Tuesday, December 11, 2007

Internet Telly

IPTV: The Facts

The following brief article answers some of the key questions readers may have about the IPTV market and technologies.

What is IPTV?

IPTV is about providing high-quality multi-channel television and streamed/downloadable video, all delivered via the web's IP protocols and displayed on the TV set in your living room.

IPTV is currently provided by telcos around the world. Homechoice provide limited services currently in the London area, and BT and Sky are rolling out services in ‘06 The experience is delivered via broadband to your TV (not your PC) via a set-top box in the home. Crucially it’s "lean back" not "lean forward " technology.

Research suggests that although there are barely 2.5 million IPTV subscribers globally today, there will be around 25 million by 2010. China is the leading candidate for IPTV growth (4.9 million subscribers), followed by the US (3.4 million), France (2.5 million), Germany (2 million), Italy (1.6 million), the UK (1.5 million) and Spain (777,000).

The ability to pipe TV content over broadband has the potential to turn the broadcasting, film, advertising, telecoms and cable industries upside down. It’s extremely disruptive technology.

What's the technology involved?

MPEG-2 is the most widely supported video codec in the TV industry, but it isn't the most efficient for IPTV.
The services running today have proved that MPEG-2 can be delivered over broadband. Some future providers will deliver the service over MPEG-4 AVC (H.264) or Microsoft's Windows Media Video 9 codec.

These dramatically reduce the bandwidth requirements, enabling IPTV systems to carry more standard definition channels or potentially HDTV programming in the future.

This service is delivered to the home across broadband to a set top box and the TV services are accessed via the TV itself, not a PC Your TV screen acts as a web browser and programmes are searched by customised guides containing video search abilities.

Why is IPTV happening now?

Technology changes: There's nothing new about the concept of Internet Protocol Television but early examples have been a poor experience, and downloading content has just taken too long. Bandwidth and the cost of servers conspired to limit the growth of IPTV.

That's now no longer the case, thanks to rising broadband speeds and more efficient compression. Faster broadband is key.

Business imperatives: The other key element is that the telcos are rapidly losing voice revenues to their cable competitors. As this revenue goes into sharp decline, the telcos must do something new to improve their offering and drive more revenues.

Getting into video delivery for them is not a choice; it’s an economic necessity. Some predict that it’s too much of a gamble for a telco to become a broadcaster, deliver consistent high premium content to TV’s and oust the likes of providers Sky from the home. Why would you switch your TV service if you were already happy with what you had?

How can IPTV compete with existing TV services?

Telcos will compete on:

Price: Get your telephone, data and video (called a "Triple Play") for a monthly cost via your telco that undercuts your combined costs of getting those services delivered in other ways.

Exclusivity of content: expect BT to become a bidder for premium content viewers will pay for, like football and films.

The return path: watching TV on an IP connected service allows for the delivery of a wide range of extra services from targeted ads to interactive options.

Niche content: An IPTV supplier can push out multiple new channels across their existing bandwidth relatively easily. It’s very possible that niche viewers drawn in to watch sand boarding or basket weaving will stay for other services, and consumers are all increasingly becoming niche viewers.

Where is IPTV being deployed?

IPTV is happening now. There are multiple deployments across the world, but all are currently operating with relatively low numbers of subscribers. Those already up and running with first-generation IPTV services include

Fastweb in Italy

HomeChoice in the U.K.

MaLigne and Free in France

Telefonica in Spain

Chunghwa Telecom in Taiwan

PCCW Ltd. in Hong Kong

Softbank/Yahoo BB in Japan

There are numerous smaller roll-outs across the US.

Huge US telco incumbents AT&T and Verizon are making vast investments into IPTV services. AT&T hopes to have 18 million homes hooked up to its service (project 'Lightspeed') by 2007. They are investing $4 billion into the project.

BT and Sky in the UK will launch IPTV services in 2006.

Homechoice already operate in the London area.

What’s going on in the market right now?

Microsoft sits squarely in the midst of the IPTV market. They are now positioned to serve theoretically 26 percent of the world's fixed-access phone subscribers with their own IPTV platform. Eleven operators around the world have signed up for Microsoft's early adopter program.

They include British Telecom, Swisscom, SBC, Verizon, T-Online in France, Telecom Italia, Bell Canada, Bell South and India's Reliance Infocomm. But some projects are already reporting slips in timescales.

A key alignment in the UK recently has been Sky’s purchase of Easynet, heralding Sky’s entry into IP delivered video services. Meanwhile, BT Entertainment is planning to roll-out IPTV services next year, and is already under intense media scrutiny.

Conventional UK broadcasters have been quick to spot the new opportunities that broadband TV can deliver. The BBC has been running the second of its Interactive Media Player trials (iMP), enabling users to download TV and radio shows after broadcast; ITV too has taken the broadband TV plunge - its pilot service includes local news and weather, an entertainment guide and community video.

What are the problems with IPTV?

Technology suppliers are still struggling to find sizeable commercial deployments to which they can sell their products in volume.

The IPTV market is geographically fragmented by deployment type (cable, satellite or terrestrial) and by regional differences in digital-TV requirements.

Standard-definition TV may be good enough for an IPTV rollout in some regions, for example, others call for high-definition TV. Available bandwidth and data rates also vary among DSL infrastructures.

There's no standardisation among requirements for conditional access and digital-rights management. Government regulatory issues will figure highly in the success or failure of IPTV in key regions such as China and the US.

The scalability and management of content, billing and customer systems are also of concern. High support costs will immediately kill off revenues and customer interest . IPTV design requirements are fragmented

How will IPTV shape the future?

IPTV services are likely to complement rather than replace today's TV delivery. What it will do is cause TV viewing to fragment even further. It will also start to effect release windows for feature films; when does the Internet release start to become more profitable than the DVD, and how does that model start to stack up?

An interesting conundrum is also advertising space. IPTV will start to break down the traditional 30 second TV spot, and fragmented viewing where consumers do not have to choose to watch advertising will create challenges for brands and agencies alike.

The only general consensus seems to be that this is disruptive technology, and that interesting times lie ahead, as a wide range of industries are changed and evolved further by the capabilities of the Internet.

by Gael McLaughlin, Editor, ipTV News www.iptv-news.com

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