The market for set-top boxes (STB) that combine Internet Protocol (IP) and direct broadcast service functionality is growing, and Michael Arden, an analyst with ABI Research believes satellite pay-TV operators will increasingly seek these hybrid strategies.

"Among the satellite operators, it is kind of a pioneering effort to use a hybrid network and use an IP back channel," Arden told Satellite News while discussing the "Worldwide Hybrid Set-Top Box Markets," a report released Sept. 19 by ABI Research.

ABI Research predicts that annual shipments of such hybrid STBs will grow to more than 50 million worldwide by 2011, with Western Europe accounting for the largest share. The report also predicts that about 20 percent of all hybrid STBs shipped in 2006 will be for satellite services. The remainder will incorporate cable or digital terrestrial TV technology with IP. In the future, the ratio will change. Direct broadcast service hybrid STB shipments in 2011 will be ten times greater than they are today and account for a solid majority of all hybrid STBs.

BSkyB is leading the way in this arena, but Arden believes others will follow soon. "The combination of Easynet broadband and BSkyB broadcast service will enable [BSkyB] to provide [video-on-demand] and data services," he said. "In the past few months, there was an announcement by Yes in Israel, that they were using the Bezeq backchannel to be able to do similar services to what BSkyB is doing. Harmonic has also announced that they have been chosen by BoomTV in Romania to provide an IP headend to run a parallel network there. This is catching on.

"Others will begin to follow suit in the near future," he said. "All satellite operators are discussing plans for doing IP back channels, but most are still in the initial planning stages."

Satellite operators now have no choice but to have a progressive IP strategy. "In competitive markets, the satellite companies can no longer retain subscribers simply by packaging themed programs together or promoting their HD capabilities," he said. "They have to provide broadband and interactive video as well."

Arden also believes that U.S. pay-TV operators, Echostar and DirecTV also will look to supplement their satellite services with a more progressive IP strategy. The operators are setting up partnerships with multiple telecom operators to develop a triple-play offering for the consumer market.

"DirecTV and Verizon made an announcement that they were putting together a triple play service for MDUs (multi-dwelling units)," Arden said. "They will receive broadcast over satellite, and they would then use Verizon DSL for voice and broadband services. Obviously, this area of triple play is really gaining momentum for satellite operators. They need to be able to get in here one way or the other. It could be in partnership with IP backchannel providers. There is some talk about DirecTV and EchoStar using WiMAX as a potential IP backchannel. There is nothing concrete there, but there is speculation."

In terms of when satellite operators might start to develop WiMAX strategies, Arden said, "WiMAX will likely come first in the United States. In Europe, DSL is more prevalent and has shorter loop lengths, so it’s more powerful in terms of bandwidth. WiMAX will be a possibility for and broadband. Streaming video over WiMAX won’t happen any time soon — if ever. The technology cannot handle it. Essentially, WiMAX would have to be used in a scenario where the transfer is more of a data transfer."

Separately, AABI Research predicts that nearly 300 million global navigation satellite systems (GNSS) receivers will be shipped by 2001 up from 40 million in 2005. In material released Sept. 20, ABI says growth will not occur evenly across the board. In 2005, in-vehicle navigation systems accounted for 26 percent of total shipments but 34 percent of worldwide GNSS hardware revenues. In 2011, in contrast, in-vehicle navigation shipments will represent 16 percent of the total market but still deliver 29 percent of the hardware revenue.

Frank Viquez, ABI’s research directors, said the most significant trend is the growing importance of the communications sector, almost entirely made up of GPS-enabled handsets: "In 2005, communications accounted for 43 percent of the total market in terms of shipments. In 2011 that will have grown to 69 percent, but the revenue derived from it will have doubled, from just 9 percent in 2005."

–Mark Holmes Contact, Beth Schechner, ABI Research, e-mail, [email protected]