by Carlos Placido, Analyst, Satellite Communications, NSR
Over the past five weeks a series of announcements have highlighted the increasing use of bandwidth. This information includes enhancing DVB-S2 and MPEG-4 technologies, both of which are poised to continue making inroads into each of the five distinct satellite applications analyzed by NSR in its recent study MPEG-4 and DVB-S2: Assessing Implementation Schedules for Advanced Video Compression and Satellite Modulation.
Several announcements shared positive financial performance in DTH-HDTV and they included: the use of DVB-S2/MPEG-4 in a new vertically-integrated SD-DTH offering; the launch of a new HITS platform; upgrade of an e-leaning network toward the new standards; and adoption of these standards into new HD and VOD video distribution.
Some of the most relevant application-specific announcements concerning the adoption of DVB-S2 and/or MPEG-4 included:
- DTH: DirecTV announced fourth quarter sales rose 17 percent largely due to high-definition upgrades (requiring the use DVB-S2/MPEG-4 set top boxes). In addition, Viasat Ukraine announced plans to launch a platform in early Q2 2008 with a basic DTH package for as little as $10-13 per month.
- Satellite Broadband and IP Trunking: Hughes Network Systems announced shipments of over 400,000 DVB-S2/IPoS-compliant end units, out of a cumulative base of over 1.5 million broadband HNS satellite VSAT terminals worldwide.
ideo Distribution: Crawford Satellite Services launched an MPEG-4/DVB-S2 MCPC HD primary distribution platform on SESs AMC-18 satellite for domestic distribution into cable and DTH providers.
- Digital Media Distribution: TBC Integration announced plans to upgrade its DVB-S/MPEG2 e-learning SCN satellite network to MPEG-4/DVB-S2.
HITS (Headend in the Sky): TeleColumbus, Germanys third largest cable operator, announced the launch of its own digital headend in the sky (HITS) platform on the Eutelsat Eurobird 9 satellite.
In virtually all of the announcements, the common denominator is (naturally) leveraging the validated efficiencies of the two complementary standards to capitalize on lower satellite capacity costs, wider content choice, or higher connectivity speed. However, the context surrounding the introduction of DVB-S2/MPEG-4 offerings is different from the context in which DVB-S and MPEG-2 were introduced in the past. Bandwidth efficiency gains guarantee continuous incursion into new satellite offerings and application-dependant migrations, but DVB-S2 and MPEG-4 are now part of increasingly hybrid, end-to-end service ecosystems shaped by forces absent in the 1990s when the digital video paradigm gave birth to consumer satellite TV.
These recent application-specific developments and announcements related to DVB-S2 and MPEG-4 also directly correlate to the following key trends described by NSR in our recently released study:
- The importance of HDTV in mature satellite TV markets as an ARPU enhancer and churn fighting tool against cable: By betting on satellites readiness and scale for MPEG-4 HDTV, DirecTVs average monthly subscriber revenue jumped 8.3 percent and enabled it to reduce its monthly churn to the lowest in eight years.
- The less trivial use of DVB-S2 and MPEG-4 in standard definition DTH offerings: The cost differential between MPEG2/DVB-S and MPEG-4/DVB-S2 set top boxes makes the case for the new standards to challenge SD. Modern Times Group and Strong Media Group own Viasat Ukraine, allowing it to achieve cost savings in content rights (Viasat) and set top boxes via a vertically integrated set top box supplier (Strong).
- The wider availability of manufacturers implementing DVB-S2 in satellite broadband: Developments in ASIC technology results into lower costs of ACM-compliant chipsets used in broadband indoor units. Following HNSs DVB-S2 footsteps, iDirect announced that it has successfully tested the commercial version of its DVB-S2 Evolution platform over a Telesat satellite.
The association between video channel growth and the adoption of DVB-S2/MPEG-4 in primary distribution: There are high collective switching costs associated with migrating existing DVB-S/MPEG2 lineups. However, this does not apply to new channels (particularly HD) introduced via new MCPC lineups: With its HD launch late 2007, cable television network Tennis Channel utilized Crawfords MPEG-4 service to allow DirecTV to access the signal.
The renewed interest in HITS platforms to achieve distribution efficiencies for cable digitization and telcoTV and the acceptance from digital media distribution applications such as distance education to DVB-S2 and MPEG-4 content delivery.
It is important to note that the leap in transport efficiency derived from DVB-S2/MPEG-4 is (for the most part) a one-time trend that will unlikely lead to continuous substantial improving. MPEG-4 technology will improve over time, but only incrementally.
The largest gain is in replacing mature MPEG-2 systems with MPEG-4, a situation that, in fact, is not yet as measurable in standard definition as it is in high definition. DVB-S2, in particular, is not going to be replaced by a new DVB-S3 standard in the foreseeable future due to its close matching with the theoretical limits of channel coding efficiency (within 1 dB), making any efforts to capture the last increment of coding efficiency unworthy.
Companies adopting the new standards realize savings in satellite capacity that do not translate into a sustainable advantage in an increasingly competitive world. DTH operators merely tapping into the readiness of satellites for HDTV will not be excused from articulating sound, two-way, IP broadband strategies against the cable triple play.
HITS platforms capitalizing on a growing cable digitization and telcoTV trend via food-chain efficiencies must stretch their service offerings to help telcos differentiate and cablecos better capture the long tail of content. Likewise, satellite broadband and IP trunking providers taking advantage of DVB-S2 OPEX savings can explore ways to lower CAPEX per broadband user via wireless broadband extensions such as WiMAX.
In short, MPEG-4 and DVB-S2 technologies have a diversified market opportunity, and recent announcements have shown solid activity across all satellite-delivered applications. While the replacement cycle and the use of these technologies in new systems deployments are in full swing, the incremental efficiencies added are a one-time trend that should not prevent players from concentrating on ways to extend their service scope and capabilities beyond a low-cost distribution and connectivity play.
Information for this article was extracted from the NSR report entitled:
MPEG-4 and DVB-S2
Assessing Implementation Schedules for Advanced Video Compression and Satellite Modulation
Carlos Placido has more than 12 years of progressive experience in the areas of consulting, program management, research and engineering in telecommunications and entertainment. Mr. Placido has carried out independent business development, technology assessment and management activities, including market research studies for NSR and project management at Telefonica. Until 2004, he led a development team at Intelsat in Washington, D.C. where he was responsible for identifying and validating emerging video and data technologies for their potential applicability to new and existing services.