The surprise with which the Wall Street Journal blew the scoop on the fact that Comcast was up to something with internet connected set tops, was itself a surprise. The Comcast Excalibur (or Xcalibur) box has been talked about for over a year as an internal project which is supposed to challenge things like Google TV, if it ever takes off.
If Comcast did NOT have an over the internet connected box THEN we’d be surprised, but Xcalibur has been in the press (under the name Excalibur) since November 2009, although no-one has quite worked out what it does yet.
But reading between the lines we don’t think that it does anything similar to Google TV and if you think for even a moment about it, there are a lot of reasons that Comcast might put in an IP return route into a set top, and if we list all of those reasons, we are likely to reach the design spec for Xcalibur.
Does Comcast want internet video to be viewed on its TV sets? Well no, that would signal its own demise, anything but that. But it might want internet connected video, in other words its own VoD and TV Everywhere services, to be viewed on the big screen. IP delivery of VoD is a simplification and as far as the Comcast architecture goes, it just shifts it from a tuned TV channel, or from a Switched Digital Video channel, to the more than capable DOCSIS 3.0 channel.
But it simplifies the infrastructure and therefore its VoD costs, so it’s something that Comcast would want, a walled garden over the internet, which cuts its costs.
It would also want a return channel. Putting a return channel into cable has been notoriously difficult in the past, especially integrating it to external servers, for instance to create interactive advertising. Of course this can be done on cable and there are technologies for it, but they are complicated, and proprietary and therefore they are too expensive to deploy across its whole footprint.
But we have to remember that Comcast is not just a TV service. It also offers broadband and VoIP, so while the IPTV rival suppliers such as AT&T are quietly producing new services based around the ALL IP nature of its offering, time and time again, even something as simple as showing the phone number of an incoming call on your TV set, or shifting phone audio to the TV speakers, are always denied Comcast, or cost too much.
Taking this one step further, how much easier would it be to add services to Comcast customers, whether from outsider partners, or from Comcast itself, if it had an IP based APP Store deliver mechanism. Once again it might not want this to be open and out of its control, but it would want it to look like Google TV once it has access to Android Market, even if it only has 25 apps on it all approved by Comcast.
What it has been speculated that Comcast wants to do, and what we cannot see, is the idea of shifting outside of its footprint, and shipping OTT services into regions where it has no infrastructure. While Faultline can see that at some point in the future, this type of service might become inevitable and Comcast might have to cover such a move by others, but it makes no sense at all for a major US operator to think in terms of both charging extra for Netflix or Google Traffic, when it comes into its network and at the same time expecting its own traffic to travel over other people’s networks, without them doing the same. Such an OTT off-footprint service would contradict its known anti-net neutrality leanings and it could be used against Comcast politically. So, at least for now, forget that application.
In fact if Comcast could stop people going to social networks by justifying charging Facebook for extra traffic, or by introducing its own social network, it would, but at the same time, getting people to use social networks, and facilitating that, is likely to increase, not decrease, TV watching. So one application that Comcast might sign up for in a pure IP environment might be Facebook on the TV screen, even as an overlay while watching the same TV programming as friends.
The Wall Street Journal asked Comcast straight out what it was doing and was told that social networks to comment on television shows, was one of the features.
In all it seems to be a project to test what people think of it and how they’d use internet connectivity, in order to nail down the design, and as such it could be a long ways off and it looks like there has been no trigger pulled to launch a new service, merely to design the basics of a platform for experiment so that it can defend itself if Cord Cutting ever becomes the major trend we all expect it to.
We think that perhaps it should be thinking in terms of how it can defend itself against Netflix, by coming out with something to rival Netflix, so that’s a possibility. But then again putting Netflix on the Comcast box as an application could be another possibility ‘ better to appear to have the service than invite a second box into your customer’s home.
Time Warner Cable has already gone on record saying that during 2011, it could offer a fully OTT approach to Internet-connected TVs, but we see this more as bravado and a recognition that OTT content will eventually emerge.