Ars Technica offers a tutorial on the first approach using special hardware at the customer end in the form of a set-top box (STB):
First things first: the venerable set-top box, on its way out in the cable world, will make a resurgence in IPTV systems. The box will connect to the home DSL line and is responsible for reassembling the packets into a coherent video stream and then decoding the contents. Your computer could do the same job, but most people still don’t have an always-on PC sitting beside the TV, so the box will make a comeback. Where will the box pull its picture from? To answer that question, let’s start at the source.
Most video enters the system at the telco’s national headend, where network feeds are pulled from satellites and encoded if necessary (often in MPEG-2, though H.264 and Windows Media are also possibilities). The video stream is broken up into IP packets and dumped into the telco’s core network, which is a massive IP network that handles all sorts of other traffic (data, voice, etc.) in addition to the video. Here the advantages of owning the entire network from stem to stern (as the telcos do) really come into play, since quality of service (QoS) tools can prioritize the video traffic to prevent delay or fragmentation of the signal. Without control of the network, this would be dicey, since QoS requests are not often recognized between operators. With end-to-end control, the telcos can guarantee enough bandwidth for their signal at all times, which is key to providing the “just works” reliability consumers have come to expect from their television sets.
The video streams are received by a local office, which has the job of getting them out to the folks on the couch. This office is the place that local content (such as TV stations, advertising, and video on demand) is added to the mix, but it’s also the spot where the IPTV middleware is housed. This software stack handles user authentication, channel change requests, billing, VoD requests, etc.basically, all of the boring but necessary infrastructure.
In an article on Converge Digest, Ben Wagner and Charlie Gonsalves from Texas Instruments outline the potential of using IP STB:
A prime example of just how compelling IPTV can become is its potential for personalization. The total content offered over IPTV will certainly expand considerably as the marketplace continues to mature. And IP STBs that leverage the flexibility of a programmable architecture will open the door for television channels and services customized to each viewers tastes and preferences. Indeed, programming and advertising could be customized demographically for each member of the household. As an example we see so-called micro-market content such as that provided by video blogs and PodCasts which feature personally produced audio, video and still images continue to increase in popularity. These applications clearly illustrate the potential for finely tuned IPTV content that could be delivered upon request of each individual. Other examples of narrowly-defined differentiated content include international or multilingual channels, new formats like HDTV, exclusive sporting events or movies, and repackaged content.
Other symptoms of this drive toward the use of personalized TV content are the increasing deployment of personal video recorders (PVR) which are capable of capturing only the programming the viewer is interested in and video-on-demand applications where users can pick and choose the content they want to view.
The ability of IPTV to support interactive programming is another factor that will differentiate the content provided by next-generation IP STBs from competitive and incumbent services. Gaming, virtual storefronts and multimedia communications are some of the interactive possibilities. In fact, two-way, audio and video capabilities could be put to good use in a video phone or TV phone application, should consumer demand peak in this area.
Besides the telcos, companies like TiVo and Akimbo have taken this approach.