IPTV must continue waiting game

IPTV versus Internet TV Berendt believes there is room for both IPTV and Internet TV in the market, and that players from both camps will be more successful with certain consumer segments than others.

“At present, where IPTV and Internet TV offer the same content, what these two camps essentially provide is a choice in the method for watching a particular piece of content. This choice is based on a trade-off between price, convenience and the quality of the experience,” she said.

Berendt said it takes effort to search and pull content together, however minimal, and there are plenty of consumers ready to receive pre-packaged content without having to think too much about or seek out their viewing experience.

“Quality, consistency and the ‘safe’ environment of the IPTV service should in fact be presented as a core differentiator by IPTV operators,” said Berendt. “Alternatively, for the market niches that are tech savvy, prepared to accept a lower quality experience and more inconvenience in order to avoid paying directly for what they watch, Internet TV is the answer.”

Berendt said a variety of IP platforms for video services will operate in parallel and will do so for a long time to come, alongside the traditional terrestrial, satellite and cable TV platforms.

“IPTV and Internet TV will cater for different requirements. Players such as Joost are certainly raising the game in terms of quality and ease of use, and vendors are working hard to take web TV to the TV set a vital requirement to take the medium mass market,” said Berendt.

Casting an eye into the crystal ball for IPTV, Berendt said all this means that some Internet TV services will represent greater competition for IPTV operators. The latter will therefore have to be one step ahead in terms of quality, convenience, functionality and of course content.

“We expect to see a closer working relationship between IPTV and Internet TV. Telcos will look increasingly to both services and players on the open Internet, sometimes bringing them into the IPTV garden, as is the case for example with Verizon and YouTube, and with BT and PodShow.

Berendt said the role that telcos take in the IPTV market will also vary market to market. Some will find the wholesale role the most lucrative, most will have a direct offering alongside key partners, and some will be capable of taking the leading role.

“In fact this ability to vary the roles played will also help establish IPTV, ensuring that those companies and brands that are strongest in individual markets are able to grow the platform most effectively. It’s quite possible that one day we will see a ‘Joost’ or ‘Google’ IPTV channel or even service as part of a telco’s proprietary IPTV offering,” Berendt added.

On Australian shores last December, local broadband provider Internode purchased additional Cisco core and Internet equipment to act as a foundation for its ADSL2+ service to deliver products such as IPTV throughout metropolitan and regional Australia. Internode’s recent network expansion involved the purchase of two Cisco Catalyst 6500 Series switches and its sixth Cisco GSR 12000 Series router.

The Cisco 12000 Series router was deployed in Adelaide and linked to Internode’s five other Cisco 12000 routers in North America and Sydney. It features Multiprotocol Label Switching (MPLS), a routing technology that manages voice, video and data traffic over a single pipe.

Simon Hackett, managing director at Internode said at the time, with the upgraded network in place, Internode plans to expand its flagship business service, Internode Business Connect, which offers private IP networks to businesses.

The upgrade will provide the foundation for Internode’s continuing national expansion, including the move into areas of regional Australia. Cisco MPLS protocols are deployed across Internode’s regional backbone networks.

“This means that end-to-end MPLS-based virtual private networks (VPNs) can be
constructed to originate in an Australian town and terminate anywhere else across the Internode backbone, through to and including California,” he said.
Internode is also looking at readying its network platform for IPTV and other video services, said Hackett.

Also targeting the Australian IPTV market is US-based provider Akamai, which believes that IPTV has a big future, as people are prepared to pay for more content online versus expecting it to be supported by advertising. The firm also claimed to have already helped companies provide IPTV and video streaming capabilities to Australian businesses and consumers.

Stuart Spiteri, director of Akamai for Asia Pacific, said: “The key issue in Australia is the subscription model of the carriers. This restricts access as users only have a set amount of downloads, which is impeding IPTV adoption. Most of the rest of the world has an all-you-can-eat model.”

Spiteri said a lot of the carriers such as Telstra lock-up content rights so they can position themselves in the IPTV market.
“In Australia we are seeing a lot of our customers looking to deliver high-grade content over the Internet,” he said “In the future you will see the large content owners getting in on the IPTV act through various types of deployment models, some set-top, some subscription based.”

Spiteri said Akamai already has a number of go-to-market partners for IPTV in Australia.

“The good news for resellers is that there are ongoing service fees with IPTV, with good margins to be found. For resellers, IPTV provides an ongoing and stable revenue in an area that is going to grow,” he said.

Future of IPTV

So what does the future hold for IPTV? “It will be a messy period for IPTV over the next couple of years until firms figure out what is the best model,” added Spiteri.

Chaisatien at Telsyte, said: “Australian adoption of IPTV by 2010 is realistic. By this time we will see Australians using IPTV applications and it will go beyond content and be more interactive.”

“The biggest factor for IPTV is how quickly the country can roll out wide-scale broadband fibre which anyone can use,” he added.

As for a channel player perspective, Razbash at CombiTel said: “IPTV in five years will be one of the key elements with small businesses and the entertainment sector.”

Is IPTV something to get excited about now? In short, not really. Australia does not have the underlying infrastructure to support wide-scale adoption. In three to five years we will have a clearer understanding of the IPTV landscape and its future success.

A lot will hinge on the government’s dedication to expanding Australia’s broadband infrastructure and the $162.5 million Australian Broadband Guarantee. The Guarantee will particularly target difficult blackspot areas to ensure that all Australians can access affordable broadband regardless of where they live.

It will also complement the $600 million Broadband Connect infrastructure program which will rollout sustainable, high speed,
open access broadband networks in regional, rural and remote areas
of Australia.

Resellers looking to position themselves for potential IPTV growth would be well advised to concentrate on spreading Australia’s broadband coverage first.
If a reseller can build a solid base of broadband customers, when advanced applications such as VoIP and IPTV rise in popularity, they will be in the best position to upsell to an already established install base.