Mariner Navigates HD Upgrades

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Mariner has
been working with phone companies launching Internet-protocol television
service since 1997. Today, the
St. John, Canada-based company offers a variety of technologies for debugging
problems in IPTV networks, as well as consulting and integration services. Mariner
president, CEO and co-founder Curtis Howe talked with HD Update contributor George Winslow about some of the unique
problems facing telcos as they expand their high-definition offerings.

MCN: What are some of
the challenges facing telcos as they try to launch and then expand their HD
services?

Curtis Howe: I
think the tremendous increase in bandwidth that is necessary for HD is well-understood.
All of the operators anticipate that and know that it is a significant lift.

Curtis Howe

Beyond that, if you look at a complete architectural map of
the IPTV ecosystem, from headend to set-top, virtually every area is impacted.
The fact that there are so many moving parts in the network and the fact that
all of them are being changed at once creates some of the biggest challenges.

In a big telco, you can take the problems into a lab and you
run hundreds or thousands of regression tests until you debug these problems. But
in a smaller telco, you often don't have the luxury of a lab and you have limited
personnel to work with. We found the sheer number of components -- whether it
is software or hardware -- that change in the course of an HD upgrade [to be] a
major challenge.

MCN: How do your
products help deal with those issues?

CH: With our
technology, we have inverted the conventional and time-honored method of
monitoring and trouble-shooting an IP network. Rather than monitoring the
status of a particular network device or even a series of network devices, we
concentrate on understanding the quality of experience that is being delivered
into the home and we have a series of technologies help us understand that.

Our solutions are all software-based and can be downloaded
into the system to work with the middleware. If it is a Microsoft Mediaroom
system, we can piggy-back the existing Microsoft Mediaroom technology to assess
how well the service is working.

To do that, we go all the way to end of the delivery chain
and look at what is happening there. If you imagine putting low cost probes
into every single home, that is what we are doing. We harvest all that data and
correlate it to understand all the behavior of the network in each region, on
each node, on each channel. We can tell you how many people are watching a
particular channel and how many of them are getting a degraded service. We can
tell you within a particular home if all the TVs are getting a good signal, if
they can order video-on-demand, if the set-top box CPU is overloaded, etc.

So, we can go through an immense amount of data in real time
and map that onto the network typology to very quickly find and solve some very
elusive classes of problems that can take hours and hours the conventional way.

[Over time, we have also] built up a repository of case
studies. Based on those, we've found solving problems the conventional way take
153 minutes. But with our technology, we can get this down to a five minute
target.

MCN: What sort of
costs might those problems create for telcos compared to satellite and cable?

CH: There are
really two ways to measure the kind of issues I've been describing. You can look
at it through eye of network management or engineering. They describe the
problem in terms of the mean time to repair network outages and the duration of
those outages. We can help them by reducing mean time to repair, reducing
frequency of outages and severity of outages.

The other lens is the lens of the chief financial officer.
If you look at these problems through his or her eyes, you see those problems are
driving repair cost and customer dissatisfaction.

We've calibrated those costs from a number of different
systems that we've worked with in North America and we think we have one of the
best analysis and data bases around in terms of the frequency of customer
problems, the cost of addressing those problems and finally, if you are unsuccessful
in resolving them, the cost of churn.

Based on that analysis, we find that IPTV operators on
average are spending about two to three times as much in repair and the cost of
replacing lost customers as a result of churn as best in class cable. Obviously,
this is a real problem. We only know of one IPTV operator in North
America that claims to be break even on an EBITDA basis.

MCN: Do these higher
costs relate to the fact that the telcos are relatively inexperienced with
video or does the problem have to do with the complexity of IPTV networks?

CH: I would say a
great deal is related to the complexity of these networks.

If you just take home networks, we have seen problems caused
by everything from elevators to treadmills to doorbells. If you are trying to find
a problem like that remotely it is very difficult because they will often be
transient problems. They appear for a while and then they disappear. Or they
appear but only on certain channels or only on high definition channels.

And, when a consumer complains about them, they won't be
giving you a proper technical description of the problem. That makes it very
difficult for telcos that try to decode those complaints and look for patterns.
It becomes a case of garbage in, garbage out. If the customer gives you a very
ambiguous picture, then you get a very ambiguous analysis of what causes the
problem.

MCN: How important
has HD become for telcos?

CH: All the
telcos we have worked with want to get there. The question is, how and at what
price tag? We've seen operators who have implemented HD and enjoyed a more than
20% improvement in their penetration within 12 months of making the upgrade. We've
worked with a few midsized operators in that transition [who have] also seen
that HD has been very critical in terms of reducing churn.

Cable and satellite have really set a high bar here for the
rollout of HD and for the telcos, HD is now table stakes. You need to get at least
25% to 30% market share to have a reasonable hope of a payback on IPTV and we don't
believe you can get there without high definition any more.

And we think this is a sweet spot for us as a company. We
have a lot of experience using our tools to help operators make that transition
and we have customers who say that we've shaved four months off the transition.

MCN: How important is it for telcos to be able
to enhance the HD experience with newer features like whole-home digital video
recorders or interactivity?

CH: We are
finding that the whole-home DVR is one of the things that the operators see as
a big benefit of moving to Microsoft Mediaroom.

Beyond that, we think that the whole justification for
doing IP video is about the potential of interactive services. We've seen that
interactive services can be a surprising impact on churn, with as much as three-fourths
of a percentage point improvement in churn associated with adding interactive
services on top of broadcast and VOD.

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