Making More of IPTV

TELECOM SERVICE PROVIDERS have said from the outset that IPTV would be more than just a cable replacement — that the power of IP would enable better, more focused and more interactive services. To date, however, the innovations around IPTV have been limited. That is expected to change, but whether it changes quickly enough to restart an IPTV market that seems to be lagging is uncertain.

“I personally think that new IPTV deployments have plateaued — you haven't seen many announcements in the last year, and those announcements were common three to four years ago,” said Kevin Walsh, vice president of marketing for Zeugma Systems, which sells intelligent edge equipment. “There's a sea-change occurring very rapidly right under our feet.”

That change involves where and when people watch their favorite shows, Walsh maintained. “I like to watch The Office, but I've never watched it as part of my cable operator's channel lineup. I can go to Hulu and watch it any time I want. There are so many other ways — Roku, LG Electronics Blu-ray player, the Microsoft Xbox, just to name a few — that no one needs to sit there and wait for something to come on.”

In fact, Walsh said, industry analysts are starting to track cable disconnects — consumers who cut the video cord much as they've got the wireline phone cord. But there are plenty of analysts who don't think cord-cutters are a very large market.

“Will consumers abandon their big-screen TVs to watch over-the-top video? My belief is no,” said Rory Altman, director with Altman Vilandrie & Co. “There may be a little bit of [average revenue per user] erosion. For certain segments of the population — those right out of college, the [low-income] segment — but most people who've just invested $1000 in an HDTV want the clarity and picture quality they are paying for. We want a dominant experience in the home, which is immersive.”

Although economic conditions may have blunted Christmas sales, the Consumer Electronics Association said 2.6 million high-definition TV sets were sold just in advance of the Super Bowl in January.

“People may be willing to watch game clips or Tina Fey comedy sketches on Monday morning via the Internet, but they want to watch the Super Bowl on the big monster screen,” Altman said.

The other issue for over-the-top (OTT) content is whether today's broadband networks will have the kind of capacity to enable a large group of people to watch streaming videos over their networks, Altman said.

“I don't know that [broadband service providers] want to add that kind of capacity to their network to download Internet video,” he said. “There is a lot that has to happen to engineer the network so that many people can download HD streams and watch them live. It's not just bandwidth, latency and packet loss — there are a lot of things that have to happen. You have to be concerned about the number of hops and prioritization of traffic.”

But other than providing the immersive HDTV experience, what else can IPTV be? To date, the two largest providers of IPTV in the U.S. — AT&T and Verizon — have focused on things such as multiroom digital video recorder capabilities that separate them from cable and satellite, and on adding things such as interactive widgets for local weather, sports and traffic information, as well as personalized stock quotes and other consumer-specific information.

Verizon has other things in the pipe, said Bill Heilig, vice president of product management and development for Broadband Connected Home Solutions. They include things such as remote energy management, video-conferencing from the TV and PC (see story on page 18) and more. But Verizon sees these as icing on the cake and not its primary market strategy, which remains selling the best possible bundle of voice, data and video services, Heilig said.

Advanced services that take advantage of better bandwidth have been slower to develop than expected, said Benoît Felten, senior analyst for Yankee Group. He attributes that, in part, to the fact that large telecom services providers globally are not doing enough to partner with innovators, instead preferring their own internal developments.

“Out of 100 projects from Internet innovators, there is one project that is going to soar and 99 that are going to die,” Felten said. “If you are going to develop these yourself, you have to be willing to invest for 99 projects that die to get the one that succeeds. But if you partner with a successful company, you can ride that success. [Incumbent service providers] haven't faced fact that they should partner with these people instead of trying to replicate what they are doing.” — CAROL WILSON