Chapter 1. Market Drivers

This chapter covers the following topics:

• Analog TV

• Digital TV

• Interactive TV

• Video on Demand

• Near Video on Demand

• World Wide Web

• Convergence of Digital TV and the Internet

• Datacasting

• Games

• Funding Models

Consumers receive a variety of services over multiple networks to the home today. They receive voice and data services over telephone networks, and they receive broadcast television services through cable TV networks and over the air. As technologies for the computer, entertainment, and communications industries converge to digital infrastructures, leaders in government and industry are contemplating the development of residential broadband (RBB) networks that will deliver these same services—and new services—to the home.

Although these RBB networks will offer great benefits to the consumer, they will be expensive to deploy. Service providers (telephone companies, broadcasters, cable operators, public utilities, municipalities, and Internet service providers) and their equipment vendors are poised to make multibillion-dollar bets that consumer demand for broadband networks and the content they deliver will be high.

What will compel the consumer to purchase the new RBB networks? Consumers won't pay for RBB services just to have access to a fast network. Existing telephone and broadcast television services by themselves don't justify the rollout of high-speed residential networks; they already work reliably, are reasonably priced, and provide a comfort level for consumers. Finally, it's difficult for people to imagine a service or an experience that they've never had exposure to before. Thus, it's a tougher to sell the consumer up to the next level.

To justify the rollout of RBB networks, new services (or market drivers) must be available to the consumer over the new networks. Although it is true that direct broadcast satellite (DBS) service has come down in price to meet cable pricing, for years this service was quite expensive. But consumers purchased millions of DBS units at a premium for digital television reception. Digital television offers better pictures and a wider program selection than over-the-air broadcasters or cable operators can offer over analog networks.

In addition, the Internet offers a tremendous variety of information and entertainment for the home. Digital television and the Internet, offered separately or in combination, are creating new forms of entertainment and information services to the home and are among the market drivers for RBB networking.

This chapter examines several possible market drivers for RBB, including these:

• Analog TV

• Digital TV

• Interactive TV

• Video on demand (VoD)

• Near video on demand (nVoD)

• World Wide Web

• Convergence of digital TV and the Internet

• Datacasting

• Games

• Funding models

Throughout this chapter, the goal is to define aspects of these services, which are either facilitators of or challenges to the deployment of RBB.