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Intel Media’s corporate VP Erik Huggers showed a little more ankle this week on the chipmaker’s plans to launch an over-the-top video service and set-top box. But it would be fair to say his presentation at the D: Dive Into Media conference raised at least as many questions as it answered.
Here’s what we now know:
- Intel is indeed planning to build and sell a new set-top box, as rumored, under a new brand yet to be disclosed. Huggers described it as a “consumer electronics product,” with “beautiful industrial design,” that will be powered by an Intel chip. Consumers will be able to purchase the device either directly from Intel of through retail. As for why Intel wouldn’t simply make its service available on the Xbox, or Apple TV, or Roku box, rather than building its own, Huggers claimed that none of the current platforms in the market is capable of delivering the kind of experience Intel want’s to provide. “In order to deliver on our vision you need to control everything,” he said. “You need to control the chip, you need to control the operating system, you need to control the app layer, you need to control the sensors, etc.”
- The service will be subscription-based, like traditional pay-TV service, and will include live, linear TV, including broadcast and cable networks, “catch-up” TV (think BBC iPlayer, which Huggers helped build), on-demand programming, and apps.
- Channels will be offered in bundles, not a la carte, but the bundles will be smaller and “more flexible” than current cable TV program tiers.
- The STB sill include a camera that can identify who is watching at any given moment so the platform can deliver enhanced personalization features, but the camera can also be shut off if users are creeped out by it.
Here are some questions the new information raises:
- The service described by Huggers sure sounds like it meets the legal definition of a “multichannel video program distributor,” which means it will likely have to comply with the terms of the Communications Act and be subject to regulation and oversight by the FCC. What sort of “must-carry” rules for broadcast channels should apply to a nationwide, over-the-top virtual MVPD? Locally licensed cable operators are required to carry all broadcast signals within the markets they serve, or alternatively to negotiate retransmission consent with broadcasters; satellite TV operators don’t face an absolute must-carry requirement, but if they choose to offer one local station in a market they most offer all. Cable operators will have strong case that Intel should face the same sort of expensive must-carry/retransmission consent requirements that MSOs face, which could quickly get unwieldy for Intel to manage on a nationwide basis.
- Any attempt to finesse market-by-market must-carry rules by using national or time-zone wide network feeds could cause copyright problems with content creators, who generally license content on an exclusive, market-by-market basis. How will Intel handle those issues?
- Cable and satellite operators will not be happy to see a new over-the-top competitor and the pressure on the networks not to make their programming available to Intel will be intense. Yet Intel seems to believe not only that it will get access to the content it needs but that it will get it with greater flexibility over how it’s bundled and packaged that cable and satellite operators have. What is the basis of that belief?
- How will Intel deal with ISP-imposed bandwidth caps? Huggers said the platform will employ the HEVC (H.265) codec to compress the video, which is roughly twice as efficient as H.264 and at least four times as efficient as the MPEG 2 codec still used by many digital cable systems. He also cited Cisco’s estimates that last-mile bandwidth capacity generally will increase over the next several years, alleviating the need for caps. But there are a lot of variables there that are not under Intel’s control, which could well delay rollout.
Huggers, in fact, offered no insight on the timing of any rollout, noting cryptically only that “Rome wasn’t built in a day.” Of course, Rome also had Caesar and his legions to get things done, a luxury Intel doesn’t enjoy. But its ambitions seem almost as audacious.
Video of Hugger’s conversation with AllThingsD’s Walt Mossberg and Peter Kafka is available here.