Considering the hybrid proposition

Over-the-top content has gotten a lot of attention here in North America, both as an alternative to IPTV for Independent telcos and as an increasingly crowded market for software providers, hardware vendors and essentially anyone with access to the broadband pipe to launch their own set-top box. Go outside the U.S., however, and it’s a different, more integrated STB making waves. Hybrid STBs are becoming the TV transport of choice, and they may be working their way to the states. Pairing broadband with either digital TV or satellite can potentially simplify the process, the time to market and the bill for telcos looking to get into TV.

“If your view of the world is through IP glasses, you can quickly lose sight of the fact IPTV may not be the best thing for all operators,” said Steve Hawley, principal analyst and consultant for tvstrategies. “Verizon has chosen [the hybrid] route, and they have done very well. Also look at operators in Europe that have live TV over digital TV and the on-demand stuff over IP.”

BT Vision is one telco in the U.K. having a lot of luck with hybrid. The TV service includes digital terrestrial TV channels using a Freeview decoder and on-demand programming delivered over broadband through a hybrid STB. Likewise, French operator Cegetel’s Neuf TV has acquired nearly 1 million customers using a digital terrestrial and IP hybrid. “Go figure — you don’t have to be all IP network to hit 1 million,” Hawley said.

The hybrid trend is very slowly beginning to catch on in the U.S. as a lot of telcos entering the IPTV market become more frustrated with the costs and complexity involved in rolling out that service. Rural Oklahoman telco Panhandle Cooperative started offering IPTV in 2001 and is now singularly focused on a hybrid fiber/coax network. Telcos including Embarq, Qwest Communications and Windstream all have also supported the case for hybrid. The newly formed relationship between AT&T and DirecTV is another successful example. In all these services, the user interface is fully integrated to the end consumer, with the only difference being the transport mechanism.

Sezmi is another newer example in the U.S. Although the vendor has yet to roll out its hybrid digital TV/OTT service, it pledges to take the vast majority of content off a telco’s network by delivering it over digital TV spectrum to a receiver equipped with a smart antenna and massive storage. It will then only leverage the broadband pipe for any niche content an individual demands.

With the economic recession causing many telcos to reevaluate their go-to-market strategies, price sensitivity and competition will most likely be their biggest motivators. Television is not becoming any less important to consumers, but options for smaller telcos doing IPTV are becoming slimmer, as SES Americom prepares to shut down IP Prime this year. As all these factors combine, hybrid begins to look more appealing. North America tends to trail behind its European counterparts anyway, and if they are any indication, hybrid TV will be the next big thing here as well.