The Economics of Delivering Triple Play to the Home
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1 The Economics of Delivering Triple Play Panelists Boyd Peterson Senior Vice President, Consumer Research, Yankee Group Bob Bissell Consultant, CTO Group, BT Kurt Eckles Director of Marketing, Residential Gateway & Embedded Systems, DSP Systems, Texas Instruments Copyright Yankee Group Research, Inc. All rights reserved.
2 Agenda The Thesis for the Managed Home Experience Boyd Peterson, Yankee Group The Service Provider Perspective Bob Bissell, BT Technical Solutions Kurt Eckles, Texas Instruments Page 2
3 The Thesis for the Managed Home Experience Competition is driving network transformation IP in the core: future network service platform, cost benefits of single network The service provider vision is to enable triple-play services (voice, data and video) and extend into multi-play services IP enables new services and new revenue sources extending from the foundation of broadband to the home IPTV, VoIP, home networking, fixed-mobile convergence The IP challenge is cost containment Provisioning and configuration Operational support Service enablement The solution to revenue expansion and cost containment: managed home experience Page 3
4 The Service Provider Vision Triple Play Phone PC/Media Center TV CPE Terminal Adapter Modem Set-Top Box Service Provider-Controlled Home Gateway Applications Voice Data IPTV Triple-Play Services Service Intelligence Software-Controlled Application Layer Network Broadband IP Source: Yankee Group, 2006 Page 4
5 The Service Provider Vision Operational Cost Highlights VoIP CPE Costs Terminal adapter and kit - $47 Distribution - $10 Battery backup - $20 Self Install 23% of all VoIP installs (US) 50% require support call $36 per support call Truck Roll Install 77% of all VoIP installs (US) Truck roll (Average) - $65 Data Reasons for Customer Support Calls 25% Synchronization issues 25% Surfing issues (internet) 20% PC issues 10% issues 5% CPE 15% Other Cost Highlights 44% CPE 11% Distribution 6% Installation 40% Ongoing support ($129 first year operational expense North America) IPTV Operational Costs 1 st 12 Mo Provisioning $360 First 30 days $60 11 months $ 313 Total first 12 months service Costs = $733 (North America, Europe) Ongoing Support Categories 66% Network / service issues 34% In-home issues $28.50 per month (average monthly support costs for IPTV) (North America, Europe) Ongoing Support Subcategories Network connectivity Set-top box firmware Application failure Middleware Wiring Connections Residential gateway Other CPE Page 5
6 Why the Managed Home Experience Is Critical to Service Providers The service provider s best opportunity to offset losses from line loss and access competition is to make the consumer experience easier and better for existing and emerging applications This requires intelligence in the home The challenge associated with the opportunity is the operational burden assigned to service providers Yankee Group data suggests that containing the provisioning and operational expense associated with managing IP services is critical to the business case Containing cost requires normalizing installation, remote diagnostic capability and remote management Page 6
7 Competitive Environment Broadband is a commodity Churn is a key issue for service providers Bundled with voice, mobile and TV services FREE! Provide a Total Broadband experience Easy to install and use new services and devices Single-support desks for all services Proving highly successful Page 7
8 Products and Services - Today Broadband Talk Broadband Talk Video IPTV BT Vision FMC BT Fusion Source: BT Security and Surveillance Broadband Data Help Desk and Remote Diagnostics Page 8
9 Products and Services Tomorrow? Health Monitoring The Car Managed White Goods Guest Access Energy Management Help Desk and Remote Diagnostics Source: BT Broadband Data Page 9
10 Key Technical Requirements for the Home Hub Latest Wi-Fi technology Fixed-mobile convergence BT Fusion Guest access QoS to prioritize services/users/wan LAN over intra LAN Hybrid of wired, wireless and existing wires, Home Network technologies Remote management and diagnostics Standards: Page 10
11 What We Need from a Home Hub Supplier Leaders in service/technology innovation Understand the Service Providers business Time to market with new features and services Flexibility of supply Minimum lead times Minimum volume commitment Flexible forecasting OEMs vs. ODMs OEMs for leading innovative products ODMs once these become commodity 3 rd Party Middleware for Home Hubs? We need a consistent look & feel For the customer For the help desk We need protocol consistency Either drive through product specification or by 3 rd party middleware Future role of Open Source Middleware Page 11
12 Key Challenges Provide innovative services that customers want Service Innovation Simple to install and use for the customer Ease of Use Within a Regulatory Framework Cost-effective for both customer and SP Cost- Effective Source: BT Page 12
13 Move from Broadband Building Blocks to Residential Gateway System on Chip (RG SOC) Centric Solutions During the first 10 years of broadband industry, TI has shipped more than 250 million broadband components (110 million+ DSL/cable CPE modems, 60 million+ DSL CO modems, 30 million+ VoIP CPE subsystems, 50 million+ WLAN chipsets). For the next 10 years we will move from building block or first-generation SOC to true single-chip service delivery platforms that merge technology from multiple industry segments to enable new services at ever decreasing system cost points. FIRST 10 YEARS NEXT 10 YEARS Page 13
14 The Target.. Enabling IP Services and Fully Connected Home Advanced and Convergence Voice IP Phone Remote Medical Monitoring and Assistance Internet Voice Mass Storage Printing Home Security Intrusion, Fire and Gas Leak Music/ Radio Remote Failure Diagnosis Energy Savings and House Configuration Blinds, Doors and Windows Lighting TV Gaming Home Remote Visioning Electricity Metering and Usage Tracking Gas and Water Metering and Usage Tracking Triple Play Beyond Triple Play Well-Being/ Monitoring Home Automation Electric Appliances Home Automation Electric-To-Be Source: Texas Instruments Page 14
15 TI Residential Gateway Solutions: Fast, Flexible Processing for Any Application An open, scalable platform, optimized for home communication and entertainment Variants supporting a wide-range WAN xdsl, DOCSISx, xpon, Ethernet Ever-increasing packet performance TI s volume solutions 25K-50K pps routing TI s 2007 solutions 100K-200K pps routing TI s 2008 solutions 500K pps + routing Supporting any home LAN 10/100/1G Ethernet, USB 1 or 2, USB host or slave, x, HPNA, MoCA, HomePlug, UPA, wusb Enabling any IP service HSI, VoIP, IPTV, storage, monitoring Page 15
16 TI s Track Record for Enabling Innovation Manageability Initiatives Support for SNMP1/2/3, Clear EOC and TR-069 on DSL Created TurboDOX to speed up FTP transfers over cable PIQUA for voice delivery (end-to-end QoS) Integration of battery backup into RG TI RG Platforms TI RG Platforms TI RG Platforms TI RG Platforms Enhanced Service Initiatives Enabled over 25Mu Cable EMTA Enabled over 30Mu DSL wireless routers Single chip programmable STB solution FMC with home gateway TI RG Platforms TI RG Platforms TI DAVINCI Platforms TI RG and OMAP Platforms Page 16
17 Tomorrow s Services that Are Being Developed Today Manageability Initiatives PIQUA for video delivery Support for EFM framing over DSL Wideband voice and GSM codecs embedded in gateways Enhanced Service Initiatives IP cameras that provide event recognition Add transcoding into STB to support mapping of framing formats and local advertisement insertion Integration of home automation with Zigbee technology utilizing TR-069 for manageability TI RG and DAVINCI Platforms TI RG Platforms TI RG Platforms TI DAVINCI Platforms TI DAVINCI Platforms TI RG Platforms Page 17
18 Recent and Upcoming Research Yankee Group DecisionNotes SM DSL CPE Shipments Driven by Increased Gateway Functionality, April 2006 Equipment Installation and Support Cost DSL Providers Billions Every Year, January 2006 Yankee Group Reports Turning Content into Services: The Next Generation of IPTV, June 2006 Exploring VoIP Lifecycle and Operational Costs, May 2006 Free Whitepaper Offer from Texas Instruments Download Today! Residential Gateways and Embedded Systems: Adaptability in a Diverse Marketplace Page 18
19 Thank You Boyd Peterson Senior Vice President Consumer Research Bob Bissell Consultant CTO Group, BT Kurt Eckles Director of Marketing, Residential Gateway and Embedded Systems DSP Systems, Texas Instruments Come and visit us at one of our upcoming Live! events or tune in to one of our free webinars. December December 4-8 ITU Telecom Forum (event); Hong Kong January, 2007 January 8-11, 2007 First Annual Mobile Broadband and Content TechZone at CES (event); Las Vegas, NV For schedules, please visit our web site: Page 19
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