Connected Televisions: Convergence and Emerging Business Models”, OECD Digital Economy Papers, No

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Connected Televisions: Convergence and Emerging Business Models”, OECD Digital Economy Papers, No Please cite this paper as: OECD (2014-02-04), “Connected Televisions: Convergence and Emerging Business Models”, OECD Digital Economy Papers, No. 231, OECD Publishing, Paris. http://dx.doi.org/10.1787/5jzb36wjqkvg-en OECD Digital Economy Papers No. 231 Connected Televisions CONVERGENCE AND EMERGING BUSINESS MODELS OECD Unclassified DSTI/ICCP/CISP(2013)2/FINAL Organisation de Coopération et de Développement Économiques Organisation for Economic Co-operation and Development 04-Feb-2014 ___________________________________________________________________________________________ English - Or. English DIRECTORATE FOR SCIENCE, TECHNOLOGY AND INDUSTRY COMMITTEE FOR INFORMATION, COMPUTER AND COMMUNICATIONS POLICY Unclassified DSTI/ICCP/CISP(2013)2/FINAL Cancels & replaces the same document of 22 January 2014 Working Party on Communication Infrastructures and Services Policy CONNECTED TELEVISIONS: CONVERGENCE AND EMERGING BUSINESS MODELS English - Or. English JT03351873 Complete document available on OLIS in its original format This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. DSTI/ICCP/CISP(2013)2/FINAL FOREWORD This report was presented to the Working Party on Communication, Infrastructures and Services Policy (CISP) in June 2013. It was made public by the Committee for Information, Computer and Communications Policy (ICCP) in December 2013. The report was prepared by Mr. Rudolf van der Berg. It is published under the responsibility of the Secretary-General of the OECD. Mr. Jonathan Levy of the United States Federal Communications Commission is thanked for his substantial contributions to the report. © OECD 2014 2 DSTI/ICCP/CISP(2013)2/FINAL TABLE OF CONTENTS FOREWORD .................................................................................................................................................. 2 INTRODUCTION .......................................................................................................................................... 7 Brief introduction to the industry ecosystem............................................................................................... 7 CONNECTED TELEVISION ........................................................................................................................ 9 Introducing connected television ................................................................................................................. 9 What is new about connected television? .................................................................................................. 10 THE IMPLICATIONS OF CONNECTED TELEVISION FOR CONTENT PRODUCERS, DISTRIBUTORS, NETWORKS, HARDWARE VENDORS, AND SUPPORTING SERVICES ............. 13 Introduction ............................................................................................................................................... 13 Impact on industry ecosystem ................................................................................................................... 13 Content producers .................................................................................................................................. 13 Distributors ............................................................................................................................................ 14 Hardware vendors .................................................................................................................................. 14 Supporting services ................................................................................................................................ 15 Competition and peripheral devices and services ..................................................................................... 16 Digital video recorders .......................................................................................................................... 16 Live television online ............................................................................................................................ 17 Standardisation ...................................................................................................................................... 18 IMPLICATIONS OF CONNECTED TELEVISION FOR NETWORKS ................................................... 20 Networks for television ............................................................................................................................. 20 Audio-visual content on the Internet ......................................................................................................... 22 The technology behind connected television ............................................................................................ 24 The effects of audio-visual content and services on networks .................................................................. 29 CONNECTED TELEVISION POLICY ISSUES ........................................................................................ 32 EXPECTED CHANGES IN NETWORK DEMAND AND THEIR IMPLICATIONS .............................. 35 The use of quality of service ..................................................................................................................... 37 Interconnection between audio-visual content providers and ISPs ........................................................... 38 The use of content delivery networks and caches ..................................................................................... 43 The use of download limits ....................................................................................................................... 45 Summary of findings ................................................................................................................................. 47 ANNEX 1 ..................................................................................................................................................... 50 European Commission green paper: Preparing for a fully converged audiovisual world ......................... 50 NOTES .......................................................................................................................................................... 51 3 DSTI/ICCP/CISP(2013)2/FINAL Tables Table 1. Bitrates in Mbit/s of Internet streaming services……………………………………………26 Table 2. Swisscom LTE mobile broadband service (NATEL) ........................................................... 36 Table 3. The use of Wi-Fi as a percentage of Android traffic on cellular mobile devices in selected economies …………………………………………………………………………………..47 Figures Figure 1. Use of BBC iPlayer ............................................................................................................... 23 Figure 2. IPTV subscriptions as a percentage of households (2012) ................................................... 24 Boxes Box 1. Distinction between managed and over-the-top connected television ........................................... 28 Box 2. Net Neutrality policy and connected televisions in Korea............................................................. 39 Box 3. Net neutrality in Norway: Background and results ....................................................................... 40 4 DSTI/ICCP/CISP(2013)2/FINAL MAIN POINTS Connected televisions are defined, for the purposes of this report, as devices that have the capability to interact with the Internet to display audio visual content. Connected television is an important development because it permits the provision of certain new and valuable services to end-users. These services will also have implications for the activities of all of the players in the content distribution ecosystem. In addition to identifying the new services that connected television enables, the report analyses in some detail their effects on networks (i.e. the physical communication links that carry content to end- users). The impact on content producers themselves, on content distributors (such as traditional pay television companies), on hardware vendors, and on providers of support services such as advertising and programme guides is considered much more briefly. More detailed examination of these matters could be the subject of future work. The report also includes a discussion of policy implications raised by connected televisions for the actual connected television devices and for network infrastructure.” Global standards and technological advancement have enabled the development of connected televisions. The introduction of new features in peripheral devices has enabled new services. Existing players in the value chain have sometimes welcomed and at other times challenged these new services. The outcomes have varied in different countries with some services being permitted to proceed and others ordered to cease in their current guise. Tools that allow functions such as the skipping of advertising, the viewing of content outside a specific location and the overlay of other capabilities are being introduced by some service providers and challenged by others across the OECD area. There is very wide interest in providing these services to consumers but contention between actors over financial compensation (e.g. over the division of revenue or bypass of existing business models in ways that contravene intellectual property (IPR)
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