It's the broadband, stupid

“Broadband video is our friend, not our enemy.” — Brian Roberts, chairman and CEO of Comcast, as quoted by Sanford Bernstein analyst Craig Moffett

The growing popularity of Internet video is seen by some as a threat to paid TV services and by others as just one part of the services mix. It may be both.

In Europe and Latin America, for instance, hybrid set-top boxes enable consumers to combine video that comes through a broadband pipe with a paid TV service, either cable or satellite. It’s a model that works because operators can offer on-demand content via an IP connection and broadcast content via the paid service.

That model is likely coming to the U.S. via Sezmi and others, which have realized that the important connection is the broadband service. As Comcast’s Roberts implies in the quote above, the demand for Internet video is actually a good thing for service providers offering high-quality broadband services.

Globally, then, the key for service providers is to continue to offer the best-quality broadband connection possible and then to exploit the available technology to make sure consumers have an easy-to-use, competitively priced option for viewing what they want to watch, when they want to watch it.

That may not be as easy as it sounds, however. A high volume of Internet video will consume bandwidth in the access and core networks, and it may lead to congestion issues, especially if network upgrades are delayed due to capital expense cuts. The industry’s response to this has been to consider bandwidth caps or metering of services — something consumers have said they don’t like.

What looms ahead for telecom service providers is an opportunity to earn a permanent place in the entertainment business, provided they don’t frustrate their consumer audience in the process. The industry needs to continue to focus on getting the broadband part of its business right, and that will continue to mean network investment, even in tough times.