Direct Broadcast Satellite
While cable operators were talking about digital TV, direct broadcast satellite (DBS) companies were doing it, taking the cable industry by surprise. Early entrants were Primestar, DirecTV, and United States Satellite Broadcasting (USSB), all launched in 1994. Echostar launched in March 1996, and recently Rupert Murdoch's News Corporation launched DBS services BSkyB and JSkyB, for Britain and Japan Sky Broadcasting, respectively.
In the United States, DBS is viewed as a commercial success. Some of the key statistics are listed here:
DBS has 9 million customers (as of mid-1999). Subscribership is particularly strong considering that customers initially paid up to $800 for a home satellite dish and installation.
The average DBS subscriber spends about 50 percent more per month than the average cable subscriber (about $52 versus $35 per month). This is due to the upscale sale of DBS and the sales of premium sports and movie packages. In particular, aggressive marketing of sports packages (including college basketball and professional football) has created differentiated content for which DBS has found a ready market.
Fifty-five percent of DBS subscribers live in areas with cable service, surprising those who thought DBS would serve only areas not served by cable.
DBS Architecture
DBS uses geosynchronous satellites operating in the Ku band (12 GHz downlink/14 GHz uplink). The specific frequencies for DBS are 12.2 GHz to 12.7 GHz.
Table 6-4 shows transponder capacity by orbital slots of DirecTV and Echostar.
| 119°West | 110°West | 101°West | |
|---|---|---|---|
| Echostar | 21 | 29 | 0 |
| DirecTV | 11 | 3 | 32 |
The 101° west longitude measurement lines up over the East Coast of the United States, 119° lines up over the West Coast, and 110° lines up over the Midwest. (Recall from your geography class that 0° lines up over Greenwich in the United Kingdom). From these orbital slots, the satellite can beam programming down to the entire United States. The importance of having many transponders (which are basically microwave repeaters in the sky) is to provide increased channel capacity. The number of programs per transponder depends on the amount of compression used by the operator and is a closely held secret. But with 50 transponders each, Echostar and DirecTV can provide roughly 370 and 500 digital channels, respectively.
Architecturally, DBS is a simple concept, as depicted in Figure 6-2. DBS operators receive analog or digital TV reception from terrestrial sources at a single giant head end. DirecTV's head end, for example, is in Castle Rock, Colorado. The programming is encoded into MPEG for digital retransmission. A control function regulates the amount of bandwidth accorded to each MPEG stream and determines how the MPEG knobs (control parameters), such as group of pictures length, are specified.
Figure 6-2. DBS Schematic
The amount of compression used per program is a closely guarded secret of the DBS operators. For example, ESPN tends to require more bandwidth than the Food Channel. Of course, ESPN has a lot more motion, but more importantly, it has greater viewership and advertising revenue. How much more would ESPN pay for access than the Food Channel? How much extra bandwidth is ESPN getting, and for how much? What MPEG knobs should the carrier use, and what knobs does its competition use? This is not public information. In any event, after compression, ESPN, the Food Channel, and all other channels are encoded into MPEG transport streams, are multiplexed together, and then are converted to the licensed uplink frequency.
The composite stream of 500 or so channels is transmitted up to a geosynchronous satellite. The satellite receives transmission and remodulates to the designated spectrum for DBS. By regulation, DBS satellites are allowed to broadcast at a higher power (120W) than the larger C-band satellite dishes currently used by many households to enable reception on small satellite dishes. This higher-powered transmission and smaller dish distinguish DBS from other forms of satellite reception and have provided DBS with a competitive advantage over the older C-band satellite services.
Although 720 by 480 is the maximum resolution offered today, DBS is capable of higher pixel resolution. In fact, DBS could be an early delivery vehicle for HDTV programming. Some analysts think that DBS will prove to be the most cost-effective means of delivering HDTV to homes in the United States for years to come. This is because most HDTV content is expected to be films, which are easily converted and which the DBS vendors routinely offer. Furthermore, the cost of upgrading to high-definition for DBS is limited to a single head end and the receiving dishes. For over-the-air broadcasters, upgrading to digital means that each individual broadcast affiliate must make an investment.
On some systems, a credit card-sized plug-in board called a smartcard is used for key management of conditional access systems. The smartcard plugs into the decoder, and without this card there is no reception. When the conditional access system is compromised by hackers, the carrier can mail replacement smartcards with new encryption keys to subscribers. This costs around $10 per card but is a little more secure than other systems.
Security Using Smartcards
Debate continues about the security and expense of smartcards, but the cards are slowly gaining momentum despite the cost of smartcard readers in set tops. Because carriers are reluctant to replace entire set tops, they typically live with breaches of conditional access. Smartcards give carriers an option, though, and raise the bar slightly against hackers. Of course, hackers are an ingenious lot and no doubt eventually will crack smartcards as well. The question is whether the cost of maintaining conditional access is worth the effort.
European carriers think so. Smartcards will be used in Europe to help DBS service providers overcome a problem not found in the United States. Because of the proximity of national boundaries, and because the issuance of program licenses is sometimes limited by country, it is necessary to provide conditional access by country. For example, a DBS provider might have the right to transmit a certain program in the United Kingdom but not in Spain, where another DBS provider has the program license. In this case, a U.K. resident on vacation in Spain should not be able to use his U.K. smartcard there. Measures are under consideration to provide this extra security, such as by combining information on the smartcard with information about the set top into which it is inserted.
Another use of smartcards is for electronic commerce. Credit information could be infused onto a smartcard so that commercial transactions can be made online without the need to reveal credit card information. If this form of commerce expands, the costs associated with smartcards will fall, making it more attractive for purely conditional access use.
The set-top hardware used by DirecTV is called Digital Satellite System, or DSS. Sony, Thomson Consumer Electronics, Hughes Network Systems, Toshiba, Matsushita (Panasonic), and Uniden all sell the DSS receiving equipment.
Challenges to DBS
DBS sales started out impressively, but some experts believe that DBS penetration will not exceed 15 million to 20 million homes in the United States. DBS faces keen competition from a strengthening cable industry and other wireless technologies, which are discussed later in this chapter. Also on the horizon is digital over-the-air broadcasting. Alphastar, a DBS operator, declared bankruptcy in June 1997. Today the United States has two DBS satellite providers—DirecTV and Echostar—and little prospect for another national provider.
Lack of Interactive Data Service
Although there is a geosynchronous satellite Internet service called DirectPC, it is a relatively small offering of only 12 Mbps of downstream service for the entire footprint of North America; it uses a telephone as a return path.
The lack of a return path for DBS means that it will have only limited interactive capability. What interaction is possible will be only with downloaded Web pages cached in the set-top box.
A possible approach to interactivity would be for DBS vendors to align with xDSL service providers. Modified DBS set-top boxes could embed xDSL modems for return-path and point-to-point full-duplex operation. As of this writing, however, there seems to be little interest on the part of either industry to take this approach.
Local Television Content
Local TV programming is important to viewers. Morning ratings are high because viewers want local weather and traffic to start their day and get to work. Local sports are also important in many communities; high school football is popular in Texas, for instance, while high school basketball is important in Indiana. Another local content issue arises due to time zones. Many people on the West Coast, for instance, are unhappy that some DBS programs are received three hours early because they originate from the East Coast. Finally, local advertisers require stations to broadcast only locally—it does a local restaurant no good to advertise nationally.
The delivery of local content on DBS is hampered by two issues: one technical and one legal. The technical issue is how to reduce the footprint from nationwide to multiple metropolitan areas. This problem is being addressed by the development of a frequency reuse technology, called spot beaming. With spot beaming, a single satellite can broadcast to multiple small footprints rather than a single footprint covering the entire country. This is done using sophisticated antenna-shaping techniques originally developed for military satellite applications. But there is not enough transponder capacity for all 1600 broadcast channels in the United States using current technology. If an operator can support "only" 500 channels, it is most likely that it will broadcast only the New York, Los Angeles, and big-city stations.
The Catch-22 for spot beaming is that if the satellite operators have this technology for a specific metropolitan area, then they will likely be subjected to Must Carry requirements just as cable is. As of this writing, mandating legislation is pending. Given sufficient transponder capacity, this should be possible—but it won't be cheap.
Another problem is the payment of royalties by the satellite operators to content producers. The Satellite Home Viewer Act (SHVA) provides a compulsory right for satellite providers to retransmit network signals, and the act provides a royalty fee for that right. Satellite providers pay 27 cents per subscriber per month to the programmers and local stations for that right. Naturally, programmers feel that they should receive more, and the DBS providers think that they should pay less. Federal legislation is currently pending to extend the compulsory license and reduce the royalties to 14.85 cents per subscriber per month for networks and slightly more for so-called superstations. Because the right of compulsory retransmission is limited to five years in the newly proposed legislation, the question of access to program content is a continuing problem for satellite operators.
Multiple Home Viewers
Current DBS systems can decode only one channel at a time, so a separate decoder must be purchased for each TV in the home. The requirement to obtain multiple decoders represents a significant cost penalty for most American homes, which have an average of nearly three televisions per home.
Competition
DBS already faces competition from cable operators and soon will compete with over-the-air digital broadcasters. New DBS competition could come online as well. Canada, Mexico, and some South American countries have been granted orbital slots that could beam service into the United States. At least some of them soon will be auctioning off their spectrum; it is expected that some U.S. companies will bid on that spectrum with the intent of servicing the United States.
Both cable and over-the-air broadcasts have the advantage of local content. Cable also intends to offer interactive services, thereby providing a complete package of services.
Finally, competition might come from Multichannel Multipoint Distribution Service (MMDS) and Local Multipoint Distribution Services (LMDS), both of which are discussed later in this chapter.
Standardization
The vast majority of DBS systems worldwide will use the European DVB standard, with the current exception of DirecTV in the United States. When DirecTV begins operation in Japan, it will use DVB. The prospect of the worldwide use of DVB promises some lowered costs as multiple manufacturers make common components. However, interoperability of set tops among different systems is unlikely because too many variables exist in the DVB specification. In addition, differences occur in conditional access and encryption. In some set tops, these security devices are built into the box, making them tamperproof. In others, the security devices are built into smartcards and consequently can be changed. Interchangeable security was a part of the original DVB specification, but it has not been enforced by service providers, who typically have their own ideas about security.
The Role of DBS in Residential Broadband
Because of its one-way capability, DBS is not viewed as an Access Network option for RBB. The role of DBS in this discussion is to further emphasize the importance of television as a market driver and to explore DBS's negative financial impact on other technologies. DBS is instrumental in keeping pricing for cable services low, thereby inhibiting the capability of cable to roll out high-speed services.
Even though it is not a candidate for RBB services, DBS is a spoiler for full-service networks, such as cable, that attempt to provide both data and video services. For the more than 20 percent of homes in the United States that are forecast to receive DBS, the appeal of other technologies such as xDSL rests largely on the strength of their pull-mode data services because DBS already provides high-quality multichannel broadcast service in such homes.