Cloud (Network) PVR Discussion

After a delay due to legal review, which was settled favorably to the SPs’ network, DVR/PVRs (N-PVR) are being deployed in earnest by all SPs. N-PVRs are becoming mainstream: In addition to improving the consumers’ experiences they also offer numerous business values to the SP. N-PVRs are also a great step toward virtualization and the move to everything on demand. Simply put, an N-PVR is a DVR that resides in the cloud. When a viewer stores a program, instead of it being stored on a hard disk drive located inside the set-top box, the program (or metadata) is stored on a server or CDN cache located in the service provider’s network.

N-PVRs benefit both the service provider and the consumer. Service providers benefit substantially on both CAPEX and OPEX. Service providers have a love-hate relationship with the set-top box. They love them because they provide a managed service enablement platform in each home, yet they hate them because they account for about 50% of total CAPEX. Interesting to note is providers argue they are part of the network when it is convenient and argue that they are CPE when it is not. The latter is because of regulator ambiguity of TITLE VI in the U.S.

By eliminating the hard drive from every set-top the cost of the box is reduced, directly impacting CAPEX. Hard drives, being mechanical devices, will fail. The elimination of the drive thus increases the reliability of the box and reduces angry customer support calls and truck rolls. This directly impacts OPEX. Without a hard drive the set-top box will consume less energy, supporting the SPs’ goal of meeting the voluntary energy reduction agreement the industry and the U.S. Department of Energy (Note, not the FCC) signed in early 2014.

N-PVRs store consumer “save” programming in the cloud. This simplifies whole home DVR and video everywhere service offerings. With N-PVR all consumer playback originates in the network and not the primary set-top box. Although newer homes have coax cable widely installed throughout the home the bulk of homes do not. All in-home technology deployments are challenging to the SP because of the high variability in both the housing stock and in consumer sophistication. With the N-PVR all video streams are delivered from the network as “just another” channel.

N-PVRs benefit the move to TV everywhere or TV to all devices. In the home consumers watch TV programming on all of their devices. Because Wi-Fi is the common fabric connecting every device, N-PVR based video programming can be sent via the broadband connection and over the Wi-Fi network to all devices. Thus, consumers can view stored programming on all their devices, and the SP does not have to contend with home networking issues.

The N-PVR takes this concept out of the home as well. Consumers can view stored program from anywhere on any device with a broadband connect. This also applies to the delivery of programming on smart phones via 4G/LTE connections. In each of these cases, the stored SP programming is treated as over-the-top (OTT) and facing the same challenges pure OTT suppliers face such as quality of service and data usages. Equally, they can benefit from the innovation in the OTT marketplace.

This everywhere DVR experience also presents a new revenue opportunity to the SP. Targeted advertising and local ad insertion take on new meaning. For example, if a Boston-based consumer is watching a stored program from San Francisco, why show the ad Boston-based car dealership? Similarly, with smart phone location-based services being widely deployed, the SP can insert a targeted ad based on the user’s real-time location.

As illustrated, N-PVRs not only offer consumers a better video experience, they offer the SP real business value: reduction of both CAPEX and OPEX and creation of new revenue generating opportunities. Properly deployed, the N-PVR infrastructure will create the foundation for everything on demand and the move to virtual set-top boxes. Given these factors, SPs should deploy N-PVRs aggressively with the caveat that they must take a long-term strategic approach of viewing N-PVRs as the first application of the platform and not the only application. 

To discuss this please contact me at gwhelan@acgresearch.net

The Next Cord Cutting: Real Cord Cutting

Today "cord cutting" refers to consumers who stop paying for TV and go broadband only from the cable or telecom company.  This is more accurately called "cord shaving".  The economic impact is significant but it's more of a redistribution.  More money to "Netflix" and less to the service provider for video.  Yet, more to the latter for higher capacity broadband that provides higher margins.

Tomorrow's "Real Cord Cutting" refers to consumers who completely stop all services from a wired service provider.  The go completely wireless.  We've seen the prequel with the elimination of a "home phone".  This next generation cord cutting has consumers relying on their 4G/LTE service for all broadband services.  This can be accomplished by simply turning their smart phone into a Wi-Fi access point when in their home.  The economic impacts of next generation real cord cutting are severe. The fixed access service provides not only lose all service revenues they lose customers entirely.

As 4G/LTE deployments expand and as more small cells get deployed the average bandwidth per device will increase substantially.  When the Netflix threshold (e.g., when the quality of streaming video is acceptable) is only a matter of time.  Slowing down real cord cutting will be the price of mobile data plans which will eliminate the intended savings in the first place.   Service providers with wireless assets will be in a strong position to succeed in this future scenario.  Other, such as cable MSOs will need to address their pricing plans which are driving customers away in the first place.  They can also compete with unique content, primarily "Sports and Wars", (i,e., live programming) and push for better quality video such as emerging 4K technologies.

Today's cord cutting is growing significantly especially in the under 30 demographic.  Tomorrow's real cord cutting will occur and will have substantial economic disruption for the entire ecosystem.


For past article please visit greywale.com