Ken Pyle looks at the fate of the independents who backed ATM, and how those early-adopters move from ATM to IP video

At the beginning of the current decade, Asynchronous Transfer Mode (ATM) was the dominant way to deliver video over DSL. Pioneered by Next Level Communications (NLC, now Motorola), the initial customer was the US Regional Bell Operating Company, US West (now Qwest Communications). With a roll-out of approximately 50,000 homes in the Phoenix area, Qwest put NLC on the map. With Qwest’s decision to forgo additional video deployments, NLC’s other 200- plus installations by independent Telcos - serving more than 250,000 set-tops - really established NLC’s dominant market position in the video-over-DSL space.

Pragmatic

The US independent Telco market space is characterised by the approximately 1,000 companies that, according to the National Telecommunications Cooperative Association (NTCA), serve more than 40 per cent of the U.S. These Telcos were formed to serve the rural areas that the larger telephone companies ignored. Independents have always been pragmatic about the implementation of technology and, as a result, were among the first with commercial deployments of digital switching, fibre-to-the-premise and video-over-DSL. NLC provided a multi-stream residential gateway, the access network and the provisioning system that included a very capable interactive programme guide. By tightly controlling the ecosystem, NLC ensured the operation of external equipment, like encoders, with its end-to-end system. The only downside, from a Telco’s perspective, was NLC’s proprietary approach, allowing for no alternative suppliers for any of the piece parts.

ATM peak

In 2003, Motorola acquired the portion of Next Level Communications it did not already own. By that time, the number of ATM deployments had peaked and the industry focus was on the use of Internet Protocol to transport video since IP promised a long-term lower cost structure than ATM and its open nature allowed for the potential of mixing and matching of equipment from ‘best of breed’ vendors. As the big Telcos moved to IP, the market for ATM no longer justified Motorola’s continuing development, and they shifted focus to the larger potential volumes associated with IPTV. There seems to be a general frustration level with Motorola’s transition from ATM to IP, leading some customers to feel abandoned by Motorola and translating into opportunity for other vendors. In fact, several access vendors have buy-back programmes catering to the Motorola/Next Level customer base.

Motorola’s transition also provides a golden opportunity for middleware suppliers, including Conklin Intracom, Kasenna, Minerva and Myrio, to provide software to control the IPTV networks, to replace Motorola’s proprietary middleware functions. Encryption, largely unnecessary with the broadcast-only networks and the ATM approach, is a requirement in IPTV and VODenabled networks. It has also been necessary, in some cases, to upgrade headends to allow for simultaneous IP and ATM feeds.

Slow transition

The Motorola/Next Level customer base is finding ways to maximise its existing video infrastructure investment. They also have been monitoring IPTV deployments and have seen that the integration is not as smooth or quick as promised by some vendors. Thus, the transition to IPTV by the NLC base is occurring on a piecemeal basis, rather than by forklift, and the transition has been slower than some had hoped. The lesson learned from the video-over-DSL rollouts is that Telcos must be much more critical of their vendors. Many are looking beyond just product comparisons and are looking at intangibles that would indicate the level of long-term support to the independent telco market. They are examining financials to determine whether suppliers can survive as a stand-alone entity and have the financial wherewithal to implement their roadmaps. Some Telcos have begun to include financial penalties in contracts with vendors to ensure performance. Another lesson is the importance of picking solutions that will have enough critical mass in the overall marketplace, such that the solutions are not orphaned by the vendor community. The take-away for vendors is that, if they are going to offer a product to the IOC market, they must plan for the long-haul.