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Speech in IPTV Solution Day hold in Taipe, November 2008
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Challenges in IPTV
TelefonicaIPTV Competence CentreDate: 30/10/2008
2TelefonicaIPTV Competence Centre
... that has consistently shown strong growth, which has accelerated in the last years ...
... which is reflected in its track record of solid financial results …
... consolidating its outstanding position in the global enterprise rankings
Telefónica has a rich heritage spanning more than 80 years...
Telefónica is today one of the world’s leading companies
3TelefonicaIPTV Competence Centre
About 63,000 professionals
About 250,000 professionals
Staff
Services
FinanceRevenues: €3.2 bnAssets: €12.9 bnMarket Cap: €2.5 bn
Integrated ICT solutions for all customer segments
Clients About 10 million
subscribers
About 230 million
customersBasic telephone and data services
1987 2007
Spain Operations in 25 countries
Geographies
Revenues: €56.4 bnAssets: €105.9 bnMarket Cap: €106.1 bn
Our evolution has been particularly evident over the past 20 years …
4TelefonicaIPTV Competence Centre
TELEFÓNICA
ESPAÑA(fixed)
TELEFÓNICA
LATAM(fixed)
TELEFÓNICA
MÓVILES(Spain+Lat
am)
CESKY TELECOM(fixed and
mobile)
O2(mobile)
TELEFÓNICA at the end of 2005 (operations in 19 countries)
TELEFÓNICA
ESPAÑA(fixed and
mobile)
TELEFÓNICA
LATAM(fixed and
mobile)
TELEFÓNICA
EUROPE(fixed and
mobile)
TELEFÓNICA today (operations in 25 countries)
INTERNATIONAL
ALLIANCES
Telefónica has evolved from a global business lines structure into a lean, focused and highly efficient organisation across its
integrated geographical operations
… and has accelerated over the last three years, mainly due to the progress towards and integrated management model
5TelefonicaIPTV Competence Centre
Argentina: 20.0 millionBrazil: 56.1 millionCentral America: 5.9 millionColombia: 12.1 millionChile: 9.7 millionEcuador: 2.9 million México: 14.7 millionPeru: 13.5 millionUruguay: 1.3 millionVenezuela: 11.1 million
Wireline market rank Mobile market rank
2112
21112211
12
2
Notes: - Central America includes Guatemala, Panama, El Salvador and Nicaragua- Total accesses figure includes narrowband ISP of Terra Brasil and Terra Colombia, and broadband ISP of Terra Brasil, Telefónica de Argentina, Terra Guatemala and Terra México.
Data as of June ‘08
Total Accesses (as of June ‘08)
147.9 million
Telefónica is a leader in the Latin American Telco market …
6TelefonicaIPTV Competence Centre
Spain: 47.0 millionUK: 18.9 millionGermany: 14.6 millionIreland: 1.7 millionCzech Republic: 8.1 millionSlovakia: 0.4 million
Total Accesses (as of June ’08)90.8 million
1
11
11
4
2
Wireline market rankMobile market rank
3
Data as of June ‘08
... enjoys a significant footprint in Europe …
7TelefonicaIPTV Competence Centre
The global digital world is transforming our business, offering significant new opportunities …
More powerful devices full of features available as never before
We shall have the possibility to store everything
Digital contents continue to increase
The network will assume a role far more relevant
Users are adopting new habits in a quick and easy manner
Many new services will show up
8TelefonicaIPTV Competence Centre
Com
petit
ive
allia
nces
Competitive alliancesInternet players
Telcooperators
Competitive alliances
Services
Access/connectivity
Terminals Cont
ents/
aplic
ation
s
Consumer electronic devices
suppliers
… at the same time that the competitive landscape is turning complex
9TelefonicaIPTV Competence Centre
Best-in-class customer experience
Innovation to grow
Turning customers into fans
Becoming a more innovative company, with third parties collaboration
A common operating model for an excellent and efficient delivery
People engagementEvolving our culture
to make Telefonica the best ICT place to work
Transforming our Operating model
we have defined four main strategic initiatives to implement it
10TelefonicaIPTV Competence Centre
Previously, on Television… Limited bandwidth towards consumer
— Broadcast model:linear consumption and experience— Limited number of channels— Broadcasters decided what people “should like”— TV personalities were stars (even dogs) — Prime time access to media between 19h00 and
22h30 Eyeballs drove advertisement
— Advertisement drove content producers & broadcasters
— Compelling content drove again more eyeballs Standalone solution
— Not connected to other devices inside home — Not connected to other services in backbone— Television was only on the television, and on the
television was only television— Offered by providers that only provided television
“Televisionwas a passive experience”
11TelefonicaIPTV Competence Centre
But we are finding a new and unknown playground with…
…a new broadband network infrastructure
… new players, the content providers
… new terminals, called “set top boxes”
… clients with a complete different behavior, even telephoning call
centers at 12 pm!!!
… a new type of network signal over the networks, video signal, that can
not support 10-9 error rates
… and new technical terms such as “pixelization”, “freezing”….
To change this, telecom operators begin to play a new match, the “IPTV match”….
“it´s critical for telcos to deeplyexplore, understand
and get experience in this first half”
12TelefonicaIPTV Competence Centre
There are few telcos who have already played the first half time, and Telefónica is one of them
Brasil Chile Argentina
Spain
Czech Rep.
600.000 customers
>100.000 customers
Next commercial launch in December 2008Trials on going
Communications
Entertainment
Home digital management
Home Networking
With a broad portfolio of services (broadcast TV, PPV, True
CoD, interactive services over the TV, ...)
13TelefonicaIPTV Competence Centre
where we have understood that, in the second-half…
Now that the referee has called for half time, it´s time to think over and prepared ourselves for second half…
… we need to evolve and innovate quickly. Therefore we
decided to industrialize our IPTV platform with a market
leader… we must deal with these subjects in a global form
within Telefónica
…And that we need to be even more aggressive to
win the match
...This is why we have selected Alcatel-Lucent as partner
...This is why we have created the Telefónica IPTV
Competence Center
...and this is why we made a strategic analysis that will turn into defined actions
14TelefonicaIPTV Competence Centre
ALBA project: rationale and implicationsFor maximizing synergies Telefonica Group should deploy
the same technologies in all local IPTV services operations it’s necessary to industrialize the Imagenio IPTV platform
For this purpose Alba proyect is arranged with Alcatel-Lucent in order to assure availability of a best-in-class platform for all markets where Telefonica commercialize IPTV services
IPTV CCIPTV CC
15TelefonicaIPTV Competence Centre
Staying ahead of the competition requires the strongest team, all the time…
CommercialBundles
EnhancedServices
Personalizedand Blended
Services
BlendedServices
StovepipeServices
Incr
easi
ng D
iffer
enti
atio
n
Increasing Innovation for end-user convenience and QoE
1st Half 2nd Half
Developing an innovative services roadmap to increase differentiation
16TelefonicaIPTV Competence Centre
Some challenges you should face
From a connectivity/communication company, implies a renewal of infrastructure equipment and data centers: TV Head end, Video Servers,…
Adjusting your organization structure to face new challenges
Design of the access network to provide QoS and convergence services
Beware of the puzzle of actual solutions, integration of different elementsin the echo system use to be a nightmare
Avoid Cable habits to use dozens of Set Top Boxes
In xDSL access interference/impulse noise issues should be considered
Monitoring and Probes deployment is a secure investment to enable visibilityof the service and its maintenance
17TelefonicaIPTV Competence Centre
Three pillars for the service
Excellencyin IPTV
operations
Quality Usability
Extensibility
MaintainingPrevious
Experience In terms of Availability
And quality of Image
TransformingCustomers
Aptitude fromLean-back toLean-Forward
Being able to enrich theService with third partyApplications enhancing
The openness of the solution
18TelefonicaIPTV Competence Centre
Meeting Customer Expectations is Key
VoIP
QoE Expectation: Moderate/High
Fault Tolerance:Moderate
Consumer experience is
established. While high quality and low latency are
expected, there is generally some
tolerance for dropped calls.
IPTV/Video
QoE Expectation: Very High
Fault Tolerance:Very Low
Expectations are very well
established, with very low fault
tolerance.
HSI
QoE Expectation: Low/Moderate
Fault Tolerance:High
Individual Consumer
experience/history with broadband is relatively short. General quality
expectations are low/moderate
19TelefonicaIPTV Competence Centre
Enhancing Quality through...
Interleaving Network Protection in xDSL access
Forward Error Correction mechanisms
Retransmission Technologies
Fully Redundant Network interconnections
Isolating different types of traffics with QoS
High Availability Solutions Backup Centers In distributed environments:
redundancy between Areas Extensive use of Probes
integrated in monitoring tools
KPIs reports for QoE evaluation
In the Network In the Platform
20TelefonicaIPTV Competence Centre
Expanding IPTV echo system
Closed SystemGetting Video Running
Off-DeckClosed Garden(VoD, HD, Caller ID)
PC AppsWalled Garden
PersonalizationWeb 2.0,consumerizationof smart Phones
Third Party applications
Bring-your-ownDevice (BYOD)Approved devices
Bring-your-owndevice –to-any-network
(BYODAN)Network-neutral BYOD play2007
2008
20092010
2011-2012
20??
Customization
10
30
40
70
140
160
180
Source: Yankee Group, The Degrees of Open Access, “Case Closed: IPTV Not Likely to Be an Open Environment for Foreseeable Future”, June 2008
21TelefonicaIPTV Competence Centre
Usability
Once customer has subscribed to service, its usability is one of the factors which determines his continuity— Learning stage is critic!
TV is a massive market— Intuitive use is key— Quick navigation and zapping
– Analog syndrome— Quality in the video
– Protecting the stream– Subjective Picture Quality
22TelefonicaIPTV Competence Centre
There’s some expectation in user experience from PC to TV, mobile, PDA…— Adjusting service to terminal facilities
– Performance, formats, human-machine interface…. Customization
— Real Value of service = Perceived Value of service— Less technological profiles implies
– Simplicity– Reduction in equipment cost
— Advanced and technological profiles– More options and shortcuts are expected– Value perceived in advanced functionalities like home networking: DLNA, UPnP
User Experience
23TelefonicaIPTV Competence Centre
New Remote Control — Mobile Phone could helps in customization
– And providing one additional screen— Gesture interfaces— Vocal interfaces— Gyroscopic controls
Seizing each specific terminal characteristics— One example could be UGC
– PC for management and configuration– Mobile/PC for production and storage– TV as a receiver
User Experience
24TelefonicaIPTV Competence Centre
Future: Convergence
Mobile and fixed networks integration Lack of standards in a world-wide approach for an e2e
solution Standardization initiatives— DVB. Europe and Asia
– Technologies, applications and protocols
— ETSI TISPAN. Europe– E2e vision but limited
— ATIS IIF. North America– E2e approach
— ITU FG, SG13. Global– Not very active
— Open IPTV Forum. Global– E2e approach. Very active
25TelefonicaIPTV Competence Centre
Open IPTV Forum— Multiple player: Service Providers, CE manufacturers, SW
Suppliers, DRM manufacturers…— Convergence to maximum
– Managed and un-managed networks– Service Provider and Platform provider independent environments
Future: Convergence
26TelefonicaIPTV Competence Centre
Interactivity: Rich Media applications— Your personal TV viewing experience
3D User interface and contents
Future: User Experience
27TelefonicaIPTV Competence Centre
Business models evolving— Massive TV market actually being financed through advertisement
(75%)— Digital Advertisement will grow with higher rates than traditional
Towards an interactive and customized advertising— Knowing the customer: multidevice, consumption profile, time dependant habits..— Synchronized with services— Normalized and secure“Feedback” of impacts to advertiser
Real time capabilities can introduce advertising auctions
$0
$200
$400
$600
2004 2006 2008 2010 2012
US$ B
ILLIO
N
Traditional Digital
Global Advertising Expenditure
Future: Interactive advertising
28TelefonicaIPTV Competence Centre
Customized in each terminal of the costumer Contextualized with content, time … A more efficient approach than actual
advertisement , specially considering time shifted content consumption — “Shift TV”— PVR
Future: Interactive advertising
29TelefonicaIPTV Competence Centre
Converging networks and services— Socializing entertainment and leisure in the TV out of the home
Presence capabilities enhanced with activity taking place Possibilities of knowing what my family and friends
— Communicating through instant messaging, videoconference …
— Content Recommendations— Sharing my own experience
Future: Social Networks
30TelefonicaIPTV Competence Centre
User Generated Content— Quality content became more accessible— Sharing means dealing with:
– Security and rights (DRM)— A multidevice approach enabled through:
– Scalable video: MPEG 4 SVC– Transcoding
— “Streaming” experience
Future: Social Networks
31TelefonicaIPTV Competence Centre
Hundreds of channels and thousand of on demand titles: How do you find what’s interesting for you?
Enriching content description through intelligent metadata:— Automatic classification of content:
– Extracting visual descriptors– Statistical recognition of patrons – Semantic reports generation– Digital fingerprints
Search and recommendation engines— Explicit preferences— Consumption profile— Semantic characterization
Up to customized virtual canal for each one
Future: Search & Recommendations
32TelefonicaIPTV Competence Centre
Where customer wants Porting terminal status
— To one or several terminals at home— Different access networks: from TV to mobile— Different media of the same service to different terminals
– Video in the TV and sound in the mobile Accessing to mobile services through wire line connectivity
— WiFi— Bluetooth— Femto cells
Management in one terminal and enjoyment in other— Purchase in the mobile and watching in TV— Scheduling local PVR through mobile
Independent Service Provider of Access Provider “Roaming” of Access Networks
— Access through other terminal in other network
Future: Nomadic & Ubiquity
33TelefonicaIPTV Competence Centre
Convergence increase complexity issues in security Authentication of user and terminal
— Access Network— Services— Mechanism defined in IMS from 3GSM
Rights protection are now dependant of terminal and business model: DRM— Conditional Access in Digital TV Platforms
– Only in distribution services and “always on”— WDRM, Fairplay in PC— OMA, PlayReady, Marlin in mobile
Marlin: A promising technology in a convergence world
Future: Security & Content protection
34TelefonicaIPTV Competence Centre
What & When through CoD— Streaming vs Download
Important Business Models Towards a business created from thousands of niche business Hierarchic architectures of content servers
— Optimizing Bandwidth in access— Concurrency— Intelligent dynamic distribution— Control Layer
Future: Long Tail
35TelefonicaIPTV Competence Centre
Evolution from HSI to customized TV
Network
ServiceValue
ADSLInternet AccessNewIncomings
ADSL2+QoS, McastIPTV, CoDTriple PlayNewIncomingsChurn ↓
MassiveDeployment
Openingto 3rd partiesContents ↑
CustomersGrowth
VDSL2FTTH
HighDefinition“Multiroom”PVR
CustomersGrowthARPU ↑
IMSPreseneceComm.
IntegratedMultimediaComms
NewoportunitiesARPU ↑
4 PlayConvergence
Customized TVWhat, WhenWhere, How
NewopportunitiesARPU ↑Churn ↓OPEX ↓
Initial Step
IPTV roll out
Growing
HDMultiroo
m
CommsIntegrate
d
Convergenced
Customized TV
Future: Trends and steps
36TelefonicaIPTV Competence Centre
Main Conclusions
1IPTV services will provide a completely new TV experienceIntroducing the new habits and expectations of customers
2But even each technology employed is well tested, there’s no standardized solution … yet
3Deploying TV services means a shift in technologies and organizations
4Convergence approach: from IPTV to IPEntertainment?
5Provide enough operational tools to support the servicewith the lowest levels of claims
6Don’t forget usability, it’s our customer entrance