This article originally appeared in the Sept. 2010 issue of INTERNET TELEPHONY

IPTV (News - Alert) is big business today, but even as IPTV penetration grows, the path to its ultimate demise is increasingly clear. 

Unlike the more general term Internet TV, IPTV refers to the telco service that delivers TV over dedicated bandwidth on a telco-supplied broadband Internet connection. IPTV was late to the game, arriving only after cable operators’ triple play services (TV, phone and Internet) began to gain traction and impact fixed line telephony revenues, but IPTV is booming now. Cable vs. telco competition has matured – they both offer triple play, they both advertise TV channels and bundle pricing, and they both deluge prospects with nearly identical mailers. Indeed in my area (Comcast vs. Verizon), the almost weekly mailers even have similar color schemes!

Unfortunately, the telcos are scrambling to become just like cable companies as the whole business is about to collapse. Given a choice, consumers will abandon the historic TV walled gardens in favor of competitive access to diverse content – what you want, when you want it. The open Internet is the platform for bypassing legacy distribution channels. It’s already fostered change in numerous industries, not the least of which is music. Now changes are beginning to appear in TV as content producers get direct connections to viewers. Many PC-based video approaches are available like Hulu (News - Alert), Joost and Miro. Of course, these don’t match the TV experience, but Internet content on television sets is coming rapidly.

Apple launched one of the earliest entries, the Apple TV. Several other companies have jumped in, like Roku, TiVo and Boxee, and Google (News - Alert) is known to be working on a Google TV. Meanwhile, newer TV sets are being delivered with Ethernet or Wi-Fi Internet connections built-in.

On the content side, large libraries of movie content are becoming available for free, for purchase from Apple (News - Alert) and others, as pay-per-view from players like Amazon or as part of subscription services like NetFlix. The major U.S. TV networks have all embraced some sort of streaming of TV episodes. They still vary as to when episodes become available, but the direct connection from content producer to viewer has been established.

Remember, it only took a few years for the mobile market to crack wide open after the introduction of Apple’s iPhone, then Google’s Android (News - Alert) and competing application stores. Now all smartphones provide open Internet access while wireless operators concentrate on network performance. Expect the same transition for the TV industry as cable TV and telcos’ IPTV services get dropped in favor of open Internet TV. Fixed broadband service providers, i.e. the cable and telco operators, will need to focus on the performance of their Internet services, not on their IPTV channels.