The Digital Media Manifesto



L. Chiariglione


Use case No. 04: Satellite pay TV



1. Introduction

Purpose of this contribution is to use the methodology proposed in 030701chiariglione01 for the specific use case of subscription-based distribution of television programs (Pay TV) by satellite.

2. Description of traditional pay TV

2.1 Functions of traditional Pay TV

2.2 Value chain players

  1. PAs setting the legislative environment in which Pay TV operates
  2. PAs assigning spectrum licenses to Pay TV operators (in case of terrestrial distribution)
  3. Satellite operators renting out satellite bandwidth (in case of satellite distribution)
  4. Program producers
  5. Pay TV operator
  6. Decoder/smart card manufacturers
  7. Smart card retail distributors
  8. End users (subscribers)

2.3 Technologies

The technology that is specific of analogue pay TV is analogue scrambling of audio and video and the technology used in the subscriber card. The rest is well-established technology.

2.4 Legislative framework

The legislative framework has evolved to allow paidsubscription services to be offered ion UHF bands and satellite. National legislation based on the WIPO Copyright Treaty is making it a crime to tamper with decoder security.

2.5 Business model

The business model of traditional (analogue) pay TV is based on the relative scarcity (for terrestrial) and cost (for satellite) of television program broadcasting. The pay TV operator (service provider) aggregates programs whose rights he acquires and broadcasts them to his paying subscribers.

3. Description of the Digital Satellite Pay TV use case

3.1 Functions

The functions of a digital pay TV service by satellite are basically the same as those of its analogue predecessor, with notable extensions such as

  1. much larger amount of programs offered simultaneously (even a few hundred)
  2. segmentation of the offer: different types of subscriptions are offered to cater for the variety of subscribers
  3. use of Electronic Program Guide to help subscribers navigate the offer
  4. departure from linear offer (e.g. movies offered with start at staggered times)
  5. return channel providing some elements of interactivity.

3.2 Value chain players

They are partly the same as for traditional pay TV, with some conspicuous additions in the service provider back office, security technology" and software. The list becomes

  1. PAs setting the legislative environment in which Pay TV operates
  2. Satellite operators renting out satellite bandwidth
  3. Program producers
  4. Pay TV operator
  5. Security technology providers
  6. Providers of back-office solutions
  7. Providers of Operating System and Middleware solutions
  8. Providers of software applications
  9. Decoder manufacturers
  10. Smart card manufacturers
  11. End users (subscribers)

3.3 Technologies

Pay TV may be a rather well established business model but its digital form over satellite requires very sophisticated technologies. In particular

  1. Security
  2. Software (OS/MW)
  3. VLSI
  4. Set Top Box
  5. Software (applications)
  6. Smart card

3.4 Cost/benefits for value chain players


Value chain player Cost Benefits
PAs Establishment of monopolies  
Satellite operators   Increase use of satellite capacity
Program producers   Controlled distribution outlets
Pay TV operator Most are in the red Hope to achieve dominant/monopoly position
Security technology providers   Important client for their technology
Providers of back-office solutions   Important client for their solutions
Providers of OS/MW   Important client for their solutions
Providers of sw applications OS dependency  
Decoder manufacturers OEM manufacturing Important client
Smart card manufacturers   Important client for their solutions
End users (subscribers) Stack decoders for each provider Improved range of choice

3.5 Difficulties of current deployments

Eight years after the first deployment started, the conclusion is clear: unless there is only one pay TV operator, cash flow remains negative.

4. Hurdles

The following can be considered as hurdles of primary importance:

  1. Interoperable DRM technologies
  2. Application independence from OS
  3. National regulations for an international service

5. Relationship with other use cases

6. References