Cover Story: Who’s There?

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The cable TV industry is tantalizingly close to a solution for a digital problem that has already torpedoed the music industry and now cripples the newspaper industry. How do you get people to pay for your core service online?

“TV Everywhere,” the bold plan to let paying TV subscribers access programming online for no additional charge, has the backing of the largest cable operators in the U.S., as well as telcos and satellite companies. Comcast, in concert with two-dozen TV networks, is gearing up for a fourth-quarter launch of what it calls On Demand Online. Time Warner Cable and Verizon Communications’ FiOS TV are following with their own trials, while DirecTV and AT&T are actively exploring the concept.

But behind the ambitious claims and hopes for the new service, a prickly question threatens to undermine a business strategy that requires absolute harmony among its disparate players — just who, exactly, controls access to the customer?

Is the customer-access controlled by cable operators, whose pipes reach into the homes of subscribers, or by the networks, whose content draws the subscribers in the first place? Precisely how that question is answered — and how quickly the two sides can come to terms — will determine if and when the TV Everywhere vision is realized.

Programmers see TV Everywhere as a way to broaden their reach by letting viewers watch their content (and ads) in as many places as possible, while preserving their existing carriage fees. TV operators want to provide a “value-add” with Web video. However, they want to retain control over their subscribers and the services made available to them.

CBS Interactive president Quincy Smith, for one, imagines a system in which pay TV subscribers log in to a centralized service once and aren’t bothered again about providing their credentials, no matter where the video lives. That means a TV Everywhere user could hit a host of sites —“TV.com, Hulu, YouTube, you name it” — if a content owner wants to distribute its programs so broadly.

But if big distributors have their way, the services may end up being available less than everywhere. For example, the industry has yet to come up with a common way for how it will allow access to TV Everywhere sites from outside a subscriber’s home, so that a user name and password can’t be illicitly reused hundreds of times. Comcast’s first take of On Demand Online sidesteps this problem by being available only over its own broadband network.

Comcast, which counts CBS as the only broadcast partner in its On Demand Online trial, wanted to deliver authenticated Web video services the same way it delivers programming to the TV: Over its own broadband network, to its own devices (cable modems) and via its own guides (Fancast, Comcast.net). That’s the architecture the commercial version of On Demand Online will use initially.

Approached with Comcast’s plan, other media companies including Time Warner Inc. objected, wanting to preserve their own Web sites as direct-to-viewer promotional outlets. “It’s so important that the programmers build [TV Everywhere] into their own sites, because they don’t want to lose that branded experience with consumers in the long run,” said Jeremy Allaire, chairman and CEO of Brightcove, a provider of Web video-management services.

Comcast now says it’s committed in principle to the TV Everywhere idea that customers should be able to access content from programming partners wherever it’s available — eventually. But the operator has shed no light on how or when that will happen. (Comcast declined a request to be interviewed for this story.)

An industry-wide standard for TV Everywhere authentication would spur the rapid rollout of these services across multiple sites, with many content owners and distributors. Otherwise, a “closed” TV Everywhere system could slow down its spread because of the complexity involved in each programmer having to establish separate links with each distributor.

“The biggest question is, will this be available 'everywhere?’ ” Pali Research media analyst Rich Greenfield said. “To me, that’s the battle royal that is building among the players.”

The technologies to implement such a universal login for TV Everywhere are already available, technology executives say.

“This is not like surmising about the feasibility of time travel,” said Ben Weinberger, founder and CEO of Digitalsmiths, a startup that provides Internet-video management services.

But MSOs and other programming distributors have a disincentive to coalesce on a common framework, according to Will Richmond, an independent consultant and publisher of VideoNuze. That’s because they’re going to want to have their own versions of TV Everywhere as differentiators.

“I think everybody would agree that it would be a big win for consumers to have the authentication systems interoperate across all operators,” he said. “But I don’t see what the business motivation would be for them to make that happen.”

Moreover, getting the dozens of media companies that comprise the cable lineup to agree on a single process may yet prove impossible. Some big players, such as The Walt Disney Co., don’t even buy into TV Everywhere’s basic premise, arguing that they’d prefer to charge separate fees for Web content. “We are not seeing evidence of cord-cutting, so why be part of something which isn’t happening?” Walt Disney CEO Robert Iger said at a Fortune magazine conference in July.

Indeed, executives of the companies that own Hulu — Disney, NBC Universal and News Corp. — have floated suggestions recently that the Internet-TV site could institute its own subscription plans. In that case, of course, there’s no pay TV operator in the equation at all.

While proponents of TV Everywhere insist that the technology already exists for robust authentication, that’s no guarantee it will be rolled out.

Pay TV services have been behind authentication walls for decades, in the form of encrypted programming streams. Digital programming traverses a closed network and typically arrives at a dedicated piece of operator-supplied hardware (that is, a set-top box CableCard), which incorporates the ID that proves you’re a paying customer.

What makes the Internet different is its inherent openness. Content and applications on the Internet aren’t tied to any single network or end device. You can get to, say, Yahoo.com or CNN.com over any Internet-service provider’s connection using any standard browser.

For TV Everywhere, the technical challenge is how those third-party sites confirm someone is a paying customer in good standing, given that those details are maintained by the cable, satellite or telco TV providers. “The raw problem is you have hundreds of cable programmers ultimately trying to communicate to hundreds of distributors, if you count telcos and smaller cable operators,” said Turner Broadcasting System chief technology officer and chief digital technology strategist Scott Teissler.

Programmers and their affiliates also need a way to prevent fraud, Teissler said: “We don’t want someone to mail their password to 1,000 people.” Therefore, there’s a need to register and identify which subscriber devices are eligible to receive TV Everywhere.

Turner, for one — whether its approach ends up being widely adopted or not — has been trying to develop a solution to the problem that uses a centralized database for ID lookups.

“We think the best way to go would be to have a third-party intermediary, maybe more than one third party,” Teissler said.

Over the past several months, Teissler’s team at Turner has constructed a working proof-of-concept of an intermediary that authenticates subscribers, via a single interface, to programmers and a via single interface to distributors. According to an executive familiar with the project, Turner has tapped Adobe Systems to develop such a system. (Both companies declined to comment.)

TV Everywhere sites would perform the ID checks with the intermediary site in the background, once they recognized a registered browser or device — avoiding the hassle of requiring a subscriber to log in separately at each site.

“We want to determine someone’s level of service without having to keep asking him to log in,” Teissler said.

Alternatively, the pay TV industry could adopt one of the multiparty authentication schemes being promoted by two different consortiums: the OpenID Foundation, backed by Google, Facebook, IBM, Microsoft, Yahoo and others; and the Liberty Alliance, whose supporters include AOL, Intel, Oracle and BT Group. Time Warner Cable, in discussing its TV Everywhere plans, has previously said it was backing the Liberty authentication spec.

Teissler acknowledged that TV Everywhere services should probably use more than one authentication intermediary, ideally via common underlying protocols. That way, “if someone finds a way to subvert one means of authentication, you can rely on another,” he said.

Having multiple authentication entities also would spur competition among them, Teissler said. “Our theory is we ought to offer encouragement to technology companies that have some advantage in this. Then it’s up to them to sell themselves to programmers and distributors as the best way to handle authentication.”

Today, there is no standard way that cable operators and other TV distributors approach authentication for online services, said Bob Bowman, CEO of MLB Advanced Media. Major League Baseball’s online arm is working with Cablevision Systems and Verizon to offer each operator’s New York-area subscribers access to New York Yankees baseball games online for an extra fee, and has a similar arrangement to sell Cox Communications subscribers broadband access to San Diego Padres telecasts.

“If there were a voluntary [authentication] standard that everyone followed, it would make it easier for everyone,” Bowman said. “In the end, the goal is to confirm what we think is true — that a subscriber is who he says he is — but to make it as quick and easy as possible. It’s not about us. It’s more about the user.”

Identifying that user properly is at the heart of the industry’s challenge, a problem which could affect the pace at which programmers can connect with distribution partners.

It’s simply too unwieldy to manage dozens of different subscriber-authentication mechanisms, said Jim Turner, vice president of product management at Synacor, a provider of Web portal services and content that is involved with several TV Everywhere trials with cable operators.

“There can’t be 15 different ways to do this,” he said.

TEST PATTERN
Where various operators stand on “TV Everywhere”:

Comcast: Launched 5,000-home trial in July with content from 24 networks via Fancast and Comcast.net to participating users; expects to launch initial version commercially before year-end

Time Warner Cable: Announced deals with 12 programmers, with plans to initiate beta test an initial service with 5,000 subs before end of 2009

Verizon: Initiated test in August with TBS and TNT, offering 500 FiOS TV subscribers content through TNT.tv and TBS.com

AT&T: Launched video portal this month with free content and has said it is “actively building an authentication system” to let subscribers access TV shows online and on mobile devices, from programmers’ sites and its own

DirecTV: Has reportedly reached an agreement with Time Warner Inc. to provide TBS and TNT shows online, but has not announced details of subscriber tests

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