2 Ways are better than one: Broadband, ASPs ripen fruits of two-way video

Just as streaming video and voice over IP have found their groove in value-added applications on the Internet, two-way videoconferencing is undergoing a revolution of its own. Two-way video finally is breaking free from the shackles of ISDN to take advantage of the ubiquity and reach of IP and the bandwidth of broadband Internet.

Analysts long have forecast that voice, video and data would converge over IP-based networks. But there always has been the caveat that IP networks will require more intelligence to handle multimedia applications with the needed quality of service (QOS). Industry opinion and practice seem to be diverging on this matter, however, and two-way video is the beneficiary.

All the moons are aligning. Bandwidth in the core of the Internet is doubling every six to nine months. The cost of high-speed Internet access is plummeting. New video technologies based on the ITU-T's H.323 standard are reducing the cost of end-point equipment.

But what about QOS and latency issues? The Internet remains too slow for much more than jerky videoconferencing on small viewing screens. But quality issues can evaporate. By dedicating more bandwidth, as can be done on a private corporate backbone or by using a managed service on the broadband Internet through new-breed application service providers (ASPs) offering video portals, one can match the quality of traditional ISDN at about one-third the overall cost with more benefits.

For mainstream business users, this could offer a way to orchestrate videoconferences from the desktop as easily as making phone calls, adding or dropping participants on the fly with a mouse click. For service providers, it means a profit-making new differentiator - the chance to tap into a deep revenue lode from the Internet's next business killer app.

In the deregulated IP world, live, high-quality, two-way video becomes viable and affordable via ASPs for virtually any business, with bandwidth-plentiful DSL reaching more than 50 million homes and businesses and high-speed synchronous options such as symmetrical DSL and very high bit-rate DSL emerging (Figure 1). There's even wireless broadband at speeds up to 155 Mb/s in the last mile. Bundle this with a price point any business can afford, eliminate the networking headache for the enterprise and match the quality of circuit-switched ISDN, and two-way video services can flourish.

Conquering the complexity

Enterprises have been reluctant to embrace IP video networks for the same reasons that they shied away from voice-over-IP applications: complexity.

Unlike circuit-switched video networks that use ISDN or ATM, which essentially are separate from data, mixing IP video packets with data adds risks and networking complexity that IT managers hesitate to tackle. A major concern is network security when deploying H.323 video on an enterprise network because it usually requires router upgrades or punching a big hole in the firewall. For these reasons, two-way IP video more likely will follow the popular path blazed by voice-over-IP deployment: outsourced services from service providers.

Consider the parallel. Voice over IP has seen limited success when enterprises face buying equipment and deploying it on their networks. Despite the falling cost of bandwidth, the short-term savings of toll-bypass are marginal when you include the costs of equipment, resources and additional management. As for replacing the trusty PBX with a soft PBX, think again. Few telecom managers, for instance, will expose their companies to the liability of an injured employee who can't be located by emergency services because of the absence of a 911-compliant solution.

Nevertheless, voice over IP is finding success in enabling new applications and making existing ones easier and cheaper. With little fanfare, the emergence of voice over IP as an enabling technology to enhance other applications or in newfound applications is driving equipment sales of voice-over-IP gateways into the broadband infrastructure. For example, Web fax and Web phone applications tied to directory services or buddy lists and integrated into leading portals are gaining momentum, and enterprises are beginning to enable Web sites with voice over IP to link call centers to online storefronts.

The key to voice over IP's early success is that enterprises don't have to make investment decisions or alter their networks because such services are mainly delivered by new-breed providers looking to differentiate themselves. While traditional ISPs focus on selling high-speed Internet access and gaining market share, these new ASPs develop new solutions around core IP technology and offer them as hosted services for other providers to add to their portfolios.

Timing is key and service providers realize there's no future in simply selling bandwidth. They know they must sell value-added services to differentiate themselves and preserve margins. Meanwhile, their enterprise customers have begun to recognize the merits of outsourcing ancillary and mission-critical applications.

Video springboard

In this new world, videoconferencing has made the evolutionary leap to the ASP model, thanks to the Web browser, new video technologies and the broadband Internet. The shift from expecting enterprises to buy, install and maintain complex systems to enterprises using the pay-as-you-go alternative managed by service providers is the springboard for mass adaptability.

The value is obvious. Few question the potential of two-way video communications to reduce travel costs, foster better relationships and facilitate business collaboration and distance learning. The average travel cost per business traveler is $9000 per year, making travel the third largest expense in most corporations, after payroll and information services, according to the National Business Travel Association. But the real cost is higher when you account for lost productivity and mismanaged projects resulting from employees unable to maintain priorities.

Unfortunately, the low reliability and high costs of traditional ISDN-based videoconferencing have prevented many companies from realizing the full benefits of their investments. This has stifled widespread acceptance of video as a standard business communication tool. Nonetheless, the videoconferencing equipment and services market is a multibillion dollar industry, with approximately $6 billion in revenue generated by service providers alone, from conference-bridging services and associated ISDN charges, according to a Perey Research report. With the emergence of the broadband Internet, two-way video is ripe for the ASP delivery model. Coincidentally, service providers are realizing its potential for generating premium revenue opportunities.

Broadband sponge

Broadband carriers are looking at ways to soak up bandwidth so they can sell bigger pipes to their customers. With the recent America Online/Time Warier merger, broadcast-quality MPEG-2 streaming video inevitably will be transported over the broadband Internet. Service providers have been scrambling to form alliances with content providers to ensure that they can play in this game. Two-way video is a natural progression from streaming audio and video - and perhaps as big an opportunity as broadcast-quality, one-way video.

With IP-based, two-way video service available, competitive local exchange carriers (Clicks) and other new-age carriers can immediately introduce profitable offerings priced to compete with existing ISDN videoconference bridging services (Figure 2). This will allow them to attract and convert former ISDN-based users to IP videoconferencing and related streaming applications. Expect that the lower-cost model and improved usability of an IP-based video service will spark more widespread use of two-way video within these enterprises and stimulate expansion from meeting rooms to the desktop.

As more service providers join the fray and two-way video at 384 kg/s becomes more ubiquitous, the price point will erode. But just as low bit-rate, one-way video is "super-sizing" to premium, broadcast-quality video, two-way video has its destiny in MPEG-2. Each successive increase in quality gives service providers the chance to sell fatter pipes. Market share, as always, will be a critical success factor, and innovative service providers already are snaring first-mover advantage in multimedia service offerings by forging relationships with two-way video ASPs and one-way video-content providers.

For businesses, these changes will mean the ability to easily conduct everything - from phone calls to critical data communications - over the broadband Internet, with two-way video as the centerpiece. The new model, in which the service provider is key, eventually could make ISDN videoconferencing obsolete.

Meanwhile, automated video gateways scattered around a service provider's network will provide the transparency needed to preserve ease of use while reaching the worldwide installed base. Instead of users typing in ISDN phone numbers, they can access integrated video services through video portals that will make using high-quality videoconferencing as easy as surfing the Web.

New ideas

For such a capability, an enterprise might buy a bundled service, similar to a cell phone model, which includes video-enabled PCs or video-enabling software along with a fixed number of minutes per month of videoconferencing. For service providers - including network access providers, interexchange carriers, CLECs and ISPs - this translates into a way of offering a new level of value-added services while tapping into another multimillion dollar revenue stream.

Video portals will provide a uniform interface to let end users initiate calls over a broadband IP network directly from their desktops. Browser-based and completely self-serviced, they will let subscribers define on the fly who will be on calls and who won't. By clicking on names in a directory service, callers could connect with others they want on the call. By choosing three names, three people would be set up. If a dozen were chosen, those 12 would be called.

Unlike today's videoconference bridging services, programming will be automated, without the requirement for administration by the service provider. It will just happen without the user seeing any of the apparent complexity today. Through the same video portals, users also will have access to an array of streaming video applications, some of which will be tightly integrated with the two-way video applications. They'll be able to replay stored video, such as a recorded employee meeting or third-party content, and receive live video streams such as a CNN feed or broadcasts of live events.

The delivery mechanism of IP-based, two-way videoconferencing over broadband as an outsourced service breaks down traditional acceptance barriers. It opens the videoconferencing market to millions of small and medium-sized businesses beyond the elite tens of thousands who could afford it in the past. Bottom line, business-quality video-over-IP has arrived. Catching up with longstanding expectations, for the first time it now has a real chance of becoming an everyday option for all and a ubiquitous communications tool of the future.