Kip Compton: Cisco's NDS deal will boost MSOs' connected TV plans

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Kip Compton, Cisco

Compton

Hours after Cisco (Nasdaq: CSCO) announced a $5 billion deal to acquire NDS, FierceCable caught up Thursday with Kip Compton, CTO of Cisco's Video and Collaboration Group. While Compton says the NDS deal will help operators using Cisco's Videoscape software platform deliver programming to connected TVs and other devices, he insists cable set-tops won't go away any time soon.

FierceCable: Does Cisco see NDS as way to deliver subscription video content to connected TVs?

KC: That's absolutely part of it. We're living in this duality right now where service providers want to deliver to the consumers' devices, which may be smart or connected TVs, as well as tablets, PCs, mobile phones and so forth, but still have large installed bases of set-top boxes that they also need to bring into that service mix. So NDS's software solutions enable us to help service providers deliver content and services to set-tops they already have, set-tops they may buy as well as this class of devices that consumers may buy--either the connected TV or something else. We think the ability to do that in a consistent way with a single architecture and a consistent user experience is really valuable and really important going forward.

FC: There's a lot of speculation that Cisco is looking to exit the set-top business. Will Cisco continue to make set-tops, or at least outsource the production of set-tops?

KC: We're not exiting the set-top business. I don't know how much more simply or directly to answer the question. Our customers have told us ... it's going to be a long time. They're not going to show up at a customer's home and say, 'Sorry, you don't have a connected TV so you can't have our service.' There is absolutely a transformation, a shift happening, whether it's smart TVs or other devices, and we are empowering that as part of our Videoscape architecture and strategy since we announced it in early 2011, and NDS propels us much faster down that path. But we anticipate that for many years to come service providers will need set-top boxes because they're going to connect all of the consumers' devices, including existing television sets that don't necessarily have Internet or IP clients in them. They're going to connect all of those to their services.

FC: When will we see a U.S. cable MSO able to deliver an entire video programming lineup, including VOD, to a connected TV without using a traditional set-top?

KC: There are some customers quite frankly who are pretty close to doing that today with hybrid gateways. There are a number of challenges that have to be overcome to do what you mentioned. A hybrid gateway device is able to take content off of the traditional digital QAM channels and put it onto the home network. That's an important transitional architecture that enables service providers to bring the full breadth of their services to those IP devices without having to simulcast all of their services in a different format on their cable plant, which will obviously take up a lot of bandwidth. So I think you may see that fairly soon, but I think the thing to watch is the use of the hybrid technology.

FC: Do you have commitments from some of your U.S. customers to deploy gateways from Cisco?

KC: We launched a number of gateways at the CES show this year, including new Videoscape Multiscreen Gateway. We don't have any updates on customer commitments but you can assume we launch products that we expect our customers to buy.

FC: In order for a cable operator to offer all of his programming to a connected TV, would he have to convert to an IPTV platform?

Compton: They certainly are going to need some way of addressing that connected TV. Many of those connected TVs have HTML5 browsers built in, so they would need in that instance to develop an HTML5 version of their user interface and their guide and the experience that the subscriber is actually going to see. They're going to have to connect that to some sort of backend over IP in terms of authorizing services and all of that. At that point there are two ways they can go. They can go either with a hybrid gateway which really translates from the home IP network to the traditional cable network which enables them to deploy that without retrofitting their digital QAM infrastructure. Or they can go full native IPTV, which would involve transmitting that content in IP from the headend across the cable plant, which would obviously need incremental bandwidth allocations to support that. We think this is a transition that is going to play out over several years and that a lot of  traditional cable customers will leverage the hybrid technology first, and as they have more and more network devices deployed, start to transition to an IP transport on the cable plant itself.

FC: What else can NDS do for Cisco?

KC: We're pretty excited about this one. We think there is a core set of technology and product that they bring to our Videoscape platform that will enable us to accelerate that. They bring us the ability to expand our customer base, both from a segment perspective, particularly with satellite, and also a geographic perspective, with emerging markets like India and China. They bring us a tremendous services team that customers have given us particularly strong feedback on and is really well suited for Videoscape as a software platform and the type of services that service providers want. And they bring us a world class user experience design team and a world class user experience in the NDS Snowflake electronic program guide that a number of leading operators around the world have adopted. So we see this as a multidimensional, transformational deal for us and we're pretty excited about what it means for our Videoscape strategy.