IPTV must continue waiting game

So we are all reading from the same page, the basic premise of IPTV is receiving TV or video signals via an Internet connection. Users can receive these on a set-top box to allow a connection to multiple monitors or TVs for wider distribution of services. The key players in the IPTV market are the telcos, broadband IP operators and cable TV suppliers.

The current IPTV landscape and its future roadmap is a difficult concept to comprehend. This makes it even harder for resellers to know where to position themselves now and for the future.

“How is IPTV shaping up?” asked Paul Budde of communication consultancy BuddeComm. “It’s not. “We have all come to the conclusion that IPTV in its current format is not happening. This is not just the case in Australia because France rolled out a series of trials, but they all petered out.”

Budde said people are using the Internet for video content on YouTube and MySpace to personalise themselves, but this is different from IPTV video content that people are willing to pay for.

“I haven’t heard of any supplier in the world who has got the right IPTV model in place. At the moment it is a case of trial and error,” he explained.

Budde predicted that as IPTV progresses it will centre on interaction, as most content will be created by users themselves.

“The media might have the content, but it is a one-way street with
limited interaction. The Internet is all about interaction,” he said.

Where there is demand for technology, resellers usually find their role in the market, said Budde, and the channel may even be able to use IPTV to enable customers to interact with each other.

“This reseller-created customer interaction could cover a region or a particular area of interest. Resellers can then build offerings around this group and sell further products.

“At the moment in Australia we have the infrastructure in place that gives us the opportunity to start deploying IPTV. There have been signs that the government will be investing into the infrastructure too, which mean there are some good prospects in Australia,” he said.

Warren Chaisatien, managing director of telecommunications research house Telsyte, said: “Australian adoption of IPTV is very tiny. “Australia is still at least three years behind more developed countries in terms of broadband coverage and we are the same behind the like of the UK and France in terms of IPTV adoption.”

Chaisatien said in order for Australia to have full-blown IPTV adoption the country needs to improve its high-speed DSL or fibre infrastructure, which is not available on a large scale at the moment.

Forecasted IPTV growth

According to industry analyst Gartner, the global IPTV market should grow to 48.8 million subscribers by 2010, but companies will still struggle to turn that into a big profit.

Despite the eight-fold increase in users between 2006 and 2010, Gartner claimed that carriers will struggle to turn IPTV into a mainstream subscription TV platform on par with established cable or satellite services.

“Global IPTV revenue during the period will grow from US$872 million in 2006 to a still relatively modest US$13.2 billion by 2010,” said Elroy Jopling, research director for Gartner’s Consumer Communication Services group.

“IPTV will not be a panacea to replace diminishing voice revenue for carriers, but in the medium term it can be a powerful tool for carriers in helping to retain customers on existing voice and broadband services.”

Gartner maintains that carriers must understand the opportunities before them if they are to take advantage of IPTV.

“Carriers need to look beyond the immediate revenue opportunity to understand the longer-term importance of IPTV,” says the Gartner report. “This is because IPTV is not a single service; it is in reality a new carrier distribution platform over which many consumer communication and entertainment services can eventually be offered.”

Gartner estimates that IPTV subscribers will more than double in the next year from an expected 6.4 million in 2006 to 13.3 million in 2007, thanks to the launch of new services.

Gartner defined IPTV as the delivery of video programming over a carrier’s managed broadband network to a customer’s TV set and does not include streaming media over the Internet to a PC.

Eugene Razbash, managing director and founder of IPTV reseller CombiTel, was upbeat about IPTV and its future across Australia.

“IPTV is going well and we are receiving a lot of enquires. Businesses are heading in two directions; mainstream IPTV deployment through major ISPs and telcos, and niche IPTV deployment by ethnic providers who broadcast programs in their own language,” he said.

CombiTel’s service provider solutions enable carriers and ISPs to deliver IPTV services across any type of access infrastructure including DSL, HFC cable, WiMAX and others. Its flagship offering is an IPTV platform integrated and supported by CombiTel.

Razbash said ISPs and telcos are competing with the likes of FOXTEL, but have the advantage of having a more one-on-one relationship with customers compared to broadcasters.

“The reseller opportunity in IPTV is working with different operators and the market is similar to Internet access reselling. VARs can add on IPTV programming to a broadband deployment and create a significant value-add,” he said.

Razbash explained that a lot of CombiTel’s customers are web design and hosting providers, who are looking to provide streaming on their clients’ sites.

“Who will take the lead in the IPTV market? Maybe telcos and ISPs will work with firms such as Intel, or these telcos and ISPs will take the lead themselves. We have already seen Telstra’s BigPond march a lead so far,” Razbash added.

Razbash makes a valid point when he asks what will drive the IPTV market and who will lead the sector. However only last month several of the biggest names in IT and telecoms banded together to create an open forum to decide on standards for IPTV. The Open IPTV Forum includes AT&T, Ericsson, France Telecom, Panasonic, Philips, Samsung, Siemens, Sony and Telecom Italia.

The forum is looking to develop new IPTV standards and bring together current technologies to work more efficiently. The eventual goal is to produce a full IPTV standard that can be applied by all manufacturers to achieve full interoperability.

The first standards to receive attention will be IP Multimedia Subsystem and Digital Living Network Alliance, but content protection, managed network interfaces and interoperability with retail consumer devices are
also under consideration.

Annelise Berendt, senior analyst at Ovum, said: “There are plenty who argue that IPTV will be short-lived because of competition from what are now termed in the US ‘over the top’ providers players such as Google, Yahoo! and Joost, whose offerings effectively allow consumers to bypass telco-controlled services and pull content towards them over the public Internet.”

Berendt said one of the latest additions to the Internet TV scene is Babelgum, an ad-supported online video service targeting mostly small, independent productions. It will introduce its beta test this month
and is backed by Silvio Scaglia, founder of FastWeb, one of the world’s most advanced and mature IPTV operators.

“Add to this the increasing number of content owners using the Internet to go direct to consumers, as well as similar moves by traditional broadcasters, and the competition for IPTV services is certainly hotting up,” she said.

Berendt made the point that this adds to the argument that the telcos’ only role will be as conduits for the content services of others, as deliverers of Internet traffic often referred to as ‘bit pipe suppliers’ unable to sustain any form of retail play in broadband content services themselves.

“This idea arouses strong feelings, not least because they touch on the issues and arguments surrounding ‘net neutrality’, which have currently gone rather quiet, but have certainly not gone away,” she said.