these facilities, however, requires a BSS/OSS system that can cope with this change to on-demand services.
Viewers can also access various types of media options by using the television remote to send control commands to the set-top box.
At the same time, there is also a need to develop franchising and content rights to ease the way into film, game and television markets and, most importantly, the flexibility of OSS and billing systems for the telecoms operators scrambling to secure key market share.
Much like 3G, IPTV involves everyone in the entertainment and communications sector, including television, gaming, music and movie studios, cable companies and telecoms operators. With so much at stake, it is not surprising that there is a great deal of interest in this new technology. In Europe and the US -- two markets where IPTV is expected to attract over 20 million users by 2008 -- the telecoms industry is sharpening its knives to get a piece of the action. The time is almost upon us, they believe, when compression technologies and broadband penetration will allow the interactive TV (iTV) promises of the 1990s to be finally realised. And they are prepared to do battle with entrenched cable and satellite companies to win over the consumer to this brave new media world.
One thing is clear -- it won't be easy. Who gets the rights to broadcast certain content is still in the balance. In the US alone, there are more than 30,000 franchise areas for IPTV, each of which can take close to a year to negotiate entry. At this rate, it could take years before all licenses are procured, and there is likely to be a bidding war in the meantime.
Another major problem is exactly who delivers 'must have' content. The biggest consumer attraction to IPTV is the ability to watch content on demand. Traditionally aggregators of must-watch content made their money by showing the content, and financing this through ads or license fees. But what is worrying many a television channel executive today is that content producers are exploring options of delivering their content independently. They could achieve this by setting up IPTV delivery sites of their own, enabling consumers to go 'straight to the source' for content and making the old networks effectively redundant. Accordingly, many of the Hollywood studios are reticent to sign up to any favourable distribution deal for their films on IPTV. And there is a danger that companies hoping to get ahead in the IPTV world will bid over the odds for content required to attract consumers.
OSS and billing challenges
Franchising and content rights are one IPTV headache. Another is billing. This is one of the biggest challenges faced by any player entering the IPTV market. At the heart of any successful media roll-out is a flexible OSS back office system, and IPTV is no exception.
Billing for cable has always been a straightforward process in the past, but the addition of telecoms operators venturing into the IPTV space means the billing process suddenly gets more complicated. It must now contend with the requirements of 'triple-play' billing with all the tracking and reporting challenges that brings.
With IPTV, telecoms operators will need to acquire the means to identify the users of the service and all vital statistics associated with billing -- such as what programmes the viewer watched and for how long, what their viewing patterns are in terms of hours watched and when, the content accessed -- which can then help drive targeted upsell marketing campaigns. In a country with a franchising model, the payment requirements for each franchise or content in a given area need to be supported.
Another billing challenge is trying to find ways to deal with the endless number of partnership agreements that are created to provide the content necessary for IPTV and to manage the thousands of franchises that go with it. Settlement between partners is a complex process when just a handful are involved -- with the potential for thousands, it becomes a problem on an entirely different scale, and IPTV providers will need to address these issues with new partner management and settlement systems.
Rating engines have to be adaptable to support different fees and local taxes, in addition to various channel line ups in the service bundles. One household, for example, might be given free access to a movie network, while another could be offered free children's programme viewing. You could also have pre-paid wallets (for VoD or mobile top up purchases) supporting a standard post paid monthly flat fee.
The variety of these issues now means that telcos are having to start talking to people they usually don't deal with, such as Hollywood studios and advertising agencies. IPTV providers must be able to cater to these players and their individual requirements and demands.
Billing systems should, therefore, provide specific rates for specific classifications. Flexibility is key, so that every IPTV service is charged fairly and in real-time, according to where and what service is enabled or downloaded.
New opportunities for OSS players
IPTV provides tremendous opportunities for billing providers, especially those that can offer an adaptable BOSS solution -- tying an intuitive customer interface with real-time rating, charging and activation on demand capabilities. Content partner management software can be installed to support the different rating requirements for the various partnerships agreements presented by IPTV. Meanwhile, a multi-service mediation system can be installed to manage the abundant levels of customer data produced by the IPTV network.
The opportunity for the BSS/OSS players lies in four main areas:
* differentiating IPTV from current TV services
* supporting on demand services
* stimulating consumer spend
* stimulating advertising spend
Achieving these aims means investing in the right back office systems and, in the process, making OpEx savings by helping to automate key customer support processes -- e.g. buying a new service via the TV rather than the contact centre.
Like 3G, the opportunities to make money from IPTV are numerous, but without the right billing systems in place, it cannot realise its maximum potential as the biggest money-spinner in the history of television. n
Simon Gleave is IPTV Market Manager at Intec.