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Live Streaming Summit [2-3 November 2017]

The Telcos Are Embracing Streaming—For Real, This Time
After attending 7 conferences in 9 weeks, it's apparent that telcos are moving into online video again in a big way, and they no longer view OTT and streaming as something tangential to their core business

This last quarter has been full of conferences for me. I'm a bit of a barfly when I take part in conferences; it"s the informal socialization of topic-specific ideas that a good conference offers that is, for me, every bit as important as the direct influx of information from the presentations and panel discussions.

I do occasionally hear from folks that they don"t often do conferences these days, citing a lack of easy-to-evaluate cost-benefit analysis. I get this argument: The financial director or company board wants to ensure that the (sometimes not-insignificant) costs of attending, exhibiting, or sponsoring an event are showing benefit.

But it is only "box shifter" companies that see an exhibition"s space (attached to a conference) as a specialized "pop-up Camden market" from which they can hawk units. Service providers see such environments as central to building the relationships with local partners and customers, and also literally keeping their brand and perception of that brand in the forefront of the delegates' minds. Not only that, but it is also important for conferences to share social media images of trivial shots of their stands with the obligatory "Visit us @ <hashtag.conference>" etc. to ensure that their entire audience is aware that they are doing bigger and better.

I actually rather like this process: Quite often my LinkedIn feed has formed a key part of ensuring I hook up with key people when we are in the same part of the world.

Conference sales teams always have to focus on the value that participation will bring to participants. This is easy to do if you meet a ton of potential buyers or the right vendors and direct business results from meetings at the event.

But if you don"t need to build partnerships, evaluate suppliers, or find customers, then the "direct return on investment" discussion becomes much harder to make.

How much value did it bring to the business for the engineers to attend a deeply technical conversation about standards alignment across the commercial ecosystem?

How quickly can we turn new thinking about deployment strategy into something meaningful in our existing deployment strategy?

Does it really matter what the very large companies are doing in their R&D teams, when this is all so "pre-market" that it will be years before it affects us or our client?

And so the discussions go.

Yet those of us who do our business through (note I said "through" not "at") conferences don"t micro-manage these issues with the team. We work out how to gossip. We talk about issues in the unstructured space that the conference bar or a dinner or a coffee counter can provide. This is not a 50-minute Skype call. This is not a WebEx. This is a bit of eye-to-eye time, where we can see from the close detail of each other"s body language exactly how interested the other party is in whatever the topic is. This is human.

This is where ideas come from. It is the cross-fertilization of seemingly disconnected ideas to create new products and services. Together. And to build business from that.

Having just hopped 7 conferences in 5 cities in 9 weeks between London, Europe, and the U.S.—at a time of huge geo-political flux—and if for no other reason than to record some thoughts or perhaps stimulate some discussion, I wanted to make a few observations about the telecoms and streaming space as we come to the end of 2017.

My autumn season starts with IBC. I estimate I do about 30-50% of our annual business at that event. Like NAB, IBC is the one event that embraces everything from video capture to telco operator strategy and everything in-between. Generally one can engage with most companies in the sector there, either on a stand, after a panel discussion, or in a den of Amsterdam"s finest iniquity – to suit all tastes.

In my opinion, this year there was little really exciting new stuff on the IBC expo floor—folks are still lighting stuff, filming stuff, compressing it, optimizing the compression, archiving or distributing it direct ,and finally charging for it. Phew J

With the increased market for fake news and fake ad revenue, there are plenty of gold diggers around the ecosystem buying in, and that"s just great for an industry selling shovels and picks to the diggers.

While all that is "business as usual," I found that behind the scenes, the intensity of the discussions with the large operators is much more engaged and active than it wa,s say, 5 years ago. Now the telcos are no longer dabbling in "TV"—they are no longer interested in just having "something" going on to tick that box with the shareholders. Their online video strategy is center stage.

Traditionally telcos used to view video as a nice wholesale product and relied on TV companies or other entities to deal with what the "TV" term meant to the market, while concentrating on the meaning of "selling bandwidth." CDNs deal with layer 4 of the stack, so sell the CDNs fat pipes and let them deal with all that software stuff. Broadcast companies want to manipulate uncompressed video, so sell them high-capacity fiber connections. ISPs deal with subscribers, so sell them peering and transit.

But two things have happened as video has moved online. The most important is that the wholesale market for the telcos has both grown and yet become much more competitive, leading to much greater volatility. It becomes harder to rely on the longevity of your wholesale deals.

Traditionally, the telco drew the line at just selling connectivity. Then Netflix and Amazon happened. Netflix has become the poster boy for making money with online video. For those running any IPTV networks or even just looking at how much of their revenue is made up by wholesale bandwidth to video orientated customers, Netflix has been the validation. Much like iTunes was for audio for a large part of the music publishing industry a decade earlier, those who had their heads under the duvet hoping "streaming" would all go away finally had a narrative change and could justify investment in the area to their shareholders.

More interesting to the telco has been Amazon. They thought AWS was essentially something like what they did for a living—tons of wires, big data centres, and perceived as an IT company, too. AWS has been such a runaway success that it is impossible for telcos not to envy the model, and ask themselves "can we do this too?"

And they clearly can. My next 4 conferences were all focused on telco virtualisation, SDN, NFV, and carrier strategy—and for such a "niche" sector, the participants in the conferences were extremely senior, very strategic, and very keen to ensure their own operator network could restructure to be able to offer PaaS, SaaS, or IaaS themselves. Indeed, when you take the AWS model and decentralize it from the datacenter into the network fabric this has already found a name in the telco space: a "FOG."

Telcos are all still evaluating the lowest layers of Layer2, Layer 3, and Layer 4 abstraction. There are many POC test being demoed showing "orchestration" and "containerisation," although there are few actually already offering network-wide commercial services. Not least, this is because telcos are still evaluating technologies at this lower layer, and the customer-centric "applications" can"t really be propositioned into the market until the underlying fabric on which these applications can run can be properly operated—and billed for.

While that is clearly the inexorable long game, in the meanwhile the telcos are engaging with their larger wholesale broadcast partners very closely and licensing in technology for POCs and small trials. Obviously the wholesale customers are excited to explore upstream licensing deals with the operators too. Some of these may even be reciprocal deals, and may even increase the short-term profitability for both parties.

But telcos are avaricious. It is clear to me that they will drive some significant consolidation in the market as they buy some of their wholesale customers to stack-creep into these lucrative application spaces, seeking to take on the profit that their heretofore wholesale customers have been taking. So these partnerships and POCs are learning exercises for the telcos.

In a matter of a few years telcos will have CDN capabilities—both on and off net—they will have in-house encoding propositions, they will offer niche vendors FOG Infrastructure as a Service, and where they see larger opportunities they will be marketing a much fuller stack of SaaS and PaaS capabilities tuned to the value that highly distributed architectures can offer against the traditional data-centre "cloud" models that AWS and Azure offer.

This will change the landscape at many of the higher layer conferences: I predict a return of the telco to the halls of Streaming Media events, and in some force. We see this every 7 years or so. But this time this is going to be a more deliberate return, not a sideline: Video is center stage in justifying the life of the telco now. It is no longer just an "interesting thing" that a wholesale telco customer (such as a CDN or an ISP)  is up to. It is the very raison d"etre for the telco to exist. They want to protect that. They want to bring it in house.

This all gives me a sense that by the time the 2018 autumn conferences come around we will be starting to see some interesting adjustments in the players presenting themselves on the exhibition floors and stages.

And I will be looking forward to getting out there to keep my finger on the pulse…