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November 28, 2006

Is IPTV only about changing the TV experience?

 By [Denis Lévesque], Product Manager, Espial

When the first commercial IPTV roll-out started 6 years ago, it was quite a technical undertaking. Kingston Interactive managed to get the new services up and Newbridge’s 3DSL program made many promises come true!

At that time, the European telcos were told that they were losing 10,000 subscribers a month to the cablecos.

A race had started, but there were still many struggles to overcome.

Marketing knowledge was minimal. What would make subscribers switch? Would this occurrence happen because of all the promises of interactive services? Would it be due to the ever popular Electronic Program Guides? Would it be because of the web-like user interface? Not many people knew.

Technology was at its infancy. Although Oracle had an obscure product called OVS (then known as Oracle Video Server) since the early 1990s, most of the other IPTV components like middleware, STB, CA/DRM, encoders were all new and clunky to work with; they were really proofs of concepts at best. Getting anything to work was a challenge, getting anything integrated was a huge undertaking!

Fast forward to 2006, the situation has changed drastically. Ecosystem components are strongly established and have many reference integrations to show. Technology has matured dramatically and telcos are much better educated than before. This progress has been fast but painful. Indeed, the first IPTV victim saw its deathbed this year as Kingston Interactive closed its doors.

Although all the technological advancements are making IPTV roll-outs feasible, the telcos are falling behind in this race for market dominance. Cablecos have been successful in widening their gap and increasing their market share in the voice business. Vonage just signed its 2 millionth subscriber, Time Warner has more than 1 million and Cablevision has passed its one millionth subscriber. In comparison, the North American telcos don’t have much to show for!

An example of this lead is clearly shown in the Canadian market. Cablecos across Canada are offering voice services, Rogers has over 800,000 voice subscribers, Videotron has over 220,000, Shaw has more then 210,000 and even the small Cogeco has over 50,000 subscribers. And these statistics are accelerating. Canadian telcos have already seen their subscriber base shrink by a few percentage points.

Let’s not make any mistake about IPTV, its first and only driver is market protection. The huge investments, the enormous learning curve and the big risks are not about ARPUs, they’re about basic bread and butter.

At this point in time, every day counts, the longer the telcos delay the introduction of their video services, the more damage they will need to deal with and the more catch-up they’ll need to do. The acceleration of the telcos introduction into the video market is crucial! To make themselves successful in the short term and be profitable in the long term, focusing on the introduction of basic TV services is a must. Revolutionizing TV usage and revolutionizing its experience should only become a second objective, an objective that should be attainable with the proper IPTV components. Therefore, having full control of their own ecosystem and feature set is critical to the long term success of the telcos.

So, first things first. Let’s first get IPTV strongly established before the battle wages on for too long and the only victory is catching up to the competition.

-Denis Lévesque

—Denis Levesque is a Product Manager at Espial IPTV. Based in Ottawa, ON, Denis has a rich history in the IPTV industry working for such companies as Newbridge, Alcatel, Thirdspace, Videologic and Tut Systems. When Denis' not at work or with his family, he can likely be found in his living room watching the Amazing Race, pedalling vicariously through the Tour de France or playing soccer aspiring to be the next Zidane.

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