As competitive pressures force carriers to deploy video services, they must choose the right technologies to deliver those services, balancing short-term and long-term needs. Carriers deploying equipment in subscribers' homes today fear the consequences those choices will bring tomorrow and the hurdles they create on the horizon. Carriers deploying fiber to the premises face a particular dilemma over whether to deploy IPTV or a radio frequency overlay.

As the cable industry's default video technology for the past several years, RF video doesn't offer the innovative features and interactive applications IPTV promises, but RF is a more mature and reliable technology than IPTV. Carriers with plans to offer video over fiber are forced to weigh the risks and benefits of each.

“It's a really tough decision,” said Steve Buska, director of premises market development for access equipment vendor Calix. “People would prefer to continue to use installed infrastructure, but there's usually a competitive driver forcing them to decide: Deploy an RF overlay or go all the way to IPTV right out of the gate.”

Verizon is one of many carriers that has chosen an RF overlay architecture to allow it to bring a reliable video service to market as soon as possible. Many such carriers, and Verizon in particular, intend to eventually migrate to IPTV when they're more confident in that technology. The question then becomes one of how to make that transition.

In an RF overlay, carriers send traditional cable video to the home as its own separate wavelength within the fiber — a 1550 nanometer stream that rides alongside the 1490 nm wavelength, carrying everything else (the high-speed Internet, the voice and the video-on-demand, or VoD, content) as well as the 1310 nm wavelength going back the other way.

Generally speaking, to adapt their access networks for IPTV, carriers would change the fiber connections and the lasers in their central office-based optical line terminals, removing the separate RF wavelength. But some sources say carriers wouldn't necessarily need to expend the effort if they didn't want to do so. Having already paid for the gear, they could just leave the RF hardware vestigial and inactive where it is. Carriers also will need to change their middleware, the cost of which would be amortized across all their subscribers. But the thornier issue is upgrading the equipment in the home, where costs aren't spread as thin.

As in typical cable systems, video signals in an RF overlay undergo quadrature amplitude modulation (QAM) on the way to the home (this essentially doubles its bandwidth by combining two signals). Some set-top boxes have inputs for both QAM-modulated RF video and IP, for architectures such as Verizon's. For example, Motorola's QIP family of set-tops, which the company calls “hybrids,” perform this role. But when Verizon migrates to a full IPTV solution, those set-tops must be replaced.

“That QAM/IP set-top is not going to be an end-all, be-all if and when [carriers] go to IPTV,” said Randy Schmid, director of wireline sales for Motorola. “The box technically would be able to do it, although the processing power in it is not up to the task of doing a full IPTV-type application. It's feature-designed to be in the hybrid role, handling the lighter load of VoD content. To do a reasonable job at IPTV, you'd need more horsepower from a processing point of view.”

How exactly carriers will switch out those set-tops remains to be seen. Charging the consumer for the new box gives those subscribers an opportunity to switch providers, something that carriers are loathe to allow. But giving the new boxes away isn't too appealing, either, as they aren't always cheap. Prices for low-end IP set-tops might fall in the $80 range, sources said, but more deluxe models, with high-definition and digital video recording functions, might cost $350 or so.

“It's not going to be a very pretty situation,” said Sam Harlan, director of video solutions for consultancy CHR Solutions. “The set-top box is one of the major costs you have. It's a very capital-intensive item.”

Some carriers might slip a fee into their customers' bills to offset the cost of the new set-tops, especially if they can convince those customers that they're getting cool new IP features in exchange. But most carriers will probably replace their customers' set-tops for free and eat the cost, said Vince Vittore, a Yankee Group analyst. “Carriers aren't necessarily getting into video to make a huge profit,” he said. “They're doing it to retain the customers they already have.”

In addition, most carriers and vendors alike say it's reasonable to expect set-top boxes to have a lifespan of only five years or so, perhaps even less.

As set-top boxes are a fixed per-home cost, independent carriers with larger numbers of targeted homes are often persuaded to go straight to IPTV rather than make the intermediate “throw-away” investment in RF set-tops, said Calix's Buska. “A lot of people are saying, ‘I've got 1000 homes. To do an RF video overlay will cost me an extra $100 per home — maybe even $200. Instead of putting money in an RF overlay, I'll just go to an IPTV head-end out of the gate.’”

Perhaps exacerbating the dilemma is a fair amount of confusion surrounding the issue. Michelle Abraham, who covers the set-top sector for In-Stat, assumed hybrid boxes like Motorola's wouldn't need to be replaced in the transition from RF to all-IP. “It seems to me you'd be able to continue using the same set-top,” she said. “If it can accept an IP VoD stream, why not an IP broadcast stream?” Several other authorities in the space admitted not knowing for sure, either.

“I get different answers depending on who I ask,” said Michael Arden, an analyst with ABI Research. “You have to make sure you have the processing and the chips to handle it, and it has to be pre-built into the box. As long as the boxes are built with that in mind, my sense is [migrating to IP] is an easy thing to do. But with earlier boxes, I'm not sure.”

In fact, some set tops can support both RF overlay and IPTV services. Entone Technologies' Hydra IP video gateway, introduced in late 2004, is such a device. However, the older equipment of Motorola and Scientific-Atlanta (owned by Cisco Systems) dominates much of the market.

“Traditionally Motorola and Scientific-Atlanta have offered soup-to-nuts solutions,” Harlan said. “For better or worse, they'll take care of you the whole way through. But end-to-end solutions are sometimes not all they're cracked up to be.”

Also complicating carriers' decisions is the fact that they are still waiting for the next generation of video compression encoding, MPEG-4, to be commercially available in set-tops. After widely documented delays, vendors have promised MPEG-4 set tops before the end of the year.

In any case, analysts say, carriers should know precisely what a set-top can handle and how that fits their long-term plans before making procurement and deployment decisions.

“It's like anything else,” said Bob Larribeau, director of the Multimedia Research Group's IPTV program. “You'd better plan ahead. If a carrier makes this a requirement upfront, it will go smoothly. If they don't and go with the lowest-cost set-top, they may find themselves in a box.”