From analogue to digital headends

March 2002 Cable operators across Europe face a serious problem: 'How quickly should they convert their legacy analogue systems into fully-fledged, interactive digital networks?' The timing could decide whether they have a future or not

For any network operator supplying broadcast content, the decision to deliver that material in a digital format should not require a second thought. Making use of advanced compression techniques, digital transmissions are able to fit many more channels onto each available frequency than their analogue equivalents, thereby enhancing operators' revenue generating potential - more channels mean more revenue. However, there is one not insignificant problem: many established networks cannot deliver the content without significant further investment.

Much of Europe's cable operators' infrastructure is currently based on analogue transmission technology and must be 'upgraded' to digital if these operators are to benefit from the range of new services the technology affords. The leap has proved relatively easy for satellite operators: their direct, point-to-multipoint networks means that the most difficult elements to upgrade are their customers' reception equipment.
While cable operators can budget and manage that process as easily as their satellite rivals, they have the added burden of a distribution system that is not converted so readily. 'Cable is such a legacy system - it's been around or 15 or 16 years,' says Dr Beth Erez, VP of Marketing for the digital content specialist NDS.

While new network projects are able to embrace the digital age immediately, many other companies have to decide on a strategy for converting their existing older systems - keenly aware that the wrong decision in a time of tight competition could cost them dearly.

The digital challenge

The critical stop-off point - as a broadcast signal travels from content provider to viewer - is a series of headend sites, which process incoming signals from satellite and terrestrial sources for transmission through the network. With an analogue system, each frequency that the viewer can receive through their television carries a single content channel. The headend's role is simply to modulate the signal for efficient transmission.
To simplify the operator's purchase decision, the headend solution offered by each equipment manufacturer may carry the endorsement of a particular content provider. This means the operator can order equipment in the knowledge that it will maintain picture quality for the content it wishes to deliver.

'Each reasonably-sized city has its own headend, so you have an analogue world that is fairly simple,' explains Nick Fielibert, COO of equipment manufacturer BarcoNet. 'Digital is a lot more complex.' Digital transmissions from content providers are packaged in a radically different way.

Each frequency setting can contain multiple channels, which are not necessarily related to each other - some may carry TV or radio and some data. Additionally, if the capacity of the cable network is different from that of the system delivering the source material, the headend may have to reallocate certain channels to different frequencies.
It is this complexity that enables digital transmission to deliver a dramatically expanded roster of services for operators to take advantage of. The use of headends within the cable network provides an opportunity for operators to differentiate their product from satellite rivals through custom options.

A well-managed digital headend can integrate channels with regional appeal, such as local news, or selected special-interest channels that may prove attractive in some areas. For example, specific language channels delivered to areas with a high concentration of non-native language speakers. 'Operators can change their present structure to one of master headends and hubs,' says Fielibert. 'The hubs may only process local content.'

Steep learning curve

Cable operators that make the switch to digital are able to offer advanced two-way services for added market differentiation, such as Video-on-Demand (VoD) and integrated voice and Internet access. Managing this wealth of options places more importance on the role of the headend in network performance.

While allocation of channels to frequencies under an analogue system is based on a straightforward one-on-one relationship, the 'multiplex' delivery of digital content requires far more sophisticated management. Here, content allocation relies on the Service Information or 'SI' tables contained within digital transmissions. These contain information essential for efficient management, such as the allocation of channels within RF frequencies and the rules governing conditional access to a channel.

Under a digital regime, the cable headend has to process SI tables from a variety of content providers - a task complicated by the way in which providers are able to define their own fields within tables. This allows them to rank their premium channels higher in their 'Electronic Programme Guide (EPG)' listings, for example; it also means that SI tables from different providers may not be formatted consistently. Issues such as back-up and redundancy management are also transformed.

BarcoNet's Fielibert believes that manufacturers must take on more responsibility in helping operators adjust, with education forming a larger part of their relationship with operators than before. 'There's so much stuff the operators need to learn about, but content and services should be their only worry.'

Manufacturers such as BarcoNet now initially take sole responsibility for managing transmissions, he adds, as the operators adjust. 'Gradually they take over from us and after a while, probably between three and six months, they can operate the system on their own.'

With support of common standards a prerequisite for digital headends, equipment manufacturers can use this educational role to make themselves stand out from their rivals, says Fielibert. 'Great differentiation is possible on the management side, like the way you handle streams. What comes off satellite is not necessarily compatible with your receiver equipment.'

Upgrading to digital headends enables the infrastructure to process far more information than before. The key to empowering the viewer to manage this influx successfully is the EPG. The headend also has to process and combine EPGs from different content providers so that the viewer enjoys a single, consistent experience.

The problem of merging these different streams of information is compounded by the EPG's need to update frequently and with the sheer quantity of information it may carry. But success at this endeavour is likely to carry its own reward by encouraging viewers to adopt the extra services presented to them.

Investment implications

For operators used to an analogue network model, committing to a fully-digital infrastructure requires a significant spike in investment. 'Set-top boxes can be at least three times the cost of the analogue equivalent,' Beth Erez notes.
Nick Fielibert suggests that the cost implications are not an issue if the operator invested wisely during the analogue era. 'Providing you have a good analogue network, the cost is the same as starting digital from scratch, and going to digital should save some money in the management system.' George Johnson, director of networks for infrastructure supplier MKI adds, 'Most forward-looking operators have made provisions already.'

Because of the technical and cost issues involved with the switch to digital, most firms are likely to adopt a phased rollout. 'You see operators switching when they need to get a competitive edge,' says Erez. 'It's a rare company that is able to convert the entire network, although Cablevision in the US have decided they're going to upgrade their entire system.'

She cites Israel, a key market for NDS, as a more typical example of operator progress. 'They're running digital and analogue in parallel; they've changed over 20-30% in about 18 months.'
Operators are discovering that balancing the cost of investment against return from increased customer spending is the make-or-break issue. 'There were expectations of fast payback,' says MKI's Johnson, 'but now operators are being more pessimistic in their forecasts.'

Rolling out digital upgrades too quickly runs the risk of leaving operators vulnerable to take-over, Fielibert points out, 'You can already see the evolution in Germany where American money is coming in.'

Yet despite the shadow of the predator, the decision of how quickly digital headends should be introduced is fast being taken out of cable operators' hands. 'The competition is now mostly from outside of the cable industry,' says Fielibert. 'DSL technology is not going to stand still, and satellite operators are thinking of adding interactivity. You [cable operators] must make sure you stay ahead of the competition,' he says.