| Vol. 18, No. 5 — November/December 2006 | ||
MHP at the Crossroads |
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By Barry Flynn Want to check whether you're entitled to free dental care or not? In Italy's Lombardy region, you can insert your 'citizen card'—an ID card carrying a computer chip—into your digital-terrestrial television (DTT) set-top box, link into the local health services database, and get the answer in a few seconds. Meanwhile, numerous Italian government information services can also be dialled up, just by pressing the red button on the remote control. The technology that makes that possible is the European Multimedia Home Platform (MHP) interactive TV standard, the core component of CableLabs' OCAP™ technology. According to Alberto Sigismondi, head of interactive TV at terrestrial network Mediaset, at the beginning of this year there were around 4.1 million DTT receivers in Italy, of which 97 per cent incorporate MHP. Today there are over 5 million. Sigismondi admits that the high penetration—equivalent to nearly a quarter of Italian households—is down to the government, in effect, initially heavily subsidizing the technology. But, he points out, “even after the subsidy ended, buyers continued to buy MHP boxes.” It's easy to see why. Acording to Sigismondi's calculations, the price of an MHP DTT set-top has come down from €390 ($517) in January 2004 to under €80 ($106) today. And, he claims, MHP makes DTT “the richest Italian TV platform in terms of interactivity so far.” Telenet, the Flemish cable operator, launched an MHP-based digital cable service in September 2005. Customers now have access to an MHP-enabled video-on-demand service, alongside other revenue-earning interactive applications that include voting (most recently, for the winner of the Eurovision Song Contest), and locating the best travel and real estate deals. The return-path is provided through a Euro Docsis-enabled EMTA (External Multimedia Terminal Adapter) that acts as the central node for the household's broadband Internet, telephony and digital television services. Telenet digital cable customers also have access to an MHP-enabled, 160 GB PVR, if they're prepared to pay €350 ($446) instead of the €199 ($254) required for a standard digital cable set-top box (this plugs into the EMTA). According to Piet Spiessens, Telenet's vice president of technology and strategy, the cable operator has already converted 14 per cent of its analogue cable customer base (equivalent to around 230,000 customers), and hopes to significantly increase that percentage by the end of this year. The rapid uptake no doubt has something to do with the fact that—although you have to buy the MHP box—the upgrade to digital from analogue does not incur an increased monthly subscription. “There's no increased fee for the basic digital service,” points out Spiessens. “You just have to buy the box and you get a certain amount of channels extra. You also get interactivity for free.” Italy and Flanders may, however, be the exceptions that prove the rule. Although a sizable number of other European countries are also broadcasting MHP services, or planning to, receiver sales have proved excruciatingly slow to take off (see table below). Peter MacAvock, executive director of the DVB Project Office, which managed MHP's standardisation, cites several reasons for this, the most significant of which is the legacy issue from the vertically-integrated pay-TV sector. “There's a very large operator there who is very good at providing turnkey systems for the pay-television environment, and that's OpenTV,” he points out. This has restricted MHP largely to the free-to-air terrestrial environment, where—by and large—no such legacy problem exists. But even here, MHP is struggling. “In that environment the MHP standard is a useful tool, but it would hardly be considered to be roaringly successful at this point in time,” concedes Macavock. “The vast majority of the applications […] seem to cover areas such as enhanced Teletext and things like that.” Moreover, declares Macavock, “what we have found is that [MHP] costs a lot of money to do and to do well, and unless you're involved in things like betting and things like that, it doesn't generate that much revenue.” This makes its adoption particularly problematic for those on limited resources, and explains why the European Broadcasting Union has so vociferously opposed Via Licensing's latest MHP licensing regime, which could imply fees of up to $100,000 a year for Europe's beleaguered public broadcasters. But Fintan McKiernan, senior vice president for global interactive IPTV solution sales at interactive TV specialists Digisoft.tv, says it's a mistake to believe MHP cannot make money for its users. He points to the rampant success of pay-per-view football matches on Italian DTT, which can be ordered through an onscreen interactive MHP application by viewers using pre-paid smartcards which slot into the box's smartcard reader. ”The idea that they can go out and buy a couple of cards in the newspaper kiosk for three Euros and I can watch the soccer match I want to watch for three Euros rather than have to have a basic [Sky Italia] subscription with an add-on sub just to watch one match—that's a killer app, actually,” claims McKiernan. “That's a big future revenue generator.” Mediaset alone made €61 million ($81 million) in net revenues from this type of MHP-based pay-per-view (PPV) application in the first nine months of 2006, according to recent company figures. As at the end of October, the company had supplied nearly two and a half million PPV smart-cards to retailers to be sold on to football fans. But can the success of the Italian model be replicated elsewhere? McKiernan admits that the Italians, who are big on pre-paid cards for cellphones, are particularly culturally receptive to schemes which allow them to sidestep monthly subscriptions. But there are other aspects of the Italian experience which have a pan-European application, he argues. For instance, Italy's subsidy for interactive TV receivers arose from a European Commission (EC) push to have all EU government services available online by 2006. “Not everybody has a PC or a laptop. But pretty much, in Europe, it's fair to say that everybody has a TV,” he remarks. That fact accounted for the Italian initiative, and it should provide an incentive to other EU member states, too, he reckons. If their governments “produce their services through applications on television, they've completely delivered the required response to the EC's mandate to have all services available to all their citizens electronically,” he suggests. Unfortunately, it remains unclear whether the particular type of subsidy adopted by the Italians is sufficiently platform-neutral to be allowable under European competition law. Indeed, the scheme in question is currently the subject of a retrospective investigation by the EC—even though it is keen for Member States to promote the use of MHP. There are, however, other ways for governments to encourage MHP take-up. Spain, for instance, required all DTT networks to broadcast interactive TV applications using an “open European standard” by November this year. MHP is, in practical terms, the only technology that answers to that description. Alex Mestre, strategic marketing director at Spanish transmission company Abertis Telecom, which supplies MHP applications to Spanish broadcasters, makes clear that, here too, the MHP initiative is all about e-government. “MHP is not intended as a revenue stream at all [in Spain],” he insists. “It's more of a sort of Information Society window. That's the reason that the public broadcasters—even the government—have been so much interested in pushing forward MHP.” Spain's main national public network, RTVE, is already broadcasting MHP applications, as is regional broadcaster TVC Catalunya. Indeed, Mestre is optimistic enough to believe that Spain could be the next big MHP market after Italy—despite the MHP licensing issue. “There has been a strong commitment until now by the public broadcasters. Obviously, the licensing issue was a bit disturbing, although I think the situation is a bit more calmed down as of now. Nothing's going to happen before 2009, anyway,” he comments. Whether MHP can be successfully promoted as a way of bridging Europe's digital divide remains to be seen. Meanwhile, many of its supporters are counting on its possible application to Europe's burgeoning IPTV market. Anthony Smith-Chaigneau, until recently vice-president of business development and marketing at MHP middleware supplier Osmosys, asserts that “MHP is going into the IPTV space. In the not-too-distant future there will be IPTV MHP deployments.” Smith-Chaigneau bases his prediction on the fact that a substantial number of IPTV set-top boxes will be hybrid DTT/IPTV affairs—and having two different interactive TV software stacks in the box will be untenable. “It means you have to have a very, very powerful set-top box with extremely large amounts of memory and it makes it non cost-effective,” he argues. “On the other hand, “if you have a single engine like MHP that runs [on different platforms], then you would be able to put a single hybrid box into the market. That's what everyone's looking for now.” McKiernan agrees. “I think MHP has a huge raison d'ętre in the IPTV environment,” he says. For telcos moving into IPTV, “If they want to provide interactive services as a differentiator, they don't want to put a web browser in the television. And what MHP does extremely well is provide interactivity in a non-Internet like environment. It is the perfect mechanism for IPTV operators to provide walled garden interactivity.” McKiernan also points out that some telcos may prefer MHP's Java-based, open-standard approach to Microsoft's IPTV solution. “If you wanted to swap out any particular aspect of the Microsoft end-to-end [IPTV] offering you can't, you're stuck, you're in an entirely proprietary system. Whereas in the wonderful, democratic world of MHP, you can modularise, you can pull out sections, you can pull in sections—and that, ultimately, from a consumer point of view and from a consumer electronics manufacturer point of view, is a much nicer environment to be in.” Macavock agrees that MHP “could be a very significant part of the interactive television future across IPTV,” and reveals that DVB is “working on a whole load of standards to make that possible.” But asked to forecast the next big MHP deployment, he chooses the USA instead. “There were very significant announcements made at the CES show in Las Vegas earlier on in the year, which led us to suggest that this was going to be the big OCAP year,” he says. Since OCAP would have “application compatibility” with some of the MHP services in Europe, “we have an interesting economies of scale thing that could happen which would further drive down the price of MHP boxes, for sure, but actually probably more interestingly, would provide us with a ready source of interesting applications. It does look rather as if the US promises to be the MHP market in the short to medium term.” European Countries Where MHP Services are Currently Broadcast
*Estimate as of Dec 2006. Sources: DVB, DigiTAG, Osmosys, Digisoft, Sun Microsystems, Telenor Broadcast, Boxer, Telenet |
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