How Telcos and Cable Companies Can Win the War on Streaming by Adopting ABR

For the first time ever, the monthly viewership for streaming services has surpassed both broadcast and cable. Nielsen, a global audience analytics company, announced that streaming usage grew to 34.8% percent in July 2022, compared with 34.4% for cable. Although the difference between the two is less than half a percentage point, the year-to-year change for streaming viewership was an increase of 22.6%, whereas cable viewership decreased by 8.9% over the same period.

The growth of streaming may seem insurmountable for cable-TV operators. In truth, telco and cable operators are in the best position to serve TV to viewers. This article will explore cable TV’s unique offering, describe the key challenges for operators thinking about streaming, and show how moving to adaptive bitrate (ABR) delivery opens up new monetization opportunities for operators while optimizing the quality of experience (QoE) and quality of service (QoS).

Six reasons cable-TV still comes first in the viewership race

Operators are in good position to deliver TV for many reasons. First and foremost, they have an existing content footprint. With 30-plus years of experience, operators have pioneered the delivery of exclusive content over set-top boxes (STBs), giving them access to significant media assets.

Most cable-TV services operate locally and have a regional customer base. In the U.S., cable operators typically distribute localized content like college sports, regional news, and the weather. This content is difficult for large streaming services to attain, let alone make searchable on their sites. Consequently, this puts cable TV in an exclusive position in terms of viewership.

The direct relationships operators have with customers to personalize their TV experience is another strength. People love to watch what’s happening in their local area. Knowing not only where their customers are located but also what they enjoy or dislike enables cable operators to tailor viewing experiences.

Since many cable operators also deliver broadband services, they have control over the home gateway, enabling them to bundle the right local WiFi network for video traffic. Leveraging the home gateway cuts down on the costs of having to build a whole new infrastructure when introducing a streaming service. All operators would need to do is enhance the home gateway with software.

Furthermore, cable operators have a very dense edge network, which enables them to deliver better video quality than streaming service providers. And operators are used to dealing with low latency at scale with broadcast, whereas streaming services always run about 30 seconds behind. With decades of experience, cable operators are better equipped at dealing with latency — a skill they can bring into streaming, too.

Finally, cable operators have navigated the complexity around programmers’ requirements and regulations for years, knowing how to deal with blackout policies and more. This puts cable operators in the best position to secure licenses from programmers and gain multiple content feeds for distribution.

Key challenges that prevent cable operators from growing their offerings

Despite all these strengths, most cable operators deliver TV the traditional way. Their resistance to transitioning to streaming for TV delivery stems from several challenges.

The first challenge is one of projected market growth. Broadband has a high profit margin, whereas TV has low margin. As a result, it’s easy for operators to focus their attention on broadband. However, if operators offered a better experience, including personalized content and targeted ads, they would see that TV is still very profitable.

Another challenge operators face is that broadcast has been around for 30 years and is rooted in technologies that existed before the internet. This new generation of technology makes some engineers hesitant to transition to streaming.

Moreover, cable operators typically don't have the cash to build a new streaming infrastructure, including a headend, transporters, packagers, and CDNs. Nor do they have the people to operate it all.

How ABR delivery can simplify the transition to streaming

Despite the challenges operators face, making the transition to streaming is critical to enable future long-term business growth. Typically, people enjoy streaming services because it gives them the flexibility to watch on multiple devices. Traditional delivery methods limit cable operators from delivering TV outside of the STB, and customers no longer want to rely on another piece of equipment to watch TV content.

Today’s cable operators have an opportunity to deliver TV services to any screen with far more exclusive content by adopting adaptive bitrate (ABR) technology. Based on Hypertext Transfer Protocol (HTTP), ABR empowers operators to deliver content to smart TVs, tablets, smartphones, tablets, and more.

Moving from broadcast to ABR delivery brings three key benefits to operators. The first one, of course, is that they no longer need to provide STBs. Instead, subscribers can use any of their own devices — either on-net or off-net. Viewers will still enjoy the same great quality of video, but with ABR, it’ll be delivered through a software application.

Second, operators can adapt the quality of their services and hence extend the eligibility of some content to remote locations. In the past, HD broadcast services could only be offered to people with higher bandwidth, leaving people with low-to-medium bandwidth to consume SD-only content. With ABR, operators can tap into a capability called “adaptive quality” and deliver the highest quality possible to viewers based on the overall bandwidth.

Third, operators can personalize video feeds for every unique subscriber – an advantage over traditional broadcast, which provides every viewer with the exact same lineup. With streaming, operators can personalize each subscriber’s lineup, including the ads they receive, and boost their own revenue accordingly.

Aside from targeted ads, ABR also opens other sources of monetization. For example, streaming services can store recorded content in the cloud. Not only does this free up the viewers’ storage space, but it also allows cable operators to sell additional storage, as necessary, without having to ship a physical piece of equipment. That’s great news for families who want to record their college kids’ football games and store them for years to come.

Additionally, cable operators can leverage their new streaming infrastructure to cache third-party content as a paid service. Because they control the network, operators can also control how the packets move in the network, making certain types of traffic — like live sports — a priority over others. They can use technology such as multicast ABR to improve quality and gain a competitive advantage over streaming services. For third parties, caching content is a great deal: They can shorten their feeds from 1 million down to one, improve the quality of their own content by caching it closer to customers, and distribute the content at a reduced cost compared with CDNs. The end result is an exceptional QoE and QoS.

Final takeaways

Despite the market, technical, and operational challenges facing operators, they are in the best position to deliver video streaming services. By investing in ABR, operators can extend their offering to new customers and take advantage of monetization opportunities with third-party providers.

Transitioning to ABR is simple. Operators don't need to invest a lot to get access to streaming feeds. They can do it by partnering with technology providers building a multi-tenant headend in the cloud and developing innovative technologies like multicast ABR. Plus, they can avoid big upfront costs by sharing all the costs with the tech provider, mitigating any operational challenges.

The tech provider can help operators overcome any resistance to change, providing experienced staff for training, configuration, and technical support. And finally, they can assist with both the management and the operation, performing all the tasks on the operators’ behalf so they can focus on other sides of the business, such as content monetization. By embracing ABR technology, operators can get a competitive advantage over current streaming services, providing exceptional quality, better latency, and all for better price.

Mathias Guille is vice president of cloud platform at Broadpeak and forms part of the company’s broadpeak.io and peakVU.TV teams.