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Last month, SES Americom launched IP-PRIME, its long-awaited, "turnkey," end-to-end, MPEG-4-based IPTV solution, which it is initially targeting at tier-two and tier-three telcos. SES Americom’s SVP of media partnerships, Bill Squadron, recently spoke to [itvt]’s Tracy Swedlow about the advantages that the company claims for IP-PRIME; about the partnerships behind the solution; about the challenges the company had to overcome in order to assemble an MPEG-4-based IPTV platform; about the company’s interest in eventually marketing IP-PRIME to cable and satellite TV operators; about its plans to add interactive TV, VOD and DVR functionality to the solution; and much more.

[itvt]: Could you explain to us what IP-PRIME is?

Squadron: IP-PRIME is a fully managed solution for IP television that SES Americom has been developing over the past 18 to 24 months. It will enable a very centralized, economical offering for any operator interested in providing a state-of-the-art MPEG-4 IPTV system. In these early stages, at least, its target market will be telephone companies that are moving quickly toward IPTV.

Those companies can take advantage of tremendous flexibility that results from the way that IP-PRIME has been designed. Since it’s a modular and flexible system, operators can either opt to use the entire, turnkey, end-to-end solution, which provides all the elements of an IPTV system right through to the set-top box; or they can select from the individual elements within that solution, including the delivery of fully encoded/encrypted MPEG-4 programming packages to a headend. The transport/last-mile piece is handled by the telephone company or other operators.

So its main selling points are that it is really state-of-the-art in terms of quality; that it offers tremendous economic efficiency, because of its centralization; and that it offers a lot of flexibility, in that it allows operators to deploy it wholesale or pick and choose from its various different components. Our trials of the solution have gone very well, and they’ve allowed us to fine-tune it. It’s now commercially available, and we’re ready to roll it out across the board.

[itvt]: According to your Web site, you offer "Transport Only" and "Fully Managed" versions of IP-PRIME. Could you explain the difference between those two versions?

Squadron: Transport Only delivers a full line-up of national content to an operator’s headend, bulk-decrypts the channels, and hands off all the programming "in the clear" to the operator’s IPTV system–i.e., encryption, middleware and set-top boxes.

Fully Managed maintains encryption all the way to the operator’s set-top box, with SES managing the entitlement to programming via our IP-PRIME operations center in Vernon Valley, New Jersey. We have integrated multiple middleware and set-top box vendors into our managed solution, so the operator need not worry about interoperability of IPTV ecosystem partners.

[itvt]: Now, to date, very few MPEG-4-based IPTV systems have been deployed in the US…

Squadron: I would agree. We’re clearly pushing the boundary here. And every time you push out to the next level, there are going to be lots of issues to address and a lot of challenges to overcome. MPEG-4 is no different than any other new technology or service in that regard. So we’ve definitely spent the better part of the last two years working with various partners, developing the system, tweaking it, ironing out any difficulties, and getting it ready to be operational in a smooth, seamless and high-quality way.

Most of the difficulties are related to building a carrier-grade, fully redundant video operations center. You have to put the system together using multiple technologies (RF, video, MPEG-4, IP multicasting, etc.), sometimes using earlier releases of vendor products. We integrated multiple set-top box vendors with different middleware and CAS vendors, all the time making sure these systems work with different access technologies (ADSL2+, FTTP, etc.). We don’t have commercial customers, but the trials have gone well, and, in a matter of weeks, multiple telcos will launch commercial IPTV service with IP-PRIME.

Like any other significant new technology, once MPEG-4 IPTV does go through this extensive testing process, it then moves the bar to a much higher level. We’ve been extremely focused on ensuring that this is not just a system that works in the baseline sense of the word, but a system that provides just as high-quality video, just as much feature-availability, and just as much flexibility and robustness as what people are used to in fully baked systems, today–and that then also provides a platform for moving into the television world of tomorrow.

Of course, doing all that has definitely taken a little bit more time. Our goal never was simply to rush out a low-cost, low-end system, but to develop a high-end, high-quality system. The good news is that we’ve gone through the whole long, involved process that was required in order to do that. I think what has allowed us to be successful in bringing to market an end-to-end MPEG-4-based IPTV system, whereas some others in this field still haven’t gotten out of the starting gate, is the fact that SES Americom is a company with 30 years of experience–not only in the video business, but in the rocket science business, too. So we have a team of technicians and engineers who are really unparalleled in this industry, and who had the skills and experience to leverage our existing infrastructure in order to extend our business into the IPTV world.

[itvt]: Now you have a number of technology partners for IP-PRIME, correct?

Squadron: Yes. What we’ve done is we’ve tried to create an open platform. So, in addition to the partners we’ve launched with, we expect that many other companies will eventually be part of the IP-PRIME ecosystem, and will want to be among the options that we offer to the telephone companies. Our initial partners include Scientific-Atlanta and Amino on the set-top box level; and Siemens-Myrio and NDS on the middleware level–so our customers currently have two middleware options: Siemens-Myrio’s Total Manage and NDS’s Synamedia Metro, and we plan to add other middleware products to our ecosystem in the future, given the open design of IP-PRIME. NDS is also our encryption partner, so we’re working very closely with them. We also have very close working relationships with Cisco, Alcatel-Lucent and Harmonic. So all of those companies are part of what I would call our core service offering.

However, in developing IP-PRIME, we’ve tried to ensure that it’s a very neutral, open platform that any vendor that meets our standards of quality and commitment to excellence can be part of. This, of course, will allow us to offer multiple options on the distribution end. So, again, we can offer a full, end-to-end solution to a telephone company that doesn’t want to do any of the pieces on their own, because they have other things to worry about or because they have no experience with video; or we can offer individual elements of the solution to those companies that are willing to take on part of the process of offering IPTV on their own, and that might want IP-PRIME to work with equipment from vendors who aren’t part of our end-to-end solution. As I keep stressing, IP-PRIME has a lot of flexibility built into its design.

The way we’ve architected this solution means that we don’t have exclusive arrangements with our technology partners, and we’re not competing with those partners: IP-PRIME gives the various players in the industry the opportunity to work with us, without compromising other things that they’re doing in the same market. Our goal, really, has been to create an end-to-end facilitation capability: we have hundreds of programmers under transport agreements; we’ve got this major facility we’ve built out at Vernon Valley, with hundreds and hundreds of state-of-the-art Scientific-Atlanta MPEG-4 encoders; and we put all this programming up on our satellite–and obviously our satellite infrastructure and assets are a major advantage we have in the marketplace–for our customers to download. So vendors really have nothing to lose from working with us.

[itvt]: Now, you claim that this headend you operate in Vernon Valley, New Jersey…

Squadron: We prefer to think of it as a "super-headend."

[itvt]: You claim that using it is 90% less expensive for operators than building their own facility, correct?

Squadron: Yes. This super-headend was a major part of our initial vision; and it’s why we felt very optimistic about the business opportunity for us in this market.

Usually, if a small- or medium-sized operator wants to get into the IPTV business, it requires a major CapEx investment in encoders, in encryption, in receivers, in antennas and so forth, at their headend location or at their central office. This investment is usually on the magnitude of $5 million to $10 million–the reason why there’s a range is that it depends on the level of quality you want, the number of channels, and so forth.

What we’ve been able to do–by building this state-of-the-art facility once, and by being able to encode all of the channels once, and put them through whatever other intelligence or applications or features need to be applied, and by then putting them up in customized packages on our satellite so that they can be downloaded to the operator’s local central office–is this: instead of the operator having to make a $5 million to $10 million investment, all they now have to do is invest something in the range of half a million dollars for the equipment necessary to download our programming packages. So that’s how the 90% figure that you cited is derived: if you compare the $5 million investment that a telephone company would otherwise have to make with the half-million-dollar investment they have to make in order to use IP-PRIME, that’s a savings of around 90%.

Obviously, that’s a pretty significant amount. If you multiply it out by 10, 20, 50, or 100 headends, you’re talking about tremendous economies of scale that our super-headend in Vernon Valley is able to achieve for the industry.

Now, it is true that a telephone company could get into the IPTV business for a lower upfront cost than $5 million. But it could not do this at the same quality level that we can provide. That’s because we’ve invested in the highest-end set of equipment, the highest-end services, and the best-of-breed partners.

[itvt]: Could you talk a little about the thought process that led to SES Americom launching IP-PRIME?

Squadron: It all goes back to a decision that was made by the company 18 to 24 months ago, before I actually joined. People at the company realized that we had a number of advantages over anyone else wanting to get into this business–advantages that would allow the company to be a leader and clearly differentiate itself from others that might potentially try to provide these kinds of IPTV services.

One of those advantages is that we have a history of relationships on the programming side–and a history of dealing with video in general. SES Americom has been transporting television broadcast signals over our satellite network since the early 1970’s, and we work with all major programmers, television systems and operators in delivering high-quality, secure and reliable television service. We have also led the market in innovation on television transport, and have been pioneering technologies in this arena on such things as high-definition television and MPEG-4. Having existing experience in television and video is, obviously, a huge advantage–because, as you know, if you’re in the business of delivering television service, you can’t afford any downtime. If the screen goes black for even 10 seconds, the whole world goes, "What happened?"–as we saw recently during the last episode of "The Sopranos." So SES Americom could see that it was going to be absolutely essential that the telephone companies which would use our service–and which, obviously would have little or no experience with video–be completely confident that they could trust and rely on the company that was going to deliver their IPTV services. Clearly, then, the fact that we had real experience in the television industry was a major consideration in our developing IP-PRIME.

Another major advantage we felt we had was that we already had significant satellite assets and experience. We’ve got a whole set of C-band inventory that’s accessible to us, and we also have significant expertise in terms of distribution over satellite. Because satellite is the perfect delivery mechanism for the kind of point-to-multipoint distribution that our super-headend/turnkey end-to-end model entails, we felt we had a real advantage over almost anyone else wanting to get into this industry.

And then the third advantage that I think really sets us apart is something I touched on very briefly before. That is that we already have a team of engineers and scientists and technicians and operators who understand what it takes to put a business like this together, and to support it. That’s a huge benefit–especially when you’re dealing with something that’s new and relatively untried in the marketplace, like MPEG-4 IPTV. Because when you’re doing something new like this, you’re constantly going to be dealing with new challenges.

[itvt]: Where are you guys planning to take IP-PRIME in the future?

Squadron: Well, while IP-PRIME will begin simply by delivering MPEG-4 IPTV to telephone company set-top boxes, the strength of this super-headend we’ve put together is that it can ingest content from any source–be it a domestic cable network, an international channel, short- form or long-form user-generated programming, gaming programming, archived programming, and so on–format it, and then distribute it to any media platform. So, for example, we’re using our super-headend to support a 24-channel DVB-H mobile video trial in Las Vegas that’s going to begin later this summer.

[itvt]: Who are your partners for this trial?

Squadron: Our partner in the trial is a company called Hiwire; and we’re going to be working with T-Mobile. Two UHF channels are being devoted to the trial, and, basically, the trial will involve the delivery of more linear programming than has ever been experimented with on a mobile phone.

[itvt]: Do you also plan to offer interactive TV applications as part of IP-PRIME?

Squadron: Absolutely. The plan is, over time, to take full advantage of the IP foundation, in order to allow consumers to enjoy the full benefits that it can deliver. Now, will that be available right out of the box? Certainly not. But within the next 12 to 24 months, now that we have our core system up and running smoothly, commercially available, and delivering video of exceptional quality, the next step will be to layer in all of those features that the IP format allows you to do. And, as you know, much of the hype and promise of interactive TV that people have been talking about for years is finally going to be realized, thanks to the IP format. Once you install an IP network for all services, you thereby enable not only traditional interactive services, such as gaming, caller-ID on the TV screen etc.; you also enable future interactive services, such as user-defined walled-garden apps–weather, traffic reports, school lunch menus, classified ads, etc.–that can enhance the community experience for consumers.

[itvt]: Two major interactive TV companies, NDS and Tandberg Television, are existing IP-PRIME partners. Can we assume that you’ll be working with them on the development of interactive TV applications for the platform?

Squadron: SES has gone to great lengths, and expense, to make sure IP-PRIME is an open, IP-based system–open in the sense that we support existing and emerging applications conforming to broadband IP standard interfaces: not just interactive TV, but interactive media. NDS and Tandberg are just two of the many companies that will contribute to our overall solution.

[itvt]: Is IP-PRIME compatible with Microsoft’s IPTV offering?

Squadron: Yes, while Siemens-Myrio is our current flagship middleware, with Synamedia Metro close behind, IP-PRIME is complementary to Microsoft, and we have demonstrated interoperability both in vendor and customer–in this case, large telco–labs.

[itvt]: Now, presumably the cable and satellite industries are at some point in the future going to move toward the MPEG-4 IPTV model…

Squadron: Exactly. And our goal is that, once cable moves from MPEG-2 to MPEG-4 and begins to look at deploying MPEG-4 IPTV systems, that they should seriously consider working with us for all or part of that upgrade, rather than having to make the substantial investment themselves that that upgrade is going to require. We believe that we are going to be the premier provider of the ability to facilitate this kind of service.

Part of the reason we’ve made such a major investment in building out this super-headend in Vernon Valley is because, even though right now it’s the telephone companies that are showing a lot of foresight in leading the move to MPEG-4 IPTV, we think the entire industry is eventually going to move in this direction. That’s because it simply makes the most sense.

[itvt]: Yet it seems like people have been talking about the cable industry making that switch for years, and still…

Squadron: Well, things never happen as quickly as people predict they will. Yet things happen incredibly quickly when they’re looked at with hindsight. I think this will be no different. I think people will turn around 10 years from now and say, "I can’t believe how quickly we moved from traditional cable and traditional DTH systems to a world where IPTV is the standard." Whereas today, people are still saying, "I can’t believe we’re still just getting out of the box." That’s just the typical pattern for pretty much all the new technologies we’ve seen over the last 20 years.

[itvt]: Now, I would have thought that if SES Americom is planning on targeting the cable MSO’s with IP-PRIME, you’re presumably going to be running up against the cable industry’s historic preference to do things in-house…

Squadron: That’s true. I would agree with you that the larger players across the industry–not just in cable, but in the telco space as well, where Verizon and AT&T, for example, have made major investments in developing their own infrastructure–tend to have the resources and the confidence to be able to implement MPEG-4 IPTV on their own.

Nevertheless, there are things that a flexible system like IP-PRIME can do that we think will make it of interest even to cable companies and telephone companies that have a strong institutional bias in favor of developing new platforms in-house. For example, providing redundancy, backup, incremental channels, and incremental services. So we’re definitely talking to absolutely everyone about how IP-PRIME can fit into their plans. So, even though for these larger companies we may not end up providing an end-to-end solution such as we would do for smaller companies, we expect we’ll still end up providing various key parts of their systems, or at least somehow functioning in a support role for those systems.

[itvt]: So SES Americom’s business plan for IP-PRIME foresees you targeting other players than tier-two and tier-three telcos with the solution…

Squadron: I guess how I would characterize it is that we are currently working very closely with the tier-two and tier-three telcos because, at the moment at least, they are clearly the ones who are leading the charge into the MPEG-4 IPTV space. And, of course, we’re very please to work with them. But I do think there is a lot of room for us to work in various ways with the cable industry, as I just mentioned, and also with the satellite industry. The ultimate goal of IP-PRIME is really to be a supporting partner and facilitator for any of the entities that are eventually going to be moving into the MPEG-4 IPTV space.

[itvt]: Could you briefly outline the business case for why a large cable MSO or satellite company might work with you to implement a switch to MPEG-4 IPTV?

Squadron: Simple: economics (CapEx and OpEx), quality-of-service, and time-to-market. IP-PRIME clearly wins on all these, compared to building your own MPEG-4 headend. Even if MPEG-4 encoders were free, IP-PRIME would still offer significant savings over the build strategy.

[itvt]: You have partnerships in place with a number of programmers, correct?

Squadron: Yes. We have transport agreements in place with virtually every major programmer. In fact, there’s only one that we don’t yet have–HBO–but we’re in the final stages of working out a deal with them too. Now lining up all these agreements took a lot of time, simply because MPEG-4 IPTV is new to the programmers. We’re asking them to entrust their signals to us, and, naturally, they wanted to be sure that we were going to handle them properly and that their quality was going to be maintained and that we had effective security in place.

So they definitely put us through our paces, in terms of testing us and making sure that our system could withstand any kind of challenge. We occasionally had to tweak our system to meet their needs: for example, we put in place a very sophisticated blackout system to handle sports blackouts. But the end result of all this is that the programmers now are confident that we’ve devoted the necessary resources to ensuring that our systems are really tight–and we now have deals in place with pretty much everyone.

By the way, just for the sake of clarity, I should point out that, while we have put all the transport agreements in place, the telcos that use our service do the actual carriage deals themselves–either directly with the programmers, or through an aggregator. Also, as you may know, we have a deal with the NRTC, which does carriage deals on behalf of its members.

[itvt]: How many HD channels are you offering?

Squadron: We currently have over 20 HD channels and we’re adding them on a regular basis. That’s in addition to 250 SD channels, and 100 music channels. So we have a total of around 370 channels, and that number is going up all the time.

[itvt]: Are you planning to offer DVR service?

Squadron: We’re actually planning to offer our clients a number of different DVR options. That’s in the works, and DVR service should be part of the system very shortly.

[itvt]: Are you planning on offering some kind of VOD service as part of IP-PRIME?

Squadron: We will soon have a complete VOD service within IP-PRIME, including content from multiple sources.

[itvt]: Do you feel that the relative lack of standards in the IPTV space is a problem for the industry?

Squadron: There are many advantages of IP media networks–and one of the primary advantages is the existence of standard interfaces. With momentum building for IPTV solutions specifically, you’ll see rapid development and adoption of standards needed to further drive the industry. In the meantime, SES Americom is working with our IP-PRIME technology partners to ensure interoperability and compliance with open standards.

[itvt]: Do you have any plans to offer IP-PRIME outside the US?

Squadron: We are bound by the transport agreements we negotiated with programmers, and right now they restrict delivery to within the US. SES Americom has the capability of delivering service outside of the US and, should our programming partners allow us, we will expand the service delivery area for IP-PRIME. On the other hand, we have a substantial number of distribution relationships with programmers in other countries, and we plan to add a compelling international line-up of programs to IP-PRIME.

[itvt]: What kinds of announcements about IP-PRIME should we expect to hear from SES Americom in the coming months?

Squadron: You can expect a lot of news about IP-PRIME. We just announced at NXTcomm that the service is now commercially available for telcos, cable operators and private networks. I suspect you’ll see announcements regarding new customers, service enhancements, new programmers, and new technology partners coming out throughout the rest of this year.

URL: SES-Americom

Originally Published: July 2, 2007 in [itvt] Issue 7.35

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