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Created 7/25/2010

Broadband Library: Two Sides to Every Story: Winter 2009 (December)

Broadband Library is distributed quarterly to all members of the Society of Cable Telecommunications Engineers (SCTE). Our "Two Sides to Every Story" columns appear on facing pages to present contrasting viewpoints on a cable/telecom industry topic.

Our columns in the Winter 2009 issue focused on whether the cable industry should spend more time and resources on new “always on” applications, rather than having so much focus on its traditional video applications.

Dave argued that the industry should promote the use of cable for "always on" applications. He pointed to examples like smart grid and telehealth which will be moving into millions of homes.

Sandy didn't think this was the right time for MSOs to divert their resources. Despite how seductive new market opportunities may be, MSOs need to prioritize their resources for the long list already underway.

It’s Time to Promote Cable for 'Always On'

The cable industry has long focused on “high speed” as the key attribute of its cable modem services. But for some applications, “always on” is more important. These applications don’t need much speed, but they do need a reliable continuous connection to the home.

Sandy and I were reminded of this by a couple of conferences we attended recently, one on the “smart grid,” the other on “connected health.” Both seem like natural applications for cable’s “always on” Internet infrastructure. But at both conferences, wireless operators and their vendors dominated the discussions and mind share; cable seemed out of sight and out of mind.

The smart grid application requires a connection to the electric meter, picking up the meter reading and sending it to the utility every 15 minutes or so. This allows the utility to bill the customer in small time increments and measure network load closely to detect signs of incipient failure.

Some utilities plan to have a link —- through a “home area network” —- to thermostats and high-consumption devices such as air conditioners, swimming pool heaters, and clothes dryers. With this connection, customers can allow the utility to adjust electricity usage –- say by raising thermostat set points and deferring clothes drying and pool heating when prices are at a peak –- to reduce the cost of electricity.

A key element in the smart grid application is a screen-based portal that allows the utility customer to monitor electricity use and make decisions on the preferred way to reduce electricity cost.

This would all seem like a natural cable application. The smart grid applications are minimal, and operators should be able to offer a very competitive price for the tiny amount of cable bandwidth required compared with web browsing and video. Operators can deploy technologies to restrict bandwidth for those homes using only smart grid. Operators are well positioned to provide the portal application on multiple screens.

MSOs ran trials of these applications several years ago. The power industry moves slowly, and MSOs turned their attention to other opportunities. The economic stimulus program recently awarded $3.4 billion in smart grid investment grants, and utilities are moving into high gear to deploy “smart meters”.

The utilities’ near-term focus is automated meter reading, with the rest of smart grid following on later. While cable would seem to be a perfect fit for this, the power industry is focused on wireless –- preferably their own dedicated wireless in newly-allocated spectrum, with cellular wireless as a possible fallback position. At the conference, we heard several operators say they couldn’t depend on cable.

“Connected health” provides remote support for patients at home. Some patients have chronic diseases such as hypertension, diabetes, or congestive heart failure. Some have recently been released from the hospital to recover at home. Others continue to live at home while suffering from mild dementia.

Most telehealth systems include “always on” communications with home-based devices to measure the patient’s weight, blood pressure, and glucose level. Some connect with home devices intended to ensure that patients take the correct medications at the proper time. Some connect with sensors that detect and report the patient’s location in the home and detect falls. Some use voice and video communications to provide feedback and reassurance to the patient.

These applications have been in development for some time, and several MSOs have participated in trials. Many forces, including the desire of large companies to control their healthcare costs and the intense healthcare focus in Washington, are bringing telehealth to the front burner.

While cable modems and in-home networking would appear to be an excellent fit for telehealth, wireless has all the mindshare. Several wireless providers and their suppliers were sponsors of the Connected Health conference we recently attended – cable was nowhere to be found.

Both smart grid and telehealth are now moving to the front burner. A few utilities already have smart meters in all customer homes, and many more will follow. The health care industry knows that Connected Health will be required to support millions of baby boomers, who would rather stay in their homes than move through the traditional sequence of assisted living and nursing homes.

Cable shouldn’t miss the opportunity to participate as these emerging “always on” applications move into millions of homes.

Sandy Says: Beware the Opportunity Trap

New market opportunities are seductive. Putting dollars and people into developing them can seem logical since opportunities may appear natural extensions of today's services, simple to address, with large potential markets. New opportunities can be very important to MSOs – they wouldn’t have a major share of consumer data and voice revenues if they had stuck only to video. But MSOs already have a large list of projects vying for mind-share and resources. New opportunities like telehealth and smart grid need to be evaluated against projects already on the main strategic development path.

The recent SCTE Expo and Fall Cable Connection featured several initiatives that are high on MSO priority lists. Most relate to the growth and well-being of today's current and emerging businesses. For the traditional video business, current work areas include IPTV, 3D TV, “TV everywhere” and interactive advertising. With telco competitors exploiting IPTV to give them a competitive edge, and TV manufacturers on a push to bring more 3D TVs to market, there’s a clear justification for devoting resources and priority to these projects.

“TV Everywhere” is another priority. MSOs are devoting investment and resources to defining the technical framework; resolving issues of security, privacy and copyright; and developing models to support both ad-supported and subscription video.

MSOs are planning to deploy interactive advertising to counter the drop in traditional advertising revenues. Interactivity on the TV has become a competitive weapon for both satellite and telco video providers aiming to take market share from MSOs. Given the threats to cable's core business, resources are clearly required to develop more and better interactive features quickly.

The industry is understandably expending resources monitoring the current FCC Notice of Proposed Rulemaking (NPRM) on network neutrality. The technical implications of this rulemaking are fundamental to the management of congestion on MSO networks. MSOs are trying to determine what will be effective in bandwidth management and pass muster with the requirement for "reasonable network management techniques".

The need for some sort of home multimedia gateway is coming to the fore. These would enable MSOs to deliver converged, IP-based video, voice, and data services to the TV and other IP-connected devices in the home. Telcos like Verizon are already exploiting their gateways to support home security and home automation services.

In the last couple of years 4G wireless broadband has been acknowledged as an important path for the future. Operators have invested billions of dollars in Clear and new spectrum for the future. Rollouts are just over the starting line, so operators face large resource expenditures to leverage their prior investments and commitments.

MSOs have subjected each of these opportunities to careful analyses before deciding to invest in them. Often the business case includes elements such as strengths from long-term relationships with content providers, areas of weakness being exploited by telcos and satellite operators, opportunities from the newly-emerging wireless broadband business and converged services, and threats to the core video and advertising business.

How do connected health and smart grid stack up compared with these opportunities? Connected health is difficult to define, since US healthcare legislation is in such a state of uncertainty. The short-term investments being made by the government are targeted to areas like portable health records, which are not a target MSO opportunity. Spending on connected health is in the early stages, with a few demonstration projects but no clear plans for next steps.

Smart grid opportunities are a moving target, since even the term “smart grid” means different things to different people. CableLabs and large MSOs should be monitoring the directions of development and the standard setting process now underway with NIST. However, it seems premature to expend much resource until the targets are much better defined.

Some MSOs have participated in both connected health and smart grid pilot projects in the past, and I expect they are continuing to monitor their development. The NIST smart grid specs include CableLabs’ PacketCable Security Monitoring and Automation standard, showing that the industry is actively participating.

The question is not whether these areas are interesting but whether now is the right time to commit substantial resources to pursuing them. MSOs might do well to remember Erma Bombeck’s caution: The grass may be greener on the other side of the fence, only because it’s over the septic tank!

Next: Our columns in the Spring 2010 issue looked at cable providers' choice between LTE and WiWAX for 4G wireless