VMedia Launches IPTV Service

In early January I wrote about a company named Zazeen that was poised to launch an IPTV service across much of Ontario and Quebec. It would seem that Zazeen is currently stuck in the starter's gate, awaiting the completion of contracts with the big media companies that control virtually all of the TV channels in Canada, including the ones that a distributor is required by the CRTC to carry.

VMedia on the other hand did a fairly low key "soft launch" last week, offering their $25 basic service in various Ontario municipalities and throwing in 3 months of free service as an enticement. I stopped in at the VMedia office over the Easter long weekend on my way through Toronto and met with some of the people behind the service. Read on to find out more about what they're up to and how they plan to become the preferred alternative to satellite and cable for cord cutters who still want a dose of conventional TV.

The Challenges Faced by Game Changers

A few minutes into my meeting with George and Alexei from VMedia, it became apparent that they were very familiar with the kind of hurdles that Zazeen is still trying to clear. As I'm sure you can imagine, setting up a TV distribution business requires an incredible amount of work and a hefty investment in staff, facilities, equipment, and telecommunication links. All of that does you no good however if you don't have any content. One would think that it would be relatively easy for a TV distributor (commonly abbreviated as a BDU - broadcast distribution undertaking) to reach agreements with the providers of the channels they wish to carry. After all, it's in the best interest of any TV channel to be available to as many viewers as possible - it gets them access to more eyeballs, which enables them to achieve the higher ratings that lead to increased advertising rates. In Canada, all channels other than ones that transmit over-the-air also get a per-viewer fee that influences how much a BDU must charge, so why wouldn't you want to make it as easy as possible for each and every BDU to carry your channel?

The answer is that almost every channel in Canada is owned by one of the large media conglomerates (Bell, Rogers, Shaw, Videotron), all of whom also have BDU businesses to run, so they view any new BDU as a competitor that will potentially leech customers from their profitable BDU business. The result is that a new BDU often has to endure months of negotiations with each of the media companies in order to arrive at fair rates for access to their content. It was very clear from talking to VMedia how frustrating that experience has been and continues to be. In the cases where they managed to negotiate a deal for content, they were often precluded from being able to offer the kind of value-added services that IPTV is especially good at (more on that later).

Basic Service

As of this writing, VMedia has a $25/month "basic" package which compares very favourably with the $40+ entry level packages from the big companies. All of the CRTC-mandated channels are there of course, but they also throw in TSN, TSN2, MuchMusic, and the American over-the-air networks. All of the channels that broadcast in HD are offered in HD, although a couple are temporarily in SD - VMedia assured me that those will be switched over to HD very soon. If you look at the "Price Comparison" section of my post on Zazeen's IPTV service, it's clear that VMedia's $25/month basic service is much better than the entry level service of any of the big boys, and also better than what Zazeen is currently showing on their web site. The initial pricing scheme called for an extra fee for each additional set-top box on an account, but after hearing complaints from many potential customers they've scrapped that plan.

VMedia also has a number of channel bundles that can be added to their basic service at prices ranging from $6.95 on up. In this regard they're not all that different from the incumbent providers, but if all you wanted was the basic networks and a couple of extra sports or lifestyle channels, you'd be way ahead price-wise with VMedia since all of the incumbents either have much more expensive "basic" packages or they make it impossible (or impossibly expensive) to add just a couple of extra channels to the basic package. Videotron in Quebec upset the status quo a while back by offering extra channels in a predominantly à la carte fashion rather than the customary "take what we give you" bundles. Their competitors responded by altering their pricing and bundling and also offering most channels à la carte, but only in Quebec. In the rest of Canada where none of the large BDUs offer individual channel add-ons, you're stuck with the BDUs bundles.

Strings Attached

Since this is Canada and the CRTC governs our broadcasting industry, there are conditions of course. Due to the terms of their license with the CRTC and contractual limitations imposed by the TV channel owners, VMedia isn't allowed to deliver TV to its customers over just any Internet connection the way Netflix does. Instead, they must employ a "closed network", which means they can only sell their TV service to customers of their own Internet service or one of a handful of Internet providers with whom they've partnered. Someday the content owners and regulators will adapt their regulations to the 21st century, but for now VMedia and other IPTV BDUs are stuck with those restrictions.

That means you'd most likely have to change your Internet provider in order to be eligible to sign up for VMedia. If that's an option for you, check out the Internet section of VMedia's web site. They currently serve all of Ontario and Quebec with a mixture of DSL and/or cable Internet service, although their TV service is limited to the greater Toronto area from Kitchener to Oshawa, plus the areas around Chatham and Cornwall. They expect to have all of Ontario covered by early summer.

Update (2013-04-18): VMedia licence amended to cover all of Ontario.

Technology

An IPTV provider's data center looks more like that of an ISP or cloud storage provider than what you would expect a TV provider's headend to look like. They receive channel feeds via leased fibre and satellite, run those through a bank of computers that encode the video in multiple quality levels, and then transmit the data to the customer's home. Having multiple quality levels of the video stream allows them to use the same kind of adaptive video quality as YouTube and Netflix. When tuning to a channel, the picture briefly starts out in lower quality and then moves to higher quality as the network capacity between the subscriber and VMedia allows. Those on fast Internet connections would be at their highest quality level in a matter of seconds.

One of the things that makes VMedia rather unique among IPTV providers is that the majority of their software is homegrown. Other companies typically buy what's called "middleware" IPTV software from companies like Microsoft or Minerva. That allows them get started sooner since they have less to create on their own, but IPTV middleware is expensive and often requires licensing fees that are proportional to the number of subscribers the TV distributor has. VMedia's software has been refined through several years of providing IPTV delivery of unregulated foreign channels through their sister company VianetTV, and they're very confident in its feature set and ability to scale to handle a large subscriber base.

For the techo-curious, all of the HD streams that VMedia carry are currently encoded in 720p format using H.264 compression and variable bit-rates. They use HTTP Live Streaming (HLS) to deliver content to subscribers - HLS is a popular way of handling Internet video so that it adapts to varying speeds or network congestion. Their standard-def streams consume roughly 1-2 Mbps with high-def going up to about 2.5 Mbps.

Many people would prefer to see VMedia use the higher-quality 1080p format, but they're sticking with 720p for the time being due to a couple of factors. The main reason is that VMedia and their Internet partners have to absorb the increased capacity charges that their IPTV service causes. YouTube and Netflix don't have to worry about that - the increased usage they foist upon your Internet connection is a problem between you and your ISP. Keeping their bit-rate capped at a reasonable level helps VMedia keep their Internet costs in check. A lesser reason is that several of their channel feeds come from Bell's SRDU service, which is the commercial side of Bell's satellite TV business; they sell channel feeds to smaller BDUs like VMedia. Bell SRDU uses the same satellite facilities as Bell's consumer satellite TV service, and Bell encodes all of their high-def channels in 720p, so there'd be nothing gained by VMedia delivering any of those channels in resolutions higher than 720p.

Hardware

The VBox settop from VMedia is a custom built unit running Android 4, a tiny bit bigger than a Roku or AppleTV box, but not by much. Like other custom Android devices, it's not quite the same as having an Android phone or tablet - in particular it doesn't use the Google Play app store and your TV is obviously not a touch screen. The main user interface is different too, but you wouldn't want your mobile phone or tablet interface on your TV anyway.

VMedia's VBox

Being Android-based allows VMedia to include Android apps that TV viewers are likely to want to use - things like Netflix, YouTube, Angry Birds, MLB.TV, and NHL GameCenter for example. Their TV service is actually implemented as an Android application, so as their service and software evolves, they anticipate that conventional TV will just be one of many apps that their customers use via the VBox on a regular basis. One minor stumbling block with running Android apps designed with touch screen devices in mind is that they're not easy to control with a conventional TV remote. You can plug a USB keyboard into the VBox and control a lot of apps that way, but gestures like pinching or zooming don't translate well to a traditional keyboard.

To make the use of 3rd party Android apps easier, VMedia expects to have a new WiFi remote ready by the end of April. It has an internal gyroscope that works for games or for controlling an on-screen mouse pointer, several hot-keys to launch apps, and a QWERTY keyboard on the back similar to the Boxee RF remote.

VMedia's new WiFi Remote (not shown: QWERTY keyboard on back)

Key features of the WiFi remote:

• Air mouse/2.4G wireless remote control for VBox as well as VMedia's PC and SmartTV applications.
• Wireless remote control with QWERTY keyboard, USB dongle.
• 2.4GHz transmission up to 15 meters.
• Mouse positioning on the screen by shaking/moving the remote.
• Plug-and-play, compatible with USB1.1 and USB 2.0.
• Switches between 16 WiFi channels to avoid interference.
• Battery saver: sleep mode after 20 seconds of inactivity with <6µA power consumption in sleep mode.

DVR Features

Most people who've used a DVR/PVR, myself included, find it hard to go back to the "old" way of watching TV where you can't pause/rewind/fast-forward. VMedia has cloud-based DVR technology that can do all the usual DVR things, plus it can automatically store the last three weeks of content for every channel they carry! You just call up their channel guide and scroll into the past, then click on the program for last Tuesday night that you missed.

Their ViaTV package of Russian channels includes this capability as part of the basic subscription. Unfortunately the content owners who run the TV networks and cable/satellite companies don't want a competitor like VMedia to be able to offer such viewer-friendly features, so the contract agreements for their channels often prohibit anything other than storage of program content at the subscriber's site. VMedia is working on adapting their DVR technology to store and playback content off a local USB drive, but it's clear from talking to them that they'd love to be able to use their cloud-based technology instead.

Summary

VMedia looks like they've got a winning combination of price and features. If they can survive whatever growing pains are sure to come their way over the next few months, they'll give TV viewers a solid alternative to cable and satellite subscriptions at about half the price. They've still got some "to do" items to check off before they can say they're a feature-for-feature alternative to satellite and cable. They'll need to: offer DVR capabilities to appease viewers like me; continue to expand their service area to reach as many customers as possible; finalize contracts for their "coming soon" channels; and ideally find a way to allow customers to subscribe without having to switch Internet providers.

None of those problems are insurmountable, so hopefully we can all look forward to better competition and more choice on the Canadian TV landscape as VMedia grows their business.