Europeans expected to flock to TV over internet

LONDON (Reuters) - About 8.7 million Europeans will be watching television over the internet by 2009, or 9.4 percent of a market currently dominated by cable and satellite operators, according to a forecast issued on Monday.

A 13-fold increase in demand for internet protocol television, or IPTV, from about 658,000 subscribers currently, will be driven primarily by telephone companies seeking to tap their large customer bases, said Daniel Schmitt, author of the study for research firm Screen Digest.

Phone companies are hoping services such as IPTV will bring fresh profits as their core residential fixed-line telephone businesses battle rising competition and falling prices.

"It will emerge faster in Europe and Asia than in the United States," Schmitt added, saying similar initiatives by US telecommunications companies are only just getting underway.

In France, for example, the three major operators -- France Telecom, Free Telecom and Neuf Telecom -- already have about 280,000 IPTV customers among them, making the Gallic nation the market leader in Europe.

In Italy, broadband group Fastweb has 190,000 subscribers, while dominant rival Telecom Italia has said over 4 million Italians should have IPTV coverage after the completion of its trials, which began in July.

Screen Digest forecast that the strongest uptake for IPTV will be in France, Italy and Spain, where it will account for 20 percent, 17 percent and 16 percent shares of their respective pay-TV markets over the next four years.

The fresh threat is forcing cable and satellite TV companies to roll out the service as well.

"Many traditional pay-television providers are finding that they too must adopt IPTV technologies in order to remain competitive," Schmitt said.