Liberty Global's video business driven by speed, simplicity

Liberty Global (Nasdaq: LBTYA) generally follows two business mantras: speed matters, and simplicity is core to the user experience. Both tenets, though, are stressed by a telecommunications space that is increasingly complex and, at times, frustratingly slow.

Balan Nair, Liberty Global

Nair (Image source: Liberty Global)

"Our industry needs to move at a much faster pace than we have been," said Balan Nair, Liberty Global's CTO during a keynote presentation at GENBAND's Perspectives13 in Orlando.

That speed includes both the development of new products and the broadband data throughput for subscribers. On the product front, Nair said, "When you build something it's got to be brilliant. People have to love it."

On the broadband side, small incremental increases mean nothing, he said.

"If you're going to have a speed increase, it has to be from 50 (Mbps) to 100," he said, noting that this is exactly what Liberty will do this year in Europe.

While some have questioned the need for that much speed, Nair was more philosophical, pointing out that today's networks are carrying an increasingly heavy load of video traffic--estimated at 90 percent of all traffic across Liberty Global--that is providing "a lot more (stress) than it used to." This problem is only bound to accelerate even if networks get faster because "the traffic on video is going to grow dramatically," he said.

Liberty is handling demand for higher speeds and better throughputs by adopting DOCSIS 3.0 now and planning for DOCSIS 3.1 when it comes on the scene with a "greater spectral efficiency" and an understanding of the stresses that video, including adaptive bit rate encoded video, place on a broadband network.

The move to DOCSIS 3.1, he said, will solve the network portion of the speed dilemma. The big consideration after that will be what to do in the home where a number of devices demand bandwidth from what are generally limited Wi-Fi connections. Liberty, which operates cable systems throughout Europe, is working to move bandwidth around the home via a Horizon box that maximizes the Wi-Fi and DLNA connections to deliver contents to multiple devices attached to the broadband network.

While the home network has to be complex to handle multiple tasks, the user interface must be simple, Nair said.

"All the software we build in the home has to run off seven buttons," he said.

Simplicity is also part of the network operations that deliver content to the home. Liberty is collapsing multiple headends into a Pan-European headend that, in addition to simplifying operations, will provide "a huge amount of savings for us," he said.

The carrier is also leaning towards "virtual applications and processing storage" in the cloud as a way to facilitate simpler in-home connections for video content being fed by Liberty and, increasingly, competition that is taking advantage of the broadband networks Liberty has built.

That outside competition from streaming video providers, Nair admitted, has the company worried. YouTube, for instance, is the top app being accessed by consumers on the Horizon platform. That's good news, in a way, but it's also disconcerting because, even as an app on the Liberty platform, YouTube is an outsider.

"We're extremely concerned about it," he said, calling it "a medium and format that shouldn't be underestimated."

While Nair said Liberty's goal is to continue to be a wireline provider, the company is necessarily moving into wireless with a modified MVNO model in which Liberty builds and maintains a core but leases or rents spectrum and infrastructure to feed wireless clients connected to its other offerings.

The model is modified because Liberty is building and maintaining a core rather than going full-scale into an MVNO.

"You want control of the SIM cards; that's why you build the core," he said.

Liberty won't build the external infrastructure and other peripherals because, he said, "It's really hard to build a wireless network and be the fourth operator or the fifth operator. I think we found our sweet spot here."

The sweet spot, not just for mobile but for every facet of the Liberty Global business, is to deliver a quality subscriber experience and that at the same time rewards investors. Unlike some operators who concentrate on investors but neglect consumers, Liberty sees a dual-edged initiative, Nair said.

"When you build something beautiful … you'll sell a lot of it," he said.

Show Coverage: GENBAND's Perspectives13: Continuing coverage from Orlando

Related articles:
Media server demand expected to boost Pace revenues
Liberty Global CEO: Netflix has 'no shot'
Liberty Global to 'redomicile' after Virgin Media acquisition
DOCSIS 3.1: Engineers finding a way to continue using HFC