Analysys Mason Communique April 2011

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Communiqué

April/May 2011

www.analysysmason.com

Contents

2 Cyber security: how to protect your

organisation from this very real threat

4 Will fibre work in Africa?

5 Swedish spectrum auction fails to

reach German bid prices

Securing the social network

6 Pay TV in Asia–Pacific – the next

opportunity?

7 The pay-TV ecosystem needs to

evolve: insights from IP&TV World

Forum 2011

8 Driving the energy sector toward

the M2M-enabled smart grid

About Analysys Mason

End game for European DSO close,at last

Welcome back to this, our April 2011 issue of Communiqué. Despite the financial and budget difficulties affectingmany economies, we are pleased to see positive signs from the financial community that should give all of us somereason for optimism. We are already working again in a significant transaction and M&A opportunities in particularcable, broadcasting and towers, mobile operators as well as specific fixed fibre projects. This issue of Communiquéincludes several Media articles about some of the issues at the core of many of these transactions – the changingpay TV ecosystem, pay TV in Asia-pacific and DSO). It also includes some updates on spectrum valuations as wecontinue with major auctions and awards throughout the world. We wanted to highlight the positive outlook forinvestments in Africa which is also together with Asia-Pacific an area of focus for growth. Finally, we also cover someaspects abut cyber security that should be a major concern to all of us who support the digital economy and want toavoid the potential negative effects on the sector by this threat. As always, we hope you find them both thoughtprovoking. We would be pleased to work with you in achieving your targets this year. Lluís Borrell, Partner

“

”

Digital switchover (DSO) has now developed

considerable momentum, and after nearly 13

years (in the case of the UK) the end game is

finally in sight, driven by EC targets and the

desire to free up spectrum for other uses.

With the EC-recommended target for analogue

switch-off a little over a year away, and alooming deadline of June 2015 for the end of

the protection of analogue service from

neighbouring interference, we can expect a new

wave of DSO programmes.

13 countries in Europe have completed DSO

already – mainly those where terrestrial TV is not

the dominant platform. Spain, where the DTT

platform is dominant, is a notable exception as it

completed DSO in 2010, well ahead of the 2012

Western European target, and it is probably a

good benchmark for other countries in similar

circumstances. Among the remaining nations, four

have planned DSO in 2011, and the rest are taking

steps to bring an end to analogue transmission by

between 2012 and 2015 at the latest.

The success of the DTT platform paves the way

for the DSO. Therefore, before looking at DSO

planning it is important to consider the key

parameters that will ensure the DTT adoption:

• understanding the current presence of

terrestrial TV channels and their value to

consumers as a broadcasting platform

• allocating a sufficient number of multiplexes

for a compelling proposition

• ensuring the right deployment and coverage

• creating the right consumer proposition that

balances choice (number and quality of

channels) against picture quality (high definition)

• raising consumer awareness

• working closely with STB manufacturers,

retailers and installers.

DSO planning requires the successful co-

ordination of a number of important initiatives,

including:



• clearly defining the government’s role in

the process

• agreeing on standards for the network

• deciding a simulcast policy (including any

subsidisation of broadcasters)

• deciding and planning the switch-off

programme, including the type of switch off

(’big bang’ or phased)

• involving all the different stakeholders, in many

cases led by the national public service

broadcasters but also the commercial TV channels.

There are still challenges ahead, such as

ensuring the affordability and universal

availability of the offering; in many cases this has

led to the launch of complementary ‘free DTT’

satellite offers. There may be difficulties in

completing DSO for some market segments,

such as the elderly and the less well off. Overall,

DSO planning could bring many benefits – but it

can also be a very expensive exercise.

Therefore, the potential DSO costs and

associated funding require detailed analysis.

Moreover, in some cases where DTT network

infrastructure is owned by a single TV channel,

there are potential conflicts of interest between

the network and the TV channel activities. These

conflicts could negatively affect the prospects of

DSO. In order to ensure a level playing field andfacilitate DSO, it might be necessary to separate

the DTT broadcasting network activities from

those of the DTT channels, by creating one or

more independent broadcasting tower

companies. There has recently been strong

interest from investors in these assets, and this

might well help the DSO process.

The next wave of countries can and should

take advantage of the lessons learned from the

DSO processes already completed. We at

Analysys Mason have worked with DTT

channels, broadcasting networks and

governments on DTT and DSO and related

issues, and are ready to pass on the lessons

learned from these projects.

For more information, please contact

Pat Kidney, Senior Manager, at

[email protected]

End game for European DSO close, at last – continued

2

The serious cyber attack on the European

Commission and External Action Service that,

was reported last month, and the recent

breaches of cyber security that have affected

many governments, have raised the profile of

cyber security and highlighted the importance of

mitigating the threats.

There are many definitions of ‘cyber security’, but

Analysys Mason uses the following: “Cyber

security embraces both the protection of the

interests of an organisation or government from

the threats associated with the Internet and other

connected networks, and also the pursuit of the

security policy of that organisation or government

through exploitation of the many opportunities

that the Internet and connected networks offer”.

Cyber security typically falls into one of three

main areas:

1.Cyber warfare – the use of advanced security

compromise techniques by governments to

extract intelligence information, or to affect the

ability of another nation to deploy military and

cyber assets.

2.Industrial espionage – the use of advanced

security compromise techniques to extract

valuable corporate information.

3.Cyber-crime – the use of security compromise

techniques to commit crimes.

It is very difficult to ascertain the scale of the

cyber security threat, as many countries do not

require organisations to report security

breaches. The UK government’s Office of Cyber

Security published a study undertaken by Detica

that estimated the cost of cyber-crime to the UK

economy at GBP27 billion per annum.

Cyber security attacks

Cyber security attacks can be very

sophisticated. Two main threat actors undertake

the majority of cyber security attacks and

breaches – national governments and groups

involved in organised crime. Both of these

groups have access to skilled individuals with

considerable IT resources. Cyber security

attacks are heavily researched, with the attacker

taking significant time and effort to look for

business processes and technical weaknesses

that could be exploited. When the research is

completed, the attacker can craft specialised

attacks to exploit the weaknesses identified.

Well-configured traditional technical security

controls will limit the potential weaknesses of an

IT system. However, many traditional security

controls work by identifying the signatures of an

attack, but because many cyber security attacks

are bespoke, these signature-based security

controls have their limitations.

Figure 1 below outlines some of the common

cyber security attacks and summarises their

potential impacts.

Analysys Mason security consultants haveinvestigated a number of major cyber security

breaches. Most of these breaches bypassed the

installed security controls and were only

detected because of side effects related to

performance of the IT systems or network,

mistakes made by the attackers, or information

provided by national security bodies.

The management boards of many private and

public companies perceive IT security as an

unwarranted drain on their resources, and so

allocate minimal security budgets to ensure

nominal compliance with regulations and

legislation. The boards of these organisations

need to understand the potential impact of

cyber security and ensure they set aside

Written by Edward HamiltonSenior ManagerConsulting Division

Cyber security: how to protect your organisation from this very real threat

Written by Pat KidneySenior Manager, Consulting DivisionLluis BorrellPartner, Consulting Division



appropriate budgets to achieve an adequate level

of security. In this way, their organisations will be

able to deter and resist cyber security attacks.

What do organisations need to do to combat

cyber threats?

To combat cyber security threats, organisations

have to significantly change their attitude to IT

security. The four basic technical security control

elements that organisations must deploy to help

them maintain cyber security are illustrated in

Figure 2 and discussed below.

Organisations need to focus on their security

strategy, which should include:

• traditional security controls – a range of good-practice security controls, covering people,

process and technology, to create a

multi-layered approach to security across the

organisation

• detection of abnormal behaviour –

supplementary security controls should be

deployed that do not rely on signatures to

detect suspicious activity, so that organisations

can detect bespoke security attacks

• detection of unauthorised changes –

organisations need the ability to quickly detect

and alert staff in the event of a successful

cyber attack. The most practical method is to

detect unauthorised configuration changes in

the IT environment. Suspicious changes can

be investigated by security teams so that any

security breach can be rectified

• continuous monitoring – an appropriate level

of event logging and monitoring must be

configured on an organisation’s IT systems.

Without this essential information it is

impossible to establish which company

assets have been compromised,making it

impossible to ascertain the scale and impactof any breach.

By deploying a range of IT security solutions,

organisations can not only significantly reduce

the likelihood of a successful cyber attack but

also enable their security teams to quickly

identify any breach and minimise its impact.

The report can be downloaded from

Analysys Mason’s website at

http://www.analysysmason.com/forms/gsma_study

For more information about the study or

our expertise in the embedded mobile

market, please contact

Edward Hamilton, Senior Manager,

at [email protected]

3

Cyber security: how to protect your organisation from this very real threat – continued

Figure 2: Approach to IT security [Source: Analysys Mason, 2011]

Figure 1: Cyber security attacks [Source: Analysys Mason, 2011]

Targets of the cyber attack

• Intellectual property (IP)

• Financial information

• Personal information

• Government information

Type of attack

Carefully targeted attacks to extract specific

data

Potential impacts

Compromise of the confidentiality of

information.

The extraction and/or use of IP, sensitive or

personal data, potentially leading to:

• financial betterment

• loss in confidence

• reputational damage

• IP

• Financial information

• Critical national infrastructure / government

systems

Alterations of key data for financial or

political gain

Modification of data leading to a compromise

in its integrity, which in turn could lead to a loss

of confidence in:

• a government’s ability to protect sensitive data

• private organisations’ products or services.

• IT Infrastructure / networks Denial-of-service attack against core

infrastructure / networks, leading to reduced

or loss of service

A reduction in the ability of an organisation,

region, government body or ultimately a whole

nation to operate effectively

Traditionalsecuritycontrols

Monitor continuously

Detectingchange

Advanced securitycontrols to detect

abnormal behaviour



Governments and operators in emerging

markets need to review their fibre investmentplans, while regulators create an appropriate

regulatory framework, to build sufficient supply to

answer a growing demand for Internet access.

Following a wave of investment in submarine

cables around Africa, fibre is now laid in the

ground of most sub-Saharan countries. This

answers a growing demand for high-capacity

telecoms networks in emerging markets driven by:

• Mobile operator cost reduction: fixed

incumbents’ expensive pricing means it may

be economical for mobile operators to self-

build fibre or to find an alternative provider

(and the regulatory conditions for building

networks are becoming more favourable).

• Mobile broadband take-up: growth in mobile

broadband penetration increases the backhaul

capacity requirement and speeds the

transition from microwave links to fibre.

• Economic growth: growth in international

trade and greater information requirements

drive demand for Internet connectivity.

• Broadband access for businesses: new

submarine cable landings mean domestic

networks can also provide international

connectivity to businesses.

• Transit connectivity: fibre can sometimes

provide cheaper transit connectivity for other

players in landlocked countries (which typically

rely on satellite bandwidth).

• Efficiencies: a lot of African governments areplanning to meet many of their Millennium

Development Goals and are lowering the cost

of public services (education, processes,

information dissemination, voting) by

increasing the access of communities to the

Internet (often with broadband capabilities).

Governments and operators in sub-Saharan Africa

have announced their plans to deploy

fibre-optic networks worth between USD50 million

and USD1 billion (see Figure 3) over the next few

years. These terrestrial fibre networks are being

built by incumbent fixed network operators,

mobile network operators, utility companies

(electricity and rail) or specialised international

connectivity companies (such as Liquid Telecom).

In a few countries, e.g. Nigeria and South Africa,

and in other regions like India (see Figure 4),

this is likely to create a duplication of network

infrastructure, as is the case in developed

countries. Our policy development experience

strongly supports the view that no undue

restrictions should be imposed on fibre network

construction. In South Africa, despite two

nationwide fibre networks already existing, key

players (mobile operators, ICT companies)

continue to find value in deploying further fibre.Our work in India has shown that duplication of

networks does not necessarily lead to high

telecoms prices for end users.

The changing regulatory environment (including

the treatment of submarine cable landing

stations) and the new balance between supply

and demand for fibre networks make the

business case for additional fibre networks in

Africa a complex and challenging endeavour.

A leading telecoms consulting and research

firm in Northern and sub-Saharan Africa,

Analysys Mason has been involved in many

submarine and terrestrial fibre projects,

preparing analyses to support investments,

developing regulatory frameworks andforecasting supply and demand.


David Eurin, Senior Manager, at

[email protected]

Written by David EurinSenior ManagerConsulting Division

Will fibre work in Africa?

Figure 3: Sub-Saharan countries with large fibre roll-out plans [Source: Analysys Mason, Hamilton Research]

Over USD50m fibre planned

700

600

200

130 11060 44

BSNL RailTel GAILTEL Airtel PowerGrid Tata Reliance

All providers cover the top 8India cities

Figure 4: Number of cities covered with fibre backbone by service providers in India [Source: Analysys Mason, Company websites]



The Swedish 800MHz mobile spectrum auction

ended on 4 March 2011, with bids totalling

SEK1754 million (EUR200 million) plus a

commitment from one of the winners to spend

SEK300 million (EUR34.2 million) on covering

homes and businesses in remote areas of

the country.

The total bids amounted to EUR0.35 per MHz

pop (or EUR0.42 per MHz pop if the

commitment to provide coverage is taken into

account). This is only around half the EUR0.73per MHz pop paid in the German auction in

May last year, and less than 30% of the

EUR1.28 per MHz pop paid in the Hong Kong

auction, which ended the day before the one

in Sweden.

The comparatively low prices paid in Sweden

reflect the relative lack of competition in the

auction. There was a spectrum cap of

2×10MHz in place, ensuring a minimum of three winners, and although five companies

entered the auction, two of them were

significantly weaker than the others: Net1

(which currently operates a CDMA 450MHz

network with fewer than 50 000 subscribers)

and ComHem (which is Sweden’s leading

cable operator, but a virtual network operator

in the mobile business). The facilities-based

GSM/UMTS/HSPA operators TeliaSonera,

Tele2, Telenor and Three were all able to win

2×10MHz of spectrum because Tele2 and

Telenor, which are already partners in a

2600MHz network in Sweden through a joint

venture called Net4Mobility, decided to

bid jointly.

It is interesting to note that Three was able to

secure the lowest frequency block of 2×10MHz

for SEK431 million (EUR49.1 million). This is

significantly lower than the prices paid by

TeliaSonera for the middle block (SEK854

million or EUR97.4 million) and by Net4Mobility

for the highest block (SEK769 million orEUR87.7 million with the coverage

commitment taken into account). This

contrasts with the situation in Germany, where

the lowest block actually attracted the highest

bid. However, the lowest block in Sweden is

subject to much more stringent technical

restrictions in some parts of the country to

avoid interference with TV channel 60.

The commitment to cover remote areas

attached to the highest block is also an

interesting feature of the Swedish auction.

Net4Mobility is obliged to serve remote homes

and businesses on a list to be issued by the

regulator, which is expected to comprise

1000–1500 premises. Net4Mobility will be

required to serve 25% of the premises on the

list in 2012 and 75% in 2013. Thereafter, the

company will be required to add coverage for

specific premises until the SEK300 million

(EUR34.2 million) commitment has been

exhausted. The throughput requirements for

the remote service specify a nominal speed of

1Mbit/s or better to a fixed terminal with a

directional antenna (with an average speed of

at least 750kbit/s over a 24-hour period and at

least 500kbit/s in the busiest four-hour period).

Net4Mobility is, however, permitted to use a

frequency band other than 800MHz if this is

demonstrably less expensive, suggesting that

there may be scope for the company to

subcontract some or all of the remotecoverage obligation to Net1.


Philip Bates, Senior Manager, at

[email protected]

Written by Philip BatesSenior ManagerConsulting Division

Swedish spectrum auction fails to reachGerman bid prices

Social networking – whether it be Facebook,

MySpace, LinkedIn, YouTube or Twitter – is fast

becoming a way of life for millions of people for

personal or business reasons. But it comes with

risks that include identity theft, malware

infections, and the potential for reckless remarks

that damage corporate and personal reputations.

Social networking refers to an online service,

platform, or site that focuses on building and

reflecting relationships between people who

usually share interests and/or activities. A social

network service consists of a representation of each user (often referred to as a profile), their

social links, and a variety of additional services.

This service allows users to share ideas,

activities, events, and interests within their

individual networks.

However, it i s not just about individuals. Social

networking offers real advantages to

organisations such as the emergency services in

reaching out to the public, as shown by

campaigns such as the Facebook appeal

launched by Avon and Somerset Police as part

of the Joanna Yeates murder investigation, or

the Twitter ‘control room’ experiment by Greater

Manchester Police (which has more than 18 000

followers on the site).

Businesses are also increasingly using socialnetworking sites to track down individuals,

based on various search criteria, e.g. identity,

industry accreditations, social and/or

work interests.

But despite these advantages – which give

legitimate reasons for employers to allow staff to

access social network sites – there are some

serious problems attached to social networks.

The sites can be accessed from a variety of

devices, including desktop computers, laptops,

tablet devices and smartphones. Most of these

devices (whether owned by the individual or by

a company) provide access to corporate

applications, e.g. email, calendar and contacts.

Organisations therefore risk ‘untrusted software’

Securing the social network Written by Nigel Strutt

AssociateConsulting Division



accessing corporate data.

Social networks can be attacked by hackers

seeking user passwords and other information,

while one survey suggests that 57% of users

claim to have been spammed via social

networking sites, and 36% claim they were sent

malware via these sites. 1 Social networking sites

are also famous for their ‘widgets’ (third-party

applications that can be added to accounts).

But in some cases these can turn into ‘warriors’

with a single mission – stealing your data.

Many organisations permit staff to access the

Internet for personal purposes. There will of

course be constraints, for example, in terms

of time spent browsing, ‘blocked’ versus

‘unblocked’ sites, and restrictions on content

that may be downloaded. But it should be

noted that when corporate resources are

used to access social networking sites,

organisations are responsible for the actionsof their employees. Conversely, there is

mounting pressure – particularly in the public

sector – for individuals’ actions outside the

work place to reflect the roles which they

undertake in society, which has resulted in a

number of dismissals, including in the

teaching sector.

Staying safe with regard to social networking

means:

• implementing a corporate policy and working

knowledgeably within a set of simple guidelines

• providing education and awareness to

employees

• monitoring compliance.

1 Source: Sophos, February 2010

For more information, please contactNigel Strutt, Associate, [email protected]

Securing the social network – continued

The pay-TV market in the Asia–Pacific region

has undergone significant changes over the past

decade. In contrast to the 1990s, the market is

now more professional and developed. Whilst

there are still regulatory and policy constraints

because of the political sensitivity of media,

there remains a significant opportunity to invest

in the market. Market themes for pay TV can

include leveraged buyout, consolidation, capital

injection for digitisation and hence revenue

growth, and turnaround situations.

In reviewing the opportunity for pay TV in

Asia–Pacific and elsewhere, a number of

questions needs to be considered:

• Is cable/IPTV or satellite the more

appropriate technology?

• How can the assets be further leveraged?

• Can access to content be maintained or

better still remain exclusive?

• What is the potential for additional services?

• How can the cost of deployment be

controlled?

The competitive industry dynamics between

satellite players on one hand and IPTV/cable

operators on the other can differ significantly

across markets. Satellite provides a much wider

reach compared to IPTV/cable and is likely to be

much more cost-efficient in rural areas. In contrast,

IPTV/cable provides for a better viewing

experience, and potentially offers a higher

profitability since the same asset can be used for

delivery of broadband and interactive services.

Over time, there may be a possibility that market

share moves towards cable as infrastructure

becomes more developed, but satellite will

continue to play an important role in large

geographical markets such as Indonesia and India.

Cable has seen a more significant increase in

profitability compared to satellite in the past few

years, driven by the re-use of assets by broadband.

In some markets, for example Indonesia,

broadband revenues have even exceeded pay-

TV revenues. Surprisingly, despite the higher

profile of FTTx technology, cable continues to

make a comeback in market share, as is the

case with Taiwan, partly as cable operatorsrecognise the incremental revenue benefits.

Content is the key driver for pay TV takeup. In

markets where free-to-air content remains

competitive, pay TV has been making less

headway as people do not see the need to

switch. In most other markets however, content

on pay TV is significantly better than on free-to-

air. In markets where pay TV is more dominant,

in order for the pay TV operators to remain

dominant, content cost will become more

expensive. How the pay TV operators continue

to acquire appealing content while maintaining

control of the cost and exclusivity of content

would be one of the key drivers in assessing the

likelihood of success for the operator.

The threat to pay TV from ‘over-the-top’ (OTT)

services cannot be underestimated. Broadband,

the key enabler for such video content, has

grown significantly. The core business in pay TV

will remain scheduled programming, although

we can expect that

on-demand viewing will become more popular

as part of the liberalisation when it comes to

‘anytime, anywhere’ programming.

Pay TV is moving into the digital age in most of

the Asia–Pacific market. Besides the headend

upgrade cost, the biggest component cost is

the set-top boxes (STBs). Controlling the STB

cost in terms of unit price and logistics cost will

be essential, and could create a significant

impact on the valuation of the companies.

In order for cable operators to compete with

satellite operators, the line deployment cost will

have to drop. Line deployment costs varyacross markets and much depends on the local

regulation with regard to roll-out. With ARPUs at

less than USD20 in Asia–Pacific, the payback

period based on line roll-out alone is going to be

quite significant.

Analysys Mason has significant experience

conducting both commercial and technical due

diligence on pay-TV assets in the Asia–Pacific

region. Our Singapore team has completed

close to ten due diligence exercises in the

pay-TV sector.

For more information please contact

Lim Chuan Wei, Partner, at

[email protected]

Pay TV in Asia–Pacific – the next opportunity?Written by Lim Chuan WeiPartnerConsulting Division



This year, the IPTV World Forum has subtly

been renamed the IP&TV World Forum,

reflecting the fact that, although Internet

Protocol TV (IPTV) has failed in most countries

to have a significant impact as a standalone

pay-TV platform, the integration of IP with

traditional broadcast technologies is

transforming the way video content is

distributed and consumed.

The traditional, vertically integrated model of delivering pay-TV services is becoming too rigid

in developed countries, where vast quantities of

video content are increasingly delivered to the

TV set through ubiquitous fixed broadband

connections. In order to maintain their

relevance and appeal to consumers in a rapidly

changing environment, pay-TV operators

should continue to adapt to a more open video

ecosystem in which:

• traditional broadcast video content can be

seamlessly blended with other forms of digital

content that complement it, including online

video content or other contextually relevant

information

• a mix of distribution platforms, incorporating

traditional broadcast and IP networks, is used

to deliver the above content to consumers

• content is consumed on a wide range of

terminals, not just traditional managed

devices, such as operator-supplied set-top

boxes, but also unmanaged devices

connected to the home network, which

consumers may have bought from third-party

retailers, including games consoles, tablets

and smartphones

• the user interfaces on these terminals need to

bridge the gap between broadcast and

broadband content, enabling aggregated

navigation and search across both, in order

to provide consumers with an integrated

entertainment experience.

This new ecosystem represents both a threat

and an opportunity for traditional pay-TV

operators. The more open ecosystem means

that barriers to entry are lower, because it is far

easier for any player with content rights, such

as Netflix, Apple, Amazon or YouTube, to reach

a wide audience with a TV-like experience

without having to invest in their own video

distribution infrastructure. It also makes it

possible for traditional broadcasters to enrich

free-to-air TV with value-added services. The

start of the IP&TV World Forum coincided with

the launch of a new set-top box developed by

EchoStar, which enables Freesat viewers in the

UK to access online catch-up TV services, such

as the BBC iPlayer, on their TV set instead of

the PC, and also to ‘placeshift’ their content to

other devices, including the Apple iPad, through

built-in Slingbox functionality.

However, the emerging, more open model of

delivering content is giving pay-TV operators

the opportunity not just to complement the core

pay-TV service that is delivered to existing

subscribers via traditional platforms, but also to

reach a wider audience with their content, thus

leveraging their position as aggregators and

packagers of content.

Individual pay-TV operators will need to decide

to what extent they are willing to immerse

themselves in the new ecosystem. Some of the

key strategic questions they need to consider

include the following:

• How and when will they combine new forms

of ‘Over-The-Top’ content with traditional

broadcast content? How do they manage

their rights negotiations accordingly?

• To what extent do they use IP to bring

interactivity to their platform?

• How widely do they want to distribute their

content? Will they deliver their own OTT

services to any consumer over third-party

infrastructure, i.e. a competitor’s fixed

broadband connection or limit themselves to

their own platform?

• How do they ensure that their OTT services

do not cannibalise their traditional linear pay-

TV proposition?

• Which devices should they provide video

services to? Which distribution channels

should they use to make these devices

available to consumers wishing to use their

services?

• How future-proof is their service delivery

platform in a rapidly changing world? How

and when should they upgrade their user

interfaces and the underlying middleware?

At the IP&TV World Forum, a multitude of

vendors offered solutions enabling pay-TV

operators to adapt to the changing market, and

differentiate themselves from increasingly

sophisticated services provided by third parties.

For example, middleware vendor NDSdemonstrated a mock-up of a digital version of

Sky Magazine, which enables consumer

interaction between the magazine’s content and

the pay-TV service. An example of this would

be reading about a forthcoming TV programme

in an article then embedding the ability to

schedule that programme to be recorded on a

DVR within the article. NDS also launched

Infinite TV Exchange, a global B2B content

marketplace enabling pay-TV operators to

incorporate special interest video content within

their proposition.

However, pay-TV operators will need to ensure

they do not get carried away by the urge to offer

increasingly advanced features, and forget

about the underlying fundamentals of their core

pay-TV service, which is all about delivering a

good selection of quality content to their

subscribers with a guaranteed quality of service.

Amid all the innovation, it was refreshing to see

vendor ADB Global highlight ‘back-to-basics’

features, such as fast channel changes and aneight-second reboot time for its set-top boxes.


Cesar Bachelet, Senior Analyst, at

[email protected]

The pay-TV ecosystem needs to evolve:insights from IP&TV World Forum 2011

Written by Cesar BacheletSenior Analyst, Research DivisionLluis BorrellPartner, Consulting Division


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Analysys Mason forecasts 1.3 billion residential

and commercial smart meter connections by

2020, with a CAGR of 56% over a 10-year period,

according to a recent Analysys Mason machine-to

machine (M2M) forecast (see Figure 5). This high

level of growth happens primarily in the

developed world economies from 2010–15, but

by 2016 we also expect very high levels of

growth in the emerging world, especially in the

Asia–Pacific region.

Utilities must do three things to be successful in

the smart-grid space.

First, they must prioritise deployment of the top

cost-reduction and revenue-enhancing

applications associated with the smart grid. The

complementary aspects of cost reduction and

revenue enhancement promise utilities a

multitude of new opportunities. But choosing

too many applications or deploying them in a

haphazard fashion will reduce the effectiveness

of these new programmes.

Second, they must work with a system

integrator (SI) or communication service provider

(CSP) that can provide a pre-integrated or pre-

tested solution. SIs or CSPs need to offer

solutions that include equipment,

communications, a hardware/software platform

and applications. Trying to piece together a

solution from 5–7 vendors will prove financially

painful and time-consuming.

Third, they must pick application vendors with a

proven track record in actual deployments in

their countries of interest. While M2M solutions

are relatively new in the energy/utility sector, we

have seen some notable successes from

Trilliant, eMeter, EnerNOC and others. And the

experiences of application vendors matter a lot

in this new field.

The roll-out of smart metering is the first step in

smart-grid development and introduces the

potential for utilities to start offering additional

value-added services to residential and

commercial customers. In the UK for example,

suppliers will be under licence obligations to

complete the roll-out of smart metering to 25

million households, most likely by the end of the

decade. Within this, a degree of flexibility is

expected over the pattern of installations, with

some utilities seeking to engage with local

delivery partners to increase deployment

efficiency, and others focusing on early adopters.

The regulator Ofgem has suggested that

suppliers’ discretionary installation rate could

peak at an annual 17% meter replacement rateduring the middle of the decade 2010–20.

We find it is the applications layer of the M2M

supply chain which can make or break smart-

grid solutions and a utility’s ability to meet its

cost-reduction or revenue-generating goals.

The top six applications include pre-paid

metering, home energy management, residential

or commercial security, smart metering, storage

management and demand response

programmes.

However, identifying the field of vendors for each

of these six applications is no trivial task.

Providers include Eschelon, OPower, Tendril,

Eragy, Alertme, eMeter, Trilliant, Current Energy,

EnerNOC and many others.

Top application providers for smart-grid

solutions will have exponential growth for their

services. Making sure they have the proper

supply-chain partnerships is key in quickly

bringing to market cost-effective, value-

enhancing solutions.


Steve Hilton, Principal Analyst, at

[email protected]

Figure 5: Utility/energy-sector M2M device connections, worldwide, 2010–20 [Source: Analysys Mason, 2011]

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600

800

1000

1200

1400

M 2 M

d e v i c e c o n n e c

t i o n s

( m i l l i o n )

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Written by Steve HiltonPrincipal Analyst, Consulting Divisionwith Ed ReedPrincipal Consultant,Cornwall Energy

Driving the energy sector towards theM2M-enabled smart grid

Analysys Mason Communique April 2011

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