The Internet Protocol (IP) has had a mix impact on the telecom operators (Telco). On one hand it has allowed them to build and market broadband access services. On the other hand it has allowed new entrants to offer at a very low cost voice over IP services, attracting an ever increasing number of subscribers away from Telcos. To mitigate this loss of customers and revenues, Telcos are building network and media infrastructure to offer television and video services. Cable operators (often referred as MSOs) have relied on IP to steal voice customers from Telco. Telcos are using IP to steal video customers from MSO.

In developed countries most Telcos have a TV offering. It is embryonic but Telcos have great hopes the service will take off. As we analyze the Telcos TV offering we realize it is mostly a "me too" product. It mimics the offering of the incumbent video providers. As new entrants, Telco have to compete on price. This is not sustainable in the long run as it is more expensive to operate a Telco network to support TV than it is for cable, satellite or digital terrestrial television (DTT). Actually, viewers trends have shown that traditional TV (we called it me too TV above) is losing appeal. People still want TV but another TV.

In this paper we look at the status of TV offerings by Telcos and we analyze the market and demographics across the world.

IPTV Assessment - A Bit of History

Television has come a long way since becoming a neologism in 1990 and the introduction of the color set by Sarnoff in the 1950s. TV technology and its business model have had a radical impact on western societies. The technology has recently undergone two major shifts - first from analog to digital; and, more recently to IP. Along with the shifts in technology has come an equally dramatic shift in lifestyle that has changed where and when users expect to view their favorite programs. How people view TV has changed from the family sitting around the TV in the 1950s, to TV on the Internet and while on the go (e.g. while traveling). We must not forget the greatest invention of all - the remote control - now the user no longer has to move off the couch to change the channel.

There has also been a major shift in the business model for delivering TV. It has gone from a handful of "free" channels, largely driven by a few major television networks (in the US) or a few public channels (the rest of the world), to pay TV with a variety of premium channels. More recently, the Telcos have entered the fray, attempting to compete against MSO, satellite providers and free to air operators with a video component added to their existing communication offer. For telecommunication operators, Telco TV offers the ability to provide triple and quadruple play services (voice + data + wireless + video). Like the cable operators that moved into telephony, the Telcos must compete for a bigger percentage of the customer’s communication spend. Having all components in this converging market is crucial to that strategy. Telco TV gives the telecom operators their fourth component.
Next page