The American Recovery and Reinvestment Act of 2009:
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- Gwen Clarke
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1 S T R A T E G I C W H I T E P A P E R The American Recovery and Reinvestment Act of 2009: Leveraging Broadband Stimulus for IPTV services in lower-density markets The American Recovery and Reinvestment Act of 2009 (ARRA) represents a unique opportunity for network operators to upgrade their networks and greatly enhance their service delivery capabilities. IP video is a key component for serving communities, and IPTV, in particular, represents essential next-generation services which open up valuable revenue opportunities and help service providers compete more effectively with cable operators, satellite providers and innovative Internet video providers. Regionally-focused communications providers have historically encountered obstacles when evaluating IPTV, often because the solutions were not designed for their unique requirements and business challenges. However, Alcatel-Lucent has recognized and addressed these requirements by offering Triple Play Express for Regional Operators a pre-packaged, tested, IP video solution. By leveraging the exceptional Alcatel-Lucent access portfolio, IPTV expertise, and end-to-end solution integration experience, this solution enables service providers to deliver a state-of-the-art broadband infrastructure that serves the community for education, healthcare, safety, high-speed communications and other future services. Most importantly, Alcatel-Lucent can assist service providers apply and adhere to the guidelines necessary to acquire broadband stimulus funding, quickly and economically deploy advanced IP video services, minimize the time to cash, and establish the foundation for creating a variety of other revenue-generating services.
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3 Table of contents 1 Introduction 2 IPTV momentum 2 IPTV market size and opportunity 3 IPTV benefits 3 IPTV challenges 4 Triple Play Express for Regional Operators 4 A predefined, end-to-end architecture 5 Triple Play Express for Regional Operators end-user capabilities 6 Triple Play Express for Regional Operators STB capabilities 6 Triple Play Express for Regional Operators Operational Support System (OSS) capabilities 6 Triple Play Express for Regional Operators element management capabilities 7 Alcatel-Lucent network integration services 7 Conclusion
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5 Introduction A great deal has been written about broadband and the implications of the American Recovery and Reinvestment Act of 2009 (ARRA). This Act allocates $7.2 billion for broadband, which will be made available through two separate government agencies. The programs are technology- and service provider-neutral, and strongly encourage enhanced broadband connectivity to schools, libraries, hospitals and other community facilities. Broadband network deployment in rural areas not only offers access to the Internet but also brings a great opportunity for service providers to offer new services to the communities they serve. Broadband connectivity extends the reach of services that may already exist in communities and also allows for deployment of new community services. These community services can potentially increase cooperation and collaboration between various public agencies and community citizens and can also bring communities closer together and better inform citizens by sharing information and sources of media. Alcatel-Lucent is uniquely qualified to help service providers of all types take advantage of this unique opportunity. We offer end-to-end solutions that can help service providers upgrade their networks which greatly enhances their capabilities, as well as a portfolio of community applications that network operators can offer which will improve their chances of obtaining government funding for proposed broadband stimulus projects. As an example, community applications might address areas such as: Media sharing for social and community events Access to static documents, images, and video, stored for controlled access and for broadcasting live community events like high school games, graduation ceremonies or a church event Infotainment Broadcast of information or entertainment for communities Advertising and marketing Web-based advertisements to individuals or groups in the community We also offer a wide array of services, including resources for network design and planning, construction and ongoing maintenance that may be required or desired. In addition to world-class technology and service solutions, the Alcatel-Lucent Grant Partnership Program offers turnkey assistance in the preparation and submission of Broadband Stimulus grant applications. In short, Alcatel-Lucent Broadband Stimulus solutions can maximize a network operator s chances of obtaining ARRA funding and ensure a positive return on investment to the network operator. Since the government program does not fund ongoing OPEX, the ability of Broadband Stimulus solutions to minimize a network operator s operational cost and deliver services that contribute incremental revenue is a key consideration for any service provider. Regardless of the government contribution, network operators must still be able to generate a measurable return on investment for anything they do under the Broadband Stimulus program. Many service providers are interested in providing triple-play services and commercial IPTV services, in particular. IPTV services are an important vehicle for service providers to optimize their business by leveraging precious network investments. Lastly, solutions for this market must be designed for and address the unique requirements for solution design, implementation, CAPEX requirements and other criteria of regionally focused communications providers. The American Recovery and Reinvestment Act of 2009 Strategic White Paper 1
6 IPTV momentum IPTV services are gaining momentum among consumers and service providers and represent essential next-generation capabilities for network operators. These services are likely the key revenue-producing application that can be used to help pay for the portion of the network which operators are responsible for funding. They also not only drive incremental revenue and increase subscriber average revenue per unit (ARPU), but also help service providers compete with cable operators, satellite providers and innovative Internet video providers such as Joost and Hulu. Industry press often focuses primarily on IPTV services from larger carriers, such as AT&T and CenturyTel. However, IPTV and related video services are also a significant opportunity for more regionally focused providers, provided they fit the business, network, deployment and operational needs of these providers. To help regional communications providers meet their unique business challenges, Alcatel-Lucent offers a pre-tested, pre-packaged IP video solution Triple Play Express for Regional Operators. By leveraging our exceptional access portfolio, IPTV expertise, and end-to-end solution integration experience, the Triple Play Express for Regional Operators solution enables service providers to quickly and economically deploy advanced IP video services, minimize their time to cash, and establish a solid foundation to create a variety of other revenue-generating services in the future. By 2012, annual revenue from IPTV services is expected to reach $8 billion in the North American region alone with over 12 million paying subscribers. IPTV market size and opportunity According to Gartner, annual revenue from IPTV services is projected to increase dramatically in North America from approximately $2 billion in 2008 to nearly $8 billion in Household penetration for IPTV services is expected to reach 8.6 percent by 2012, resulting in over 12 million paying subscribers in the North American region alone. 2 Related video services also generate additional revenue, as shown in Figure 1. For example, in North America, video on demand (VoD) income is expected to increase from approximately 244 million United States dollars in 2009 to 976 million in 2012, 3 while revenue from value-added IPTV services is projected to rise from 42 million United States dollars in 2009 to 182 million in It is important to note that this IPTV growth and momentum will not come solely from Tier 1 carriers. Regionally focused communication providers are also turning to IPTV and related video services to increase revenues and to combat competitive threats from cable MSOs, satellite providers, and innovative Internet video content providers. 1 Akshay K. Sharma and Jouni Forsman, Dataquest Insight: Carriers Must Test the User Experience to Ensure IPTV Success, Gartner, November 27, 2008, p. 3 2 Elroy Jopling and Amanda Sabia, Forecast: IPTV Subscribers and Service Revenue, North America, , Gartner, Number Ibid. 4 Ibid. 2 The American Recovery and Reinvestment Act of 2009 Strategic White Paper
7 Figure 1. IPTV subscribers and service revenue, North America, IPTV subscribers (thousands) Total IPTV subscribers ,141 12,022 Household penetration 4.6% 6.1% 7.4% 8.6% IPTV revenue (millions of U.S. dollars) IPTV subscription revenue (basic and premium) VoD IPTV service revenue Value-added IPTV service revenue Total IPTV service revenue Source: Gartner (June 2008) IPTV benefits Consumers can already access television programming from a wide variety of sources, including overthe-air (OTA), cable and satellite operators. In addition, they are increasingly turning to the Internet to find and view video content when and where they want it. In this environment, what can service providers offer through IPTV services that competitors cannot? And how can service providers benefit? Unlike competing services, IPTV can transform the end user s viewing experience by integrating personal communications, social networking and interactive capabilities with programming content. These innovative offerings create valuable new revenue opportunities for services providers. IPTV has the potential to transform the end user s viewing experience by combining programming choice and flexibility with personal communications, social networking, entertainment and a new breed of interactive services. Fortunately, this new world also creates many additional revenue opportunities for service providers. When launching their services, IPTV providers typically start by offering similar capabilities as incumbent providers, namely basic and premium packages of linear programming, VoD and digital video recorders (DVRs). 5 These capabilities create a strong foundation for adding a wide variety of other revenue-generating services such as targeted advertising, interactive messaging, social networking, and cross-promotion which can be combined and packaged to meet specific market needs over time. For example, Belgacom has taken advantage of cross-promotion to increase Pay Per View (PPV) adoption among their subscribers. By leveraging their IPTV infrastructure, they offer a free preview of an upcoming PPV show, whenever customers watch another PPV program. Belgacom has experienced an 85 percent conversion rate for subscribers who choose to watch these previews (by simply pushing a red button presented to them). 6 IPTV challenges Historically, regionally focused communications providers have had challenges acquiring, implementing and justifying the costs of IPTV solutions which require a flexible IP network architecture that can support video services, along with expertise in implementing complex video services. Alcatel-Lucent has recognized this market need and responded with Triple Play Express for Regional Operators, an IP video solution specifically designed to address these challenges. 5 Adam Daum, The IPTV Industry s Focus Moves From Technology to Revenue, Gartner, March 31, 2008, p Ibid, p. 4. The American Recovery and Reinvestment Act of 2009 Strategic White Paper 3
8 Triple Play Express for Regional Operators Alcatel-Lucent s Broadband Stimulus solution for wireline carriers is Triple Play Express for Regional Operators. The Alcatel-Lucent Triple Play Express for Regional Operators solution is a pre-packaged, tested, end-to-end solution that enables regional operators to deliver advanced IP video services more economically to lower density markets. Its key elements include: A flexible network architecture which supports fiber to the node (FTTN), fiber to the premises (FTTP) or a combination of both. FTTN is enabled by the Alcatel-Lucent 7330 Intelligent Services Access Manager Fiber to the Node (ISAM FTTN) with DSL residential gateway, while FTTP is supported by the Alcatel-Lucent 7342 Intelligent Services Access Manager Fiber to the User (ISAM FTTU) Optical Line Terminal and Optical Network Terminal. A switching and routing component which includes the aggregation network and the subscriber edge router, along with server connectivity in the Central Office (CO). This functionality is provided by the Alcatel-Lucent 7750 Service Router or a combination of the Alcatel-Lucent 7750 Service Router and the Alcatel-Lucent 7450 Ethernet Service Switch. A VoIP network consisting of either a Genband G6 Media Gateway Controller for PSTN-based voice or a customer-supplied softswitch for SIP-based voice. Hardware and software that provide fully functional IPTV delivery including a management system with middleware, plus VoD and integrated Digital Rights Management (DRM) capabilities. Support for Motorola set-top boxes (STB) which support both standard and high-definition personal video recording (SD and HD PVR) capabilities. It is expected that service providers will acquire their STBs from a third party. End-to-end network IP video integration services from Alcatel-Lucent Services who possess a comprehensive understanding of the end-to-end TPE network. A predefined, end-to-end architecture For faster, easier installation and integration into service provider networks, the end-to-end architecture of the Triple Play Express for Regional Operators solution is predefined and provides the following features: The physical connectivity of the equipment and the logical network architecture are both documented. A standard configuration template is provided for all components. The middleware solution is fully pre-integrated. That is, all subsystems, middleware, VoD and DRM have been configured, tested and validated to offer a seamless experience for end users and operators. However, content is not part of the Triple Play Express for Regional Operators solution. Service providers are responsible for all content acquisition as well as the general video and broadcast skills required for internal operations. 4 The American Recovery and Reinvestment Act of 2009 Strategic White Paper
9 Triple Play Express for Regional Operators end-user capabilities The Alcatel-Lucent Triple Play Express for Regional Operators solution supports a broad array of foundational and revenue-generating capabilities, including: Digital broadcast television allows subscribers to watch hundreds of broadcast TV channels in both Standard Definition and High Definition formats. This is a standard feature, comparable to the typical TV services offered by digital cable/satellite providers. Main menu provides subscribers with easy, centralized access Interactive program guide provides details of currently airing and future TV programs and channels. Three versions of the guide currently exist: Grid guide a standardized gridlike view of show and channel data, optimized for performance and ease of use Information overlay a fully interactive view of show and channel data, displayed unobtrusively over the full-screen video display Search-by guide a flexible list-like view of shows and channels that enables custom searches. Pay per View (PPV) allows subscribers to select, purchase and watch Pay per View programs, using self-serve screens for the purchase process. Password protection can be used to set up passwords that help prevent unauthorized purchases. Parental controls allow subscribers to prevent access to specified content, based on content ratings and/or channel numbers. Reminders and autotune can be used to set reminders of favorite programs. When the show begins, subscribers are visually reminded or directly tuned into the program. Favorites allow subscribers to specify their favorite channels for display on the program guide. Notifiers allow service providers to transmit on-screen messages to subscribers. These diverse messages can range from marketing promotions and caller-line IDs to emergency response messages. Community portal is operatordefined and provides links (news, weather, community events) as well as customized content to suit operator branding requirements. The American Recovery and Reinvestment Act of 2009 Strategic White Paper 5
10 Triple Play Express for Regional Operators STB capabilities The STBs supported in the Alcatel-Lucent Triple Play Express for Regional Operators solution provide key functionalities that end users demand. Its PVR application provides the following features: Watch live TV allows subscribers to pause, rewind and fast-forward live channel broadcasts. Record a show enables subscribers to schedule and record specified TV programs. They can also search, view, modify and cancel scheduled recordings, as well as stop recordings already in progress. Surf and play recordings allow subscribers to review and play stored recordings, as well as pause, rewind and fast-forward. With Triple Play Express for Regional Operators, subscribers can schedule and record live TV programs, watch recorded programs and use pause, rewind and fast-forward features on both live and recorded shows. Triple Play Express for Regional Operators Operational Support System (OSS) capabilities With the Alcatel-Lucent Triple Play Express for Regional Operators solution, service providers can leverage built-in OSS capabilities such as: Service administration allows service providers to setup and configure their IPTV service and manage general items like security, service definitions (classes of service and geographical segmentation) and user access privileges. Consumer management can be used to manage subscribers account, device and subscription information. Content management allows service providers to review and modify their channel lineup and packaging information. Support for multiple languages enables television services in multiple languages. Automatic data updates allows service providers to programmatically obtain the latest TV guide data, process the information and distribute it to subscribers throughout their service network. Managed client device booting can be used to manage software upgrades and failure recovery of subscribers devices. Remote diagnostics allows service providers to gather operational statistics from remote subscriber s devices and troubleshoot any device-specific problems. Data exchange allows service providers to access or update data from their internal systems and integrate this data with existing providers billing, CRM, and similar systems. Error logging and alarms support monitors the system, creates proper error logs of any failures and sends alarm messages to provider s OSS/BSS systems. Reports provide a set of customized reports for service provider s use. Triple Play Express for Regional Operators element management capabilities For efficient element management, the Triple Play Express for Regional Operators solution includes the Alcatel-Lucent 5520 Access Management System (AMS) to control all elements of the access network. The 5520 system also provides centralized management of the Operational Support System (OSS), database, software, events and service management and offers an XML-based interface to facilitate integration into the service provider s existing OSS. 6 The American Recovery and Reinvestment Act of 2009 Strategic White Paper
11 Alcatel-Lucent network integration services Conclusion Along with the pre-integrated IPTV solution, Alcatel-Lucent can offer assistance with solution design, planning and implementation, which are critical elements in any project s success. Drawing on a unique combination of IT experience and network expertise, Alcatel-Lucent can help service providers evolve and transform their business. Alcatel-Lucent is a trusted partner to both global and regionally-focused service providers, and our depth of experience in IPTV is based on over 60 integration projects, including end-to-end commercial Tier-1 solutions across four different middlewares and access networks. In brief, we deliver world-class, end-to-end IPTV solutions that enable service providers to: Maximize revenue by delivering profitable new services that help attract and retain customers Innovate for the future supported by a scalable, flexible and secure network Operate cost effectively by optimizing networks, operations and support systems Deliver reliable, secure, high-quality services The American Recover and Reinvestment Act of 2009 (ARRA) represents a unique opportunity for network operators to upgrade their networks and greatly enhance their service delivery capabilities. Alcatel-Lucent s expertise, capabilities and experience in IPTV are available to help you plan, leverage and navigate through the intricacies of this important federal stimulus program. As an example, Alcatel-Lucent can provide grant writing assistance to help service providers submit accurate, comprehensive, persuasive, and timely applications for ARRA funding. We can also help show why IPTV services, delivered by the Triple Play Express for Regional Operators solution, can be the key revenue-producing application that can help pay for the portion of the network that operators are responsible for funding. Based on industry standards and cutting edge technologies, Triple Play Express for Regional Operators provides high availability for uninterrupted service and seamless interworking for fast deployment. In addition, Alcatel-Lucent s global experience and track record in IPTV technologies is unmatched in the industry. Drawing on this expertise, our design and implementation services can play a key role in successful deployment of a Triple Play Express for Regional Operators solution. We even offer operational capabilities to help service providers optimize and supplement existing resources, particularly during challenging economic times. In summary, Alcatel-Lucent is the right partner to help network operators understand, acquire, implement, and optimize their Broadband Stimulus investments. The American Recovery and Reinvestment Act of 2009 Strategic White Paper 7
12 Alcatel, Lucent, Alcatel-Lucent and the Alcatel-Lucent logo are trademarks of Alcatel-Lucent. All other trademarks are the property of their respective owners. The information presented is subject to change without notice. Alcatel-Lucent assumes no responsibility for inaccuracies contained herein. Copyright 2009 Alcatel-Lucent. All rights reserved. RMK (06)
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