Decisions, Decisions: Digital data broadcasting can provide new revenue streams for telcos, cable companies and DBS service providers

Telephone and cable companies share a challenge: mastering video technology to survive amid increasing competition for viewers. Telcos, long accustomed to distributing voice and data digitally, face new technical and management issues as they move into video. And cable companies, steeped in analog, must learn and work quickly as they get ready to distribute programs in the new format.

For all video service providers-direct broadcast satellite, broadcast cable or telco-digital broadcast technology can be a boon if implemented with a sound strategy. Speed to market will count, but profits will come from delivering the right services to the right markets.

Digital broadcasting technology enables service providers to deliver as many as 10 television channels at equal or higher quality levels in the bandwidth needed for a single analog channel. Visual and audio quality options are available up to and including high-definition TV levels.

Digital broadcasting allows companies to deliver advanced image and graphics enhancement with techniques that have been developed during the past 10 to 15 yea rs. It supports the combination of conventional video programming with data applications to support a wide range of services and applications, including interactive advertising and a tighter integration of national advertising with local advertisements.

Digital technology also helps companies reduce costs by eliminating outdated, expensive processes for storing, managing and distributing video. Intranets, for example, can replace express mail, and video servers can replace the videotape cart. The risk of implementing new services can be minimized by offering and testing each new digital service with a limited audience to gauge market acceptance while generating new revenue streams. A company can implement digital technology incrementally so it won't be left holding the bag if one of its ventures stalls.

Video distribution Digital video distribution systems are much like the high-end sound systems assembled by audiophiles who pore over wattage and signal-to-noise specifications, selecting CD players, speakers and tuners from a variety of manufacturers. The key elements in a fully digitized video and data transmission system, however, include the video server, the digital library, spot insertion and digital data broadcasting.

The video server. This computer-based server should be fully compatible with industry standards for television signals, including NTSC and PAL, and digital networks, including asynchronous transfer mode and TCP/IP. It should accept selectable MPEG encoding formats and provide MPEG stream outputs, as well as ATM Forum-compliant MPEG input and output streaming. The server should be able to distribute the content in digital, analog or both formats at once.

The video server can be scaled to fit the carrier's needs-which could be something as simple as a replacement for traditional videotape units or as complex as a full-function digital video distributor for a network. The server can be customized to support new services such as impulse pay-per-view, near-video-on-demand and, sometime in the future, real-time video-on-demand. The server should provide unprecedented reliability with hot spares, fully mirrored software and hot standby on dual systems.

The digital library. Digital library technology enables a distribution company to harness the value of vast amounts of video and data. At its core are search servers that manage and catalog information and provide secured access. The digital content, stored in object servers, is indexed and catalogued for users to search, view and retrieve. The digital library is used as an index and source for the content assembled and played out from the video server.

Spot insertion. In a centrally managed local spot advertisement insertion system, all data in the system is managed and processed at a central site, then distributed by satellite or terrestrially to remote sites. There, unattended computers receive program material and spots in precisely timed transmissions at electronic speed. This guarantees that spots submitted by deadline will arrive in time for a successful broadcast and eliminates the need to rely on remote operator skills or intervention.

Digital data broadcasting. Digital data broadcasting technology is opening up an extensive array of new media services. Large volumes of data-news, community information, education, home shopping and even pre-selected pages from the Internet-can be delivered to audiences of all sizes, down to the theoretical audience of one.

Various forms of digital data broadcast are emerging from vendors active in the digital video market. One example is using the vertical blanking interval in analog broadcasts to carry limited content at relatively slow data rates. A more sophisticated approach, such as IBM's LogiCast, uses digital data within an MPEG stream to deliver information at high data rates to today's digital set-top boxes. A third approach sends data to digital video-enabled PCs.

The digital data broadcast carousel technique, which can be used to support all these approaches, is a means of presenting interactive content to users. It systematically provides large numbers of individual serial data streams, repetitively broadcast on multiple channels. Using a remote control, the user is guided by menus to the desired information and can tap into the appropriate data (Figure 1).

Digital data broadcast enables a viewer, attracted by an ad on a television broadcast, to access related information from the data carousel, selecting the pertinent "page" from the data stream and interacting with Internet-style presentations. Information about user interactions with ads can be captured to gauge their effectiveness. Another potential application is an electronic program guide that enables a user to point and click to access a program.

Since the set-top box is interacting only with the broadcast stream, many applications can be supported without a return channel from the set-top to the server. This minimizes the cost of the set-top and eliminates the need to upgrade the transmission infrastructure to support two-way communication or to use a telephone line for the return path. The servers furnishing the broadcast data do not need to interact with the individual users, so their operation is unaffected by the number of active users.

The digital business model To make the most of these opportunities, a telephone or cable company must craft its business model in ways that managers may find somewhat unfamiliar. A telco can exceed its universal service marketing mandate and offer optional services to specific audiences wherever it finds them. A cable company can go beyond being a source of entertainment and generate new revenue streams by providing multiple services to select audiences.

But these companies can't be all things to all customers. They should test new service offerings in "live markets" at relatively low investment levels, then analyze and segment their markets. By learning which services people will pay for and how much they will spend, a company can discover the market-based purpose for building a system vs. building a system and looking for ways to use it.

As they enter the new digital environment, video service providers will need to forge effective business alliances. Since many of the products and services now in the digital pipeline are untested, carriers should consider looking for partners experienced in the marketplace. These partners would help them make the right choices from among the mounting technology options and help integrate those systems so they will work together efficiently to ensure success in the digital future.