Debating VOD Costs

Internet Photonics Inc.’s (IPI’s) deal with Buckeye Cablevision to provide infrastructure for the operator’s rollout of video-on-demand (VOD), consumer data and enterprise services is a clear indicator of the industry’s desire to cut costs by consolidating as many services as possible onto a single network. The key advantage of the approach, says Buckeye Cablevision CTO Joe Jensen, is the flexibility that will enable Buckeye’s commercial and residential businesses to evolve without worrying about capacity or management issues each time a service is introduced. Currently, Buckeye serves about 135,000 video subs and 28,000 modem customers in Toledo, Ohio, and another 20,000 subscribers in the Sandusky area. It has about 900 buildings on its fiber network as well. Jensen also is president of Buckeye TeleSystem. “We were really looking for a solution to a multifaceted problem,” Jensen says. “We had growth on the interactive side and are planning a VOD launch. We need to support datacom connectivity, and we also need to provide data and voice services for our commercial telephone customers, all on the same network.” IPI’s approach is to take traffic—Ethernet in the case of VOD, synchronous optical network (SONET) in the case of telephony—and map it directly onto a wavelength, says Gary Southwell, IPI’s vice president of marketing. In the Buckeye project, IPI is providing the potential for an extremely high level of bandwidth. Using dense coarse and wavelength division multiplexing (DWDM and CWDM), each fiber can carry a maximum of 128 Gbps of data. That number will be doubled soon. Buckeye’s rings have either 48 or 96 fibers. Concentrated servers According to IPI, the 10 Gbps of capacity and switching capabilities will enable servers to be more centrally concentrated while delivering a greater number of movie choices to subscribers. The system also will be utilized to provide telephony services and commercial data services. This is the second announced deal for IPI. The company is providing networking services to Cablevision in the New York City metropolitan area. That deal was announced last year. The company says it has four other rollouts that it will announce over the next couple of months. Elsewhere in the news IPI is not the only player with cable transport news. Here’s a brief rundown: · Scientific-Atlanta has added VOD transport cards to its Prisma IP multiservice digital transport platform. It also announced that Time Warner Cable Charlotte is using Prisma IP to deliver high-speed data and “dedicated access” commercial services in North Carolina; and that Oceanic Time Warner Cable is using Prisma DT digital transport to interconnect video and data services in Hawaii.
· Luminous Networks, which works with S-A, offers resilient packet ring (RPR) technology. RPR harnesses the attributes of Ethernet in a platform robust enough for the WAN. Last month, Luminous widened its flagship product, PacketWave, beyond Ethernet. The new product, PacketStream, can carry SONET/SDH traffic, says President and CEO Alex Naqvi.
· Optinel Systems introduced the PLEXiS 10 Gbps. The product, which extends the PLEXiS suite, is available in bi- and uni-directional configurations.
· Movaz Networks, which provides infrastructure based on WDM, has new agreements with two operators and is shipping products to a third, says Gaylord Hart, the vice president of development for MSO markets. The coming consolidation of networks presents “a tremendous opportunity because it solves a lot of problems and allows cable operators to readily consolidate headends and it lowers costs for service delivery to the hubs.” —Carl Weinschenk   Operators have scrutinized video-on-demand (VOD) cost structure, but market entrants, such as Movidis, say it remains high. Bolstered by the adoption of software based upon assets acquired from defunct Diva Systems, Movidis emerged from stealth mode to announce pricing of production systems at $89 per stream and an entry level evaluation price of a system that scales up to 400 streams at just under $15,000. Depending on VOD architecture, the per-stream price could drop further. “The buzz is, ‘Can you detach stream from storage?’ And we’ve done that from the beginning,” Keith Beckwith, Movidis vice president of sales and marketing, says. Using video pumps alone reduces the per- stream costs to about $60. Smaller systems? Incumbent vendors demur on the idea of VOD being too expensive. “The cost per stream is plummeting. Automation is making the business far less costly and more dynamic—not just movies but capturing local broadcast content—and content like SVOD is establishing ready-made offerings for operators without the big media relationships,” Jim Sheehan, SeaChange International spokesman, says. He also points to SeaChange’s collaboration with smaller operators, such as Advanced Cable in Florida, suggesting that VOD is within the means of MSOs traditionally regarded as more cash-strapped than their larger brethren.
On the transport side, Nimrod Ben-Natan, senior director of cable solutions for Harmonic, says that centralizing the fixed costs and extending the cost per stream across a wide number of subs (via fiber) makes VOD reasonable for most systems. He also admits that detaching storage from streaming is architecturally attractive, but raises concerns about doing so on the basis of proprietary technology. There nonetheless remain systems that have trouble cracking this nut. Take Cable One, for instance. Is it the cost structure, value proposition, lack of fiber interconnects, low number of subs per headend? “All of the above,” Steve Fox, Cable One vice president of digital services and IT, says. On the other hand, Fox says The Washington-Post owned MSO is “pursuing” DVR technology. —Jonathan Tombes