A couple years ago, I gave a presentation at the former TelcoTV conference about broadband and video. The main point of my presentation said, if you are a broadband service provider, you are also a video service provider, whether you wanted to be or not. The challenge was how to make money at it. The point being, broadband customers are consuming more and more video over the broadband pipe into their home, so broadband carriers should embrace that and try to build a business around it.
Fast forward a little over two years and the broadband TV business model is beginning to emerge. I differentiate broadband TV from OTT video in this way. OTT video delivers video content over the open and unmanaged Internet directly to a consumer’s home. With broadband TV, service providers are delivering video over their closed and managed broadband network to that same home. Many content owners continue to demand a closed facilities based broadband network to distribute their content.
In some regards, broadband TV is the new IPTV, albeit with some very distinct differences, namely it requires a dramatically less expensive video headend. But traditional IPTV still delivers robust channel line-ups with access to all the content that most consumers still demand – a channel line-up that broadband TV does not. Then again, that’s exactly the point. For now, broadband TV is setting itself up as an alternative to cable and IPTV for consumers who do not want or need a traditional channel line-up. That may change over time.
Broadband TV Takes Shape
With broadband TV, service providers like Canby Telcom of Canby, Oregon deliver local broadcast networks (NBC, ABC, CBS, FOX, etc.) over their managed broadband network to a Roku set-top-box for $15 per month. A recent announcement from Skitter and Dakota Carrier Networks (DCN) raises the bar on this broadband TV approach.
DCN members, who include independent telcos across North Dakota, will soon be able to use the Skitter platform to deliver both local broadcast networks and some national cable channels (not all) to a Roku box. This approach creates an alternative to traditional cable or IPTV and at lower cost for the broadband service provider than a traditional IPTV service. “Our broadband service provider members have been seeking a way to offer their subscribers an alternative to increasingly expensive cable TV service,” said Seth Arndorfer, CEO of DCN in a press release.
The Skitter platform leverages a unique business model, where Skitter effectively acts as a national cable MSO and secures the programming rights for both the local and national programmers on behalf of their broadband service provider distribution partners.
“We see the broadband TV model as a complement to the existing IPTV business, where service providers can offer a service to customers who may not want or can’t afford a full blown TV offer,” said Mark Ellison, General Counsel for Skitter.
Enter DISH Networks
The broadband TV momentum is also shaped by a very interesting announcement from DISH. The traditional DBS provider has been spreading its wings for some time now, including stocking up on considerable wireless spectrum assets, and recently announced a distribution deal with Disney that they claim gives them Internet distribution rights for Disney owned content, including ABC and ESPN. DISH says this distribution deal gives them rights to stream certain Disney content “…as part of an Internet delivered, IP-based multichannel offering.” I would submit the devil is in the details though – details that most of us will never be privy to. Will DISH be able to stream ESPN’s Monday Night Football for example?
Regardless, DISH may be on a path to offer some form of a virtual cable MSO type offering, where they can offer a channel line-up delivered via the Internet to any broadband home. I would characterize this as a broadband TV/OTT hybrid. In my opinion, this type of offer still needs local broadcast to be compelling enough. DISH does have the capability to include locals, but there is no indication of their “local” thinking for this project. So, the details are still very few and far between, and there is certainly no imminent product. It’s going to take some time for DISH to assemble a viable channel line-up, but getting Disney on board is a significant accomplishment towards that end.
DISH is certainly not alone. Verizon, DirecTV and a host of others are said to be actively doing the same. It’s an approach that’s been vigorously discussed for years and the technical ability to do it is here today. The business rules and models are what is holding it up. It appears those business rules are finally beginning to adapt to enable a broadband TV offer.
“It’s clear from recent news that large system operators will be coming after customers over your broadband lines,” said Robert Saunders, CEO of Skitter in a phone interview. “Broadband carriers can and should respond with their own broadband TV offer.”
Clarity for broadband TV as a business is fleeting for the moment. As is the case with any emerging disruptive business model, the beginning phase raises more questions than answers. Slowly, those questions are being answered and momentum continues to build.