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Eric Xu, Deputy Chairman of the Board and Rotating CEO, Huawei, has revealed that the ICT solutions provider is stepping up its role in supporting telcos’ video operations better to enable them to develop successful businesses.
Speaking at the Ultra-Broadband Forum 2016 in Frankfurt, Xu noted that at the previous year’s event in Madrid, Huawei saw video as a driver of Ultra-Broadband and undertook to help telcos achieve business success in video.
“In the early days, a number of telcos were providing video service as a ‘value-added’ option and not really making money. Now, with the prospect of fibre, video can be a driver for better ARPU,” he declared. “People are now talking about the contend, HD, 4K and such matters.”
Nevertheless, he noted that there were only 26 telcos with penetration rates above 50 per cent and suggested that successful players should be positioning video as a key driver of their broadband business. There were a number of challenges facing market entrance and development: Business Analysis and Development; Content Acquisition; Platform Acquisition; Network Construction and the Teminal. “Some networks without upgrading would not be ready to support a service that offer good Quality of Experience,” he observed.
As such, he defined two roles for Huawei: an Enabler to drive video as a telcos basic service, and an Enabler for telcos to achieve video business success. Part of this would involve building up content aggregation ability to share with clients and developing consultancy expertise.
In particular, Xu revealed that Huawei was increasing investment in STB chips. “We’re driving technological video innovation,” he declared. “We’re also going to open up middleware.” He said it was important to eliminate the complexity between the terminal and the platform.
Paolo Pescatore, Director, Multiplay and Media, CCS Insight, described the initiatives as “a bold strategy” and quite complex to execute given the focus to bring all of these elements together. “Most notably, content aggregation due to licensing and the way rights are sold by territory,” he advised. “Despite this, it is a clear statement of intent to compete with established players in video. We believe that there is an opportunity for Huawei given its existing relationships with telcos who need to be better prepared in video and the cloud. And we firmly believe that the future of delivering video is all about IP. However, video will cause a wrecking ball effect on networks so it is important to have an end to end platform experience management.”
In terms of industry dynamics, units associated with Huawei, perhaps subsidiary business units, are at risk of losing potential customers will not want to work with them because of historical links with the company, whether a direct competitor in the STB and in the head-end, with middleware partners worried about replacement with Huawei’s middleware.