TMO Reports - Carriers Plan Their Response to Apple’s "iTV"

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Apple, a company that is new to the video delivery business, has never been involved with the traditional carriers, and has instead elected to assist their customers with viewing iTunes-purchased video content on their HDTVs with a product code-named "iTV." This Apple technology is almost certainly seen as a threat to the status quo by the cable carriers.

Meanwhile, there are high hopes in the Apple community for the iTV, a device that can beam video content from a Mac, via AirPort (802.11n), to an Apple box ("iTV") that plugs into an HDTV. That allows Apple to completely bypass arrangements with the traditional carriers. Some view a technology like this as the next generation of TV and the long sought Internet-TV convergence. Others, the carriers, donit like it at all.

As a result of products like the iTV, the traditional carriers are exploring ways to retain their customers, keep that cable service alive and generating revenue. That will require the creation of the same kinds of services available on the Internet with, for example, the iTunes Store, YouTube, and the experimental network Websites that offer streamed, on-demand TV content to a Web Browser.

In order to achieve this business goal of retaining their traditional customers, most of the major cable carriers are partnering with Motorola for hardware and software assistance.

Wanting to shed some light on all this, I asked Nick Chakalos, Senior Director of the Software Product Management Group at Motorola in a phone interview how they are working with the traditional carriers to assist them with the threat from the Internet and products like "iTV."

The Mac Observer: Mr. Chakalos, can you provides us with some background on the carrieris new initiatives?

Nick Chakalos: Weire seeing significant new trends. The carriers want to make sure theyire ready to take advantage of those trends. Specifically they want to allow consumers to gain access to the (TV) content they want. Theyive asked us to help.

TMO: What specific technical areas are you working on?

NC: We have customers in the telco, cable and satellite business. This includes, for example mobile phones, managed services, and voice services delivered by cable operators.

TMO: So the focus is OEM, no direct contact with the customer?

NC: Right. We deliver hardware and software solutions to our partners and they deliver to the end user. However, our TV set-top boxes are Motorola labeled.

TMO: Who have you partnered with so far in the industry?

NC: We have built Motorola branded set-top boxes, with DVR, for Comcast, Cox, Time Warner, Charter and Starchoice in Canada. Weive delivered over six million of these, and weive been the leading set-top box provider for number of years now. Weire also working with Verizon and AT&T.

TMO: Anyone else?

NC: Over the summer, we purchased Broadbus for their software expertise in Video on Demand (VOD) services, and we just announced that weire buying Netopia.

TMO: Did you license TiVo technology for the DVRs?

NC: Actually, weive used our own proprietary technology combined with licensing from Replay TV. This combination fit best with Motorolais long term strategy.

TMO: How about IPTV? Are you assisting AT&T that?

NC: Yes. And Verizon. Verizon is committed to an aggressive rollout of IPTV.

TMO: Iim curious. How well is IPTV working out with HDTV? That must put quite strain on the customeris broadband connection.

NC: Actually it works quite well. The service provider makes sure that there is sufficient bandwidth to deliver an HDTV signal to the customeris TV. Itis compressed using MPEG4, and the hardware can deliver a 4 Mbps stream. With four or five to one compression, thatis sufficient for 720p.

TMO: Will these set-top boxes migrate to 1080p?

NC: In time, if the content takes us there.

TMO: What will the DRM be like on these HDTV systems?

NC: Weire still working on agreements and DRM that will allow customers the flexibility they want. For example, weire working on technologies that will allow the consumer to view that content in another room or take it with them.

TMO: Taking it with them sounds like youill be building devices that will compete with the Apple 5G iPod.

NC: These would be phones and smaller devices.

TMO: Does viewing downloaded content in multiple rooms sit well with the content providers?

NC: Sure. It falls under fair use within the household. Of course, transmitting the content to, say, a remote location when youire on travel does not.

TMO: OK, one of the advantages of using a computer instead of a set-top box for storing video is that a user can easily add terabytes of external storage to a computer. But set-top DVRs tend to have smaller drives, driven by consumer price points.

NC: Weire also working on devices for additional storage on a network. Something like a Network Attached Storage (NAS).

TMO: Would that be restricted to a network at the TV location? Or could these devices reside on the home computer network?

NC: Sure, the home computer network. The data would be secure and encrypted. We still have some DRM issues to work out.

TMO: How do you see the these technologies evolving?

NC: We see it as a progression. The developing technology has to standardize. The operators will choose to progress as they go along, and the customers must accept the progression.

TMO: With respect to traditional living room TV, what kinds of trends are you seeing now?

NC: Consumers in general still prefer TV and ubiquitous content. Service providers want to offer vast amounts of content and advanced Video On Demand services using their existing bandwidth and networks. Motorola is helping them accomplish this by increasing the amount of content and streams providers are able to offer on-demand, straight to customersi set-top boxes, with technology like Switched Digital Broadcast and DOCSIS 3.0. We are also making television more flexible with technologies like Start Over TV, which lets viewers start shows over from the beginning with the push of a button -- without having to record them, and Follow Me TV, which lets viewers "pass" shows theyive recorded on one DVR to other televisions around their home. From demographic data, itis true that teens are more into content portability. And thatis a trend important to watch. Motorola is well positioned to make sure they have portable solutions as well.

TMO: What about markets outside the U.S.?

NC: Weire pursuing the global market. Especially Latin America and Europe.

TMO: It sounds as if Motorola is working with all the traditional carriers to provide a very robust home TV system, HD services, storage, voice, VOD and flexible delivery services right on the customeris TV screen.

NC: Absolutely.

TMO: Mr. Chakalos, I think thatis about it. The Mac Observer would like to thank you for your time. This has been most informative, and I think youill open the eyes of our readers. Thanks again.

NC: Youire very welcome.

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