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July 2007 | Volume 10 / Number 7
The Next Wave Redux

IPTV’s Limited Window of Opportunity

IPTV and Peer-to-Peer TV (P2PTV) are two new ways to deliver video. Both are in the news, both use IP, but there the similarity ends. IPTV provides video streaming over DSL, so telephone companies can compete with cable TV. P2PTV is mysterious, possibly illegal. It’s an application and/or a service that runs over the public Internet, independent of any specific Internet access provider. Just as P2P file sharing is driving fundamental change in the music industry, P2P is about to disrupt conventional TV - broadcast, cable and IPTV.

In the US and Canada today, cable TV “triple play” services - TV, telephony and Internet access - are succeeding, to the detriment of the telcos’ residential voice revenues. Since subscribers change residential services infrequently, losses tend to persist. So it’s no wonder incumbent local exchange carriers (ILECs) are launching IPTV services using DSL over their existing copper plant and, in the case of Verizon, using new FiOS fiber-to-the-home

IPTV provides a centrally managed service platform that Telcos can rely on to deliver carrier grade video streaming. TV services typically require local franchises, but ILECs are lobbying experts, likely to obtain the needed franchises directly or via state legislated overrides. TV services also require content, but AT&T and Verizon have the capital and critical mass to negotiate content deals. So IPTV is a good bet for equipment providers, as ILECs invest in their struggle against Cable’s triple play. But will it matter ten years from now?

Peer to Peer

Peer-to-peer (P2P) technology is best known for content sharing. P2P handles distributed databases, searching and file transfer using only Internet connectivity and the distributed storage and processing power of participants’ computers. There is little or no central infrastructure. Recently, this technology has been extended from file sharing to live video streaming.

P2P TV first showed up in China under names like PPLive and PPStream. PPLive grew out of work done at HuaZhong University of Science and Technology in WuHan in 2004. They launched services as PPLive in January 2005. Now, western companies are jumping on the bandwagon. Joost has the highest profile as it was started by the founders of Skype, but Babelgum, RawFlow, Zattoo, and Neokast are also using P2P technology.

Disrupting Conventional TV

Which of these startups succeed is unclear, but three forces guarantee disruption will ensue. First, people want to watch content on their own schedule, not that of a broadcaster. The advent of TIVO and other personal video recorders has made this abundantly clear. Second, access to “the long tail” of all possible content, obscure or otherwise, significantly expands any content market as Internet forces have already demonstrated with books and music. Third, user-created content is a powerful force. YouTube just exposes the beginning of this effect. As mobile phones evolve to include video cameras, the volume of personal video content will soar.

These forces work against conventional broadcast TV, whether via cable or IPTV. When most content is not live, file transfer is better than broadcast. As the volume of interesting content soars, Internet scale search and delivery beats any local service. And when P2P technology can handle live streamed sporting events, the last remaining advantage of conventional broadcasting disappears. If anything, P2PTV will increase live sports coverage when individuals are able to broadcast local little league matches. But there’s more.


IPTV typically couples video streaming to local access in order to guarantee quality of service (QoS). With file transfer, QoS is irrelevant. And for one-way video streams, a few seconds of delay can buffer any variations in packet delivery. Either way, all that’s required is high speed Internet access, from any provider.

P2P technology has an additional advantage over IPTV infrastructure - automatic local caching. Costs for video delivery include the cost of hosting the actual video and the cost of bandwidth. While local Internet access is typically sold flat rate, costs depend on volume in the Internet backbone and the “middle mile” (from the backbone to the local access network). Local caching has two advantages, it reduces backbone and middle mile bandwidth expense and it improves local response times. So IPTV systems typically incorporate local caching at some considerable expense. P2P systems accomplish similar local caching with no capital investment whatsoever.

Limited Window

Telco investments in IPTV are a logical response to cable telephony but, with TV disruption on the horizon, investing in IPTV looks a lot like starting a new record label in 1995. IT

Brough Turner is Senior VP of Technology, CTO and Co-Founder of NMS Communications. For more information, please visit the company online at

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