IPTV LANDSCAPE CHANGES, AGAIN

Several recent announcements from traditional video outlets, Internet portals and the consumer electronics world have the potential to reshape a telco TV landscape in which plans seemed to be gelling just three months ago.

Among those salvos was last week's announcement that NBC would begin offering select shows for download over Apple's iTunes network. Prior to that, TiVo said it was teaming with Yahoo to allow its subscribers to use the Internet portal to program their digital video recorders. Intel's release of its Viiv-branded consumer electronics devices also is adding fuel to an expanding model that connects consumers directly to content providers. Although that model relies on a broadband connection into the home, the moves call into question whether carriers are too late to the entertainment landscape, according to several analysts.

“The telcos will have to step back and take a different look at their business and where they think it is today,” said Colin Dixon, senior IPTV analyst for The Diffusion Group. “There's no question that Yahoo is a content aggregator in the same way that a service provider is a content aggregator.”

Indeed, portals such as Yahoo and Google have been among the fastest moving in the video world, with some predicting that it would be perfectly feasible that one would try to acquire a large telco such as AT&T, Verizon or BellSouth

“These new competitors are really financially in a position to become real competitors,” said Clif Holliday, president of B&C Consulting Services, noting that Google's market capitalization currently is close to AT&T's and BellSouth's combined. “All those guys have found ways to do the thing the telcos haven't been able to do and that is to make all this data traffic pay. What we have is a new class of competitors rising here, and these guys are making money.”

Danny Briere, CEO of TeleChoice, puts more stock in Intel's plan, which will leverage the Viiv brand in video-oriented devices in much the same way it used Centrino in laptops.

“This isn't a play where consumer electronics vendors can sell through the service providers,” he said. “This is directly in their face. I think this would put a phenomenal amount of pressure on the business case for telcos and cable operators.”

Currently, most telco video products are mimicking cable offerings, though some independent telcos have been offering caller ID on TV for some time. A spokesman for Verizon, which launched its FiOS TV service in Temple Terrace, Fla., last week, said the company is exploring a number of interactive TV applications. Additionally, many carriers plan to roll out significant video-on-demand offerings. Thus far, none have committed to opening their video networks to Internet-delivered content in the way that the portals have said they planned to do.

Ultimately, however, that is a model that some believe carriers must adopt as a differentiator.

“For a pipe [provider] to say, ‘we're only going to deliver and own certain types of content’ is a little naïve,” said Jim Olson, president and CEO of SkyStream Networks, which is talking with numerous video providers about supplying compression equipment. “I think at the end of the day, they're going to have to be open.”

Because it is so early in the development of the new models, there also is a possibility that carriers could end up as partners of the portals or consumer electronics vendors. Craig Malone, vice president of Detecon Consulting, said carriers could position themselves as the interface with consumers because they already have a different kind of built-in relationship than the consumer electronics market.

“Ultimately, for the telcos to compete in video, they have to be able to satisfy that end-user experience for home entertainment,” he said. “We have looked at the end-user terminal, which will migrate to different platforms. And that end consumption device really needs to drive the viewing experience.”