Segmenting the herd

It's sort of sweet justice--in only a perverse way--that it now appears telcos may indeed end up getting statewide video franchises. Instead of forcing telcos to go before every single franchising authority the same way cable operators must, the idea that state PUCs could grant blanket permission is a huge break for telcos.

Not only do they get to save the time and expense of getting approval from thousands of cable boards, they have the opportunity to segment out the areas that are most appropriate for telco TV services. Freed from the typical requirement to build out to every area covered by a franchise, telcos can pick and choose the best. It may come off as elitist, but telcos would be best served if they didn't provide blanket coverage of IPTV. Some form of broadband, yes. Video, no. And there is a big difference.

Broadband as a service opens the door to opportunity like no other technology. Give a poor kid a broadband connection plus some guidance, and the world is at his or her fingertips. Put it into the most rural parts of the U.S. and the equation of economic diversification suddenly changes. TV can be educational, but more often is overwhelmed by the mass of digital garbage that is entertainment.

In a recent study, Parks Associates segmented the market for IPTV into four major categories. While there's opportunity in all four, telcos are better served by not trying to tackle all four at once. In fact, there can be a strong case made that carriers shouldn't even try to capture the large swath of market that see TV as nothing more than a shiny box in one corner of the living room.

Because of the presence of cable and satellite in more than half of U.S. households, stateside telcos aren't expected to capture the lion's share of the IPTV world. Given the competitive landscape, it would make perfect sense for carriers only to deploy in the most targeted areas.

E-mail me at vvittore@primediabusiness.com