tight squeeze

OPTIMISTIC PRONOUNCEMENTS ON THE timing and scale of TV service rollouts by major telcos mask a knot of unresolved cost and technology issues surrounding the next-generation compression technologies that are vital to many carriers’ plans.

While considerable progress has been made toward commercialization of the two leading advanced compression formats, it remains to be seen at what point in time either platform will be incorporated into HDTV-capable set-top boxes that meet telcos’ stringent requirements for quality, bandwidth efficiency, interoperability and cost-effectiveness. In the case of MPEG-4 Part 10, otherwise known as H.264 or Advanced Video Coding (AVC), there are HDTV-capable set-tops on the market, but not at the price points telcos are looking for. Things still are uncertain for VC-1, the standardized version of Microsoft’s Windows Media 9 advanced compression system, because the standard has not been finalized by the Society of Motion Picture and Television Engineers (SMPTE), although a major step in that direction was pending at press time.

No one says the telcos’ IPTV goals are unreachable; they just say they may not be reached this year. “HDTV is crucial, but it’s out of our hands,” says Reed Majors, vice president for marketing and business development at Minerva Networks Inc., which recently introduced MPEG-4 Part 10 encoding capabilities as part of its IPTV headend platform. “Until we have set-tops that meet these requirements, a lot of the larger carriers will hold back on deployments.”

But for manufacturers to make the commitments to volume production and the low costs telcos are looking for, the carriers will have to make firm commitments to specific suppliers. “Telcos need to make commitments in order to solidify dates for manufacturers,” says Lisa Hobbs, director of marketing at TANDBERG Television, a leading supplier of video encoders.

In what amounts to a case of the classic “chicken-and-egg” conundrum, this isn’t happening because telcos aren’t seeing the price points that would draw them to such commitments. And, until carriers have new lower-cost set-tops using the most advanced hardware implementations, they won’t be able to make commitments in any case. Chips supporting such set-tops won’t be on the market in volume until mid-year.

Minerva’s Reed Majors

“It’s fairly unlikely that there will be HDTV-capable IPTV set-tops deployed this year,” Hobbs says. “There are a couple of manufacturers that are hoping to do it, but they’re not making any promises.”

No telco has more on the line where timing of TV rollouts is concerned than SBC Communications Inc. The company has set itself a goal of being in a position to market IPTV services over new FTTN networks extending to 2.5 million households by year’s end, according to Scott Helbing, senior vice president of consumer marketing at the carrier. “That’s the base we expect to be marketing services to,” he says.

“With FTTN we’ll be able to deliver service at 20 to 25mbps, which, using advanced compression, will allow us to provide service simultaneously to one HDTV set and three SDTV (standard definition) sets,” Helbing says. By the end of 2007, SBC expects to be marketing its TV services to 18 million households with an anticipated market penetration rate of 30 percent, he adds.

Advanced compression, of course, is just one of many hurdles that SBC must clear if it is to stick to this timeline, notes Jeff Weber, vice president of entertainment services at the company. “The risk for us isn’t tied to just one issue,” Weber says. “It’s about how things like VDSL, the Microsoft IPTV platform, content aggregation, etc., come together and when. We’re driving toward a fourth quarter launch, and every one of those things has to work.”

TANDBERG’s Lisa Hobbs

Advanced compression technology is also vital to the plans of BellSouth Corp. and independent operating companies, all of which are evaluating TV strategies tied to the use of various flavors of DSL. As for the other two Bells, Verizon Communications Inc. is basing its video service launches on deployment of bandwidthrich FTTP, which means advanced compression is not as important to its plans; and Qwest Communications International Inc. has not voiced intentions to launch widespread video services.

For telcos in a hurry, it appears MPEG-4 with AVC has an edge over VC-1, say a wide range of set-top and headend encoder suppliers who are prepared to go either way. “More choices [of set-tops that use MPEG-4] means lower prices, and right now it appears that more engineering groups are spending their time working with MPEG-4 than with VC-1,” says Minerva’s Majors. “But it’s hard to say, because Microsoft’s marketing power may result in their being able to push VC-1 faster.”

Keith Wehmeyer, general manager for IP video business at Thomson, is seeing demand move ahead for AVC-based solutions. “DIRECTV and EchoStar [Communications Corp.] both have announced their support for AVC, which makes for a significant volume market right there. So you have to ask, ‘What impact does their making that decision have on others — the telcos and the guys who are spinning the silicon?’”

There are a lot of questions about what set-tops are going to cost, Wehmeyer says. “Some people have an expectation they can get MPEG-4 set-top boxes for what the satellite industry is paying for MPEG-2 boxes at one tenth the volume of the MPEG-2 sales.”

Such prices, at about $100 to $125, may be a long way off given that today’s AVC boxes, without HDTV decoding capabilities, are selling for $250 or more in volume. One of the first HDTV-capable set-tops operating in IPTV advanced-compression mode will be the Thomson IP1100, now available in sample quantities, with general availability for early deployments slated for the third quarter.

But this is an Intel Pentium-based system, which means customers are paying for a general-purpose processor that depends on high-processing power to do software-based decoding. Wehmeyer says the follow-on to this system will be the IP1200 series, which relies on lower-cost chips with wiring designed to the requirements of advanced decoding.

SBC’s Scott Helbing

“We saw about a 40 percent reduction in costs when we went from our first-generation IPTV set-tops (using MPEG-2) to the second generation,” Wehmeyer says. “We’d like to follow that model.” Thomson, he adds, now claims 12 of the world’s largest telcos as customers for its first-stage advanced compression, non-HDTV set-top — the IP1000 — most of which are using it either in lab or early field trials.

Late last year, Broadcom Corp. and Conexant Systems Inc. became the first chip makers to introduce hardware implementations of H.264 in so-called “bolt-on” versions where the new decoders are married to “mother” chips performing the IPTV set-top-on-a-chip tasks associated with earlier MPEG-2-based solutions, including digital video recording, video-on-demand “trick play” functions (fast-forward, reverse, etc.), various modes of security, connectivity to peripherals, and much more.

Next in the chip evolution are single-chip IPTV set-top solutions from Sigma Designs Inc. and STMicroelectronics that do all that and decode both H.264 and VC-1 on a single device. ST began providing its new STB7100 chips for sampling in January with general availability slated by the third quarter. Sigma was to begin sampling one version of its new SMP8630 series in March, and the other, designed for multiple HDTV streams, was slated for sampling by this month, with volumes for both by mid-year.

“From a whole system standpoint, our chip will lower the costs of set-top boxes in comparison to other solutions now on the market,” says Ken Lowe, vice president, Sigma. “It’s the most significant product we’ve ever introduced.”

While Sigma’s and ST’s solutions are touted as H.264 and VC-1 compatible, Michael Hawkey, director of the satellite business unit at ST, says the VC-1 processing capabilities will have to be fine-tuned to reflect inevitable changes that will be made before the standard is finalized. “This chip can be used in some cases for VC-1, depending on what level of compatibility people require with respect to all the interfaces with the Windows Media platform,” Hawkey says. “We will have a follow-on to the 7100 that will be specific to the changes that will be made between now and when the standard is finalized.”

But it’s clear that there is “a whole group of people out there who are going to build H.264 boxes, who don’t care about VC-1,” Hawkey notes. “We could have gone with a multichip solution to satisfy this demand, but decided it was better to wait a little bit in order to deliver on the benefits of a single-chip solution.”

The emergence of lower-cost advanced-compression set-top boxes surely will be a step in the right direction, although it remains to be seen how close even those units will come to meeting the extremely low cost thresholds cited by Wehmeyer. In any event, Thomson won’t have a single-chip version of the IP1200 set-top in the market until the first or second quarter of next year, Wehmeyer says.