Satellite operators in Europe have forged ahead with digital interactive service launches, leaving the competition from cable behind. At the Western Show in Los Angeles last month, Open TV’s Vincent Dureau offered a critical perspective…

In the rush to get digital services underway, European DTH operators, and BSkyB in particular, have shown evidence of looking over their shoulders, wary of the perceived sleeping giant of digital cable. Europe’s cable operators have so far struggled to make much headway in the digital world, by comparison with the big guns of satellite pay-TV such as BSkyB and Canal Plus. Cable operators such as the UK’s NTL have continued to insist that digital cable will be worth the wait, offering consumers a much broader range of interactive possibilities. They have championed open Internet-based standards and have criticised satellite operators such as BSkyB that have opted for a proprietary solution (Open TV) for interactive services.

Open TV, which announced at last month’s Western Show in Los Angeles that it had signed an agreement with General Instrument to incorporate Open TV software in GI’s DCT 2000 digital set top, and which has just opened a London office, naturally has a different perspective.

"What people should never forget is that they will need more than one TV set in the home," says Vincent Dureau, Open TV’s chief technical officer. "That definitely puts the focus on the cheapest set top possible."

Dureau points out that Open TV is present in close to five million set tops in Europe, and says that this is expected to rise to ten million by the end of this year, based on the projected growth of existing customers such as TPS, BSkyB, Via Digital and Stream.

One market that has remained largely closed to Open TV is Germany, where the company is banking on the success of the ‘Free Universal Network’, the FUN alliance. "There’s a sizeable market for free to air TV," maintains Dureau, pointing out that FUN is backed by the two largest broadcasters in the country, ARD and RTL. Open TV is working closely with the public broadcaster ARD, which is developing enhanced interactive TV content. "That’s motivating a lot of players to join the consortium," says Dureau.

According to Dureau, TV-centric content will lead the way. The path towards Internet access via the TV could, on the other hand, lead merely to a blind alley. "TV content will drive people to interactive," he says. "People want to watch TV. That will lead them to some element of interactivity. Sky [for example] has TV content, and that’s the force behind the success of their network." Thus it would help Open… and Sky Digital together if their offerings were seamless as far as the viewer was concerned. However, BSkyB’s attitude has always been that it was better to launch a platform that worked first, and worry about joining things up seamlessly second. This stands in contrast to the view seemingly held by UK cable.

"My perception is that UK cable is less focused on TV [than satellite]," says Dureau. "And TV is a quite powerful driver to services."

Satellite has thus far dominated the digital market because of its greater flexibility. "Satellite guys move first because the can move faster," says Dureau. "Cable can’t react as fast as it would like to." Cable operators are also less exclusively focused on TV because telephony and (further down the line) cable modems are seen as key revenue drivers.

"There are two camps," surmises Dureau. "One is TV focused and it has adopted a push broadcast model for interactivity. It can associate interactivity with primetime TV. It deploys a low cost set top box." Cable operators that have adopted this model, reserving two-way functionality for modems and telephony, include TeleDanmark, Casema and Lyonnaise. "The other camp [believes in] a full broadband end to end [solution] with lots of power in the set top." This group includes UPC, NTL and CWC.

The Open TV model clearly favours the first camp. "We have shown that you can support a full range [of functions] on low end set top boxes," says Dureau. "We think this will be the dominant model. Others are struggling on implementation and deployment." Microsoft, increasingly seen as the great white hope of European cable is, in Dureau’s view, more focused on the needs of the US market and AT&T. "UPC and others are losing customers to satellite," he argues. "We are confident that some cable companies in the big bandwidth camp will migrate back to the other camp." Dureau’s analysis also suggests that operators will have to take into account the hard realities of the existing market. In terms of interactive platforms, Open TV and Canal Plus between them account for about 90 per cent of the European market, he says. "Canal Plus is associated with one powerful holder of content, and we are associated with the other ones," he says.

Another area where cost is of crucial concern is the development of set tops with integrated hard drives. Amongst Open TV customers, TPS is planning to deploy receivers this year. Dureau sees the recordable hard drives as offering satellite operators a way to compete with the greater bandwidth offered by cable. "It can give VOD capability in an NVOD environment," he says. "it gives satellite operators a trade-off between satellite bandwidth and storage in the box." Dureau sees the hard drive market being segmented between retail boxes, where the hard drive is ‘owned’ by the consumer, and the subsidised pay-TV market, where the operator could retain control of much of the memory.

Open TV’s championing of the cheap set top box solution, meanwhile, has led it to take a somewhat critical view of the trajectory of the DVB’s Multimedia Home Platform (MHP) standard. "We were deeply involved in the MHP," says Dureau. "We wanted the DVB to focus on low end receivers and it did not. That will impact on the success of the DVB box in large numbers."

While Open TV would preferred the DVB to focus its attentions on the pay-TV market rather than, as has been the case, an unproven retail market for high end free to air set tops, it is nevertheless developing an MHP product and plans to participate in interoperability field trials this year. "I do not see how the MHP will help in the UK," says Dureau. "We are more hopeful that it can work in Germany because the space is more open, but the cost of the receiver and time to market is key."