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INSIGHT: Hybrid Network Opportunities In Asia
by Laurence Peak

The analog to digital switchover is providing a major catalyst for operators to think differently about how they deliver pay-TV services. As the number of subscribers in Asia continues to grow, operators have a huge opportunity to increase ARPU with new and compelling content.

The Cable & Satellite Broadcasting Association of Asia (CASBAA) recently reported that there are 71 million digital pay-TV households out of 300 million pay-TV connections across Asia, which is seen as a “tipping point.” While the pay-TV market has grown across the region, CASBAA estimates that the cost of video piracy is also on the rise at US$1.7 billion in 2008, up from $1.5 billion in 2007.

However, a bright spot for operators and content owners are the interesting statistics CASBAA revealed on the concentration of this pay-TV piracy. Asian markets with “the lowest levels of revenue leakage (or piracy) are generally those with the highest percentages of digital deployment.”

Therefore, operators are led to believe that building a more advanced digital network makes it more difficult for service and content theft. As piracy decreases and copyright rules are enforced, there is potential for significant business upside. In particular, we are seeing operators in the Philippines and India proactively reducing grey market effects — and securing more revenue — with an advanced network.

Other signs that content protection is being taken more seriously are groups like the Centre for Content Protection (CCP). Based in Singapore, the goal of the CCP is to act as a clearinghouse and resource for information related to all aspects of digital distribution and content protection for the Asia Pacific region. The consortium wants to “expand consumer viewing choices by promoting technological measures that permit secure distribution of digital television.”

Hybrid Network Opportunities
Operators know that the long-term vision of digital networks is more than a simple substitution of Digital Video Broadcasting (DVB) for existing analog services. Ideally, digital networks should accommodate broadband IP services and multi-screen delivery. As a result, Asian operators are evaluating some form of hybrid network that enables them to serve multiple tiers of subscribers and deliver material ranging widely in value from blockbusters to niche content. Transitioning broadcast subscribers to those who are willing to pay for richer, on-demand services is the ultimate goal for operators.

Yet hybrid network architectures raise unique issues regarding content security and digital rights enforcement. Offering premium, high-value content goes hand-in-hand with higher ARPU. Content owners need to be assured that their assets are protected, and operators are more motivated to stop theft of service. The good news is that there are more choices for operators looking beyond the scope of legacy solutions to address their content security requirements.

Standardizing On IP

The advent of all-digital infrastructures is incorporating core components of the mature DVB standards, which are supported by other organizations like the Association of Radio Industries and Businesses (ARIB), a Japanese standards organization. The majority of these industry standards bodies have included the use of IP protocols to standardize the delivery and security of content across diverse network types — merging legacy MPEG-2 delivery with IP infrastructures and IP centric clients. In parallel with this trend of cost-effective, IP protocols standards is the recognition of software-based IP security technologies as the gold standard for securing everything from web-based banking and financial transactions to high-value video in broadband and pay-TV service applications.

Advantages of IP
Leveraging the inherent two-way nature of IP connectivity, IP-based protection can deliver an industrial-strength content security system that addresses all the requirements essential to delivering cross-network security cost effectively. Furthermore, an IP-based platform eliminates the need for multiple conditional access (CA) or encryption vendors. Equally important to cost-sensitive operators and subscribers, software-based IP content security maintains a high-level security through downloadable updates to devices. This not only presents a much more responsive and less costly mechanism for addressing security breaches or new threats, it also lowers the costs of set-top boxes.

One main advantage of DVB-IP hybrid networks is that operators can offer tiers of subscriber packages that can include broadcast-only content (one-way) and/or interactive features, like on-demand movies and user generated content. This is especially important in regions where there is a lack of disposable income to spend on TV services. Software-based content security offers the cost advantages that position it as the first choice for operators.

VerimatrixVCAS™ for DVB solution, which supports any combinations of broadcast and hybrid networks from a single head-end, is attracting early interest from operators primarily in India and Asian regions. Mainly we feel this is because VCAS for DVB offers tremendous value in supporting base of lower ARPU subscribers in one-way networks while providing a clear upgrade path to capture higher ARPU subscribers with hybrid networks.

CommunicaAsia/BroadcastAsia 2009 will provide a good opportunity for Verimatrix to further assess the current environment from both the network operators and content owners. The Company will also be participating in the CCP’s Digital Future Seminar Series on “Developments in Broadcast Content Protection and the Role of Government” on June 17. Please stop by booth #6C4-03 for more information.