Original URL: https://www.theregister.com/2007/05/18/directv_broadband/
DirectTV turns focus to power lines for broadband
Change of heart a blow to WiMAX
Posted in Networks, 18th May 2007 10:51 GMT
DirectTV CEO Chase Carey said at a conference this week that the largest US direct to home satellite provider will try out broadband over power lines in a few cities later this year.
And in that simple statement he may have delivered the biggest body blow to WiMAX in the US that he could have, and in particular to Craig McCaw's Clearwire and any of its suppliers. A test would be tried later this year in one of the top 50 cities in the US and would need to cover an area of at least half the city, Carey said.
The head and shoulders certainty for DirecTV to take its one way pay TV service and turn it into a two way triple play, was a deal with Clearwire and there is no question that such a deal would have been the making of McCaw's new baby. He recently signed a deal with AOL to get the marketing muscle of AOL behind the Clearwire broadband push, but would have loved even more to get the DirecTV marketing engine on his team.
So either DirecTV really believes that broadband over power is the way to go, and has an economic model of it which is secure, or it just could not come to terms with Clearwire. Our own view is that DirecTV could reduce churn so dramatically by offering a triple play, that its savings would have paid for the US rollout of Clearwire. With that understood, DirecTV would have sought ownership or part ownership or eventual control at Clearwire, and that may have been a sticking point.
We have known for the past 18 months that DirecTV has been visiting broadband over power line companies and that in order to gain any kind of foothold in this market it would take a long time, because it would need to bring sufficient power companies to the table, who were ready to take the plunge and take on what some see as a risky technology for them, which takes them out of their comfort zone. By picking up deployment costs DirecTV may have provided the comfort they needed.
The way power line works in the US is by using the mid-voltage circuits that span a city. A high voltage segment acts as a back bone and the low voltage segments that feeds a home reaches too few homes for it to be used for the final delivery platform, as low voltage segments are in Europe.
In large apartment buildings in Europe, termination equipment can feed up to 500 homes with a single or multiple 200 Mbps links which brings broadband straight out of the plug socket with the right adaptor. But in the US, where the average number of homes on a low voltage segment is more like 15, the economics of that kind of deployment just isn't viable.
Instead, the mid-voltage segment reaches within 200 feet of every US home and wi-fi can make the last hop from the power pole across the road to inside the home. The broadband backhaul is usually a wireless fiber operating in a line of sight to multiple high points in the power network.
Companies like Amperion in Lowell, Mass, are perhaps the favourites for picking up a deal like DirecTV, while smaller operations like Ambient have been testing similar systems at Con Edison.
It has always been considered vital that utilities are given a better way of running their business to justify the installation cost of broadband equipment onto their networks.
Amperion may well be a good partner for someone like DirecTV and its existing installations might be used to trial services such a VoIP, broadband internet, and interactivity with TV programming.
Ever since mid 2005, when Israeli start up WiNetworks revealed that it was in talks with both DirecTV and EchoStar about the provision of key technology to allow WiMAX and a DVB-S signal to co-exist on the same cable, running from a hybrid dual purpose antenna, we have been waiting for the DTH companies in the US and elsewhere in the world to come up with a WiMAX DVB-S Hybrid. But in the absence of a major win in the US, other DTH suppliers around the world have been reticent to be the pioneers in this market.
So if DirecTV takes the power route, it will also hit companies like WiNetworks, as well as operators like Clearwire, as well as denting one of the key bright scenarios for WiMAX generally.
Which is why a throwaway line from Chase Carey is not that at all. He will have mentioned broadband over power line with a very clear intention either to change expectation about the way DirecTV will develop, or to help in current negotiations. Whatever, it will have been very deliberate.
DirecTV is not only in the process of changing ownership from News Corp to Liberty Media, a transaction that still has regulatory and other hurdles to cross, but it has already said it will launch its own VoD service in the US, to run over any broadband line, called DirecTV On-Demand. This will offer thousands of programmes from both broadcast and cable networks, and broadband connection will be integrated into the set top. It would be a lot easier for DirecTV if its marketing for this type of service was run in parallel with marketing for the company's own broadband lines, and also once there is more certainty that the transfer to Liberty is going ahead, so that Liberty too can invest its own content assets into the venture.
In fact, Carey and News Corp owner Rupert Murdoch may have been in disagreement over the best way to proceed in broadband or whether to proceed at all, and it may be the Liberty deal, and the confidence of reporting to a new owner that has given Carey the confidence to speak out on strategy.
Although Satellite DTH operators are the only pay TV market growing in the US (unless you count the fledgling efforts of Verizon and AT&T in IPTV), but the marketing effort of doing so is huge, with churn rates of 1.9 per cent per month, meaning that out of 14 million customers, DirecTV has to find over two million new customers a year just to stand still. It is widely believed that a triple, or even quadruple play, where voice, internet, and perhaps an MVNO offering mobile voice, would reduce this churn to under half of what it is today, saving billions each year in marketing, deployment, and customer premises equipment costs.
Carey is still understood to be considering offering broadband alongside rival EchoStar rather than going it alone and may even develop a multi-tier strategy, over the top broadband in some places, satellite broadband in rural areas, power in some cities, and WiMAX in others.
BPL will almost certainly use the UPA standard based around OFDM over power lines, with thousands of tiny carriers modulated between 2 MHz and 34 MHz on a power line, each delivering part of the overall data. This makes it easy to allocate some of the carriers to one function and some to another, making Quality of Service simpler to put in place.
The implementation of filters to stop overhead power lines radiating signals into the ether, and interfering with other signals such as Ham Radio set ups, should have silenced criticisms of broadband over power lines, but sadly there remains a lobby against the use of power for communications, which so far the FCC has ignored. Liberty Media has also put money into a powerline start up and this might also have been instrumental in Carey's decision to go to a trial.
Copyright © 2007, Faultline
Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.