Watch and learn

Video at this point has got to be the top transformational agent in the telecom industry worldwide. Maybe voice revenue still is growing at 5% a year, but it really doesn't matter whether voice revenue is growing or declining. Video is where the the real money is: new money — and lots of it. If you plan your network around voice services, ongoing growth in voice revenue won't be nearly enough to save you from competition and shifting financial expectations.

But upgrading a network to be capable of delivering video effectively and reliably isn't the only part of the video equation that telcos must work on. The total video picture is a complex one, with almost as many variables as there are pixels on the TV screen — OK, maybe not that many, but you get the idea. Content influences are flying at telcos from all different directions. Existing cable TV programming provides a model that itself is still evolving; the flexibility inherent in IP and other new technologies are providing inspiration for new kinds of content; mobile customers tuning into mobile TV are telling new stories about the length, format and type of content users are willing to view; and perhaps above all these variables, user-generated content and other Web-based forms. So-called viral video content could influence how telcos new to the video game might develop a competitive edge.

That's a lot to process for a telco entering a new service market, and what makes it harder is that each telco must decide on its own how much it will let each of these factors influence its direction. Each telco has a distinct customer base, and what works for someone else may not work for you. That's particularly important to remember as U.S. telcos look overseas to gauge the success of their brethren on other continents who might be further along in their TV adventures. As Carol Wilson reports in this issue's cover story on page 8, China, propelled by the success of PCCW and other service providers, has become an IPTV juggernaut. But as telcos in the U.S. try to watch and learn from what's happening in China, they must note that content needs and trends and government influence in China's video evolution could make for lessons that don't fully translate.

Elsewhere in this issue, on page 26, Wilson also provides a glimpse at how video services are transforming networks. On page 32, Ed Gubbins examines the sometimes arbitrary art of determining bandwidth-per-user goals for broadband services. On page 14, Tim McElligott covers the ongoing shakeup in the software market. (Be sure to check out Tim's related podcast, “Software Shakeup,” at TelephonyOnline.com.)

As video sweeps through the telecom industry, we all need to watch and learn how it will shape the future of telecom services, but we also have to figure out which lessons are really worth learning.