The same pipe that delivers your phone and Internet services could also soon provide television

Database News - Wednesday December 19, 2007

TELEVISION MEETS THE INTERNET

The same pipe that delivers your phone and Internet services could also soon provide television

Story by GEOFF LONG

Gone are the days when your telephone company simply offered phone calls. Sure, they still do that, but telecom providers are also going well beyond voice calls with the offering of various broadband and multimedia services. And now they want to be your preferred supplier for video and television as well, using broadband and Internet Protocol (IP) to deliver it - hence the name IPTV.

On the surface, it would seem a safe bet: the phone companies already have broadband infrastructure in place and consumers are increasingly spending more of their time on the Net at the expense of television. Put them together and you might be excused for thinking you're on a winner.

The problem is that IPTV is still incredibly expensive to roll-out, with a lot of new video distribution required by the carrier as well as things such as set-top boxes for consumers - not insignificant when it goes to a mass roll-out of hundreds of thousands of subcribers. And the traditional broadcasters, notably satellite operators and cable TV providers, aren't sitting still either - they're responding by offering voice and data services on top of their own video offerings.

To top it all off, there's a new breed of Internet TV player that is purely Internet based and doesn't need to create its own infrastructure - in the same way that VoIP services like Skype don't actually build their own network. Companies like Joost and Bablegum are just starting to appear and there are real concerns that they could undercut IPTV before it really gets started.

As a result, many in the industry would agree that IPTV so far hasn't lived up to its promise, particularly in the Asia Pacific region, where countries such as Japan and South Korea, with their high broadband penetration, were expected to lead the way. One of the exceptions is Hong Kong's PCCW. Its "Now" IPTV service has been taken up by around 850,000 subscribers and it recently landed the exclusive rights to broadcast English Premier League football matches.

PCCW chief technology officer Paul Berriman recently told an audience at the IPTV World Forum Asia in Singapore that its service was proof that telcos are well-placed to make the transformation to media companies. "After years of having people eat our lunch, it's our turn to go and eat someone else's lunch," he said.

The Now service, launched in Hong Kong four years ago, is part of a quad play from PCCW that includes fixed line, broadband, mobile and IPTV. Berriman said that the various service offerings had helped reduce churn, with its fixed line market share now stabilised and new content offerings helping to turnaround what was a flattening broadband market.

He said that the Now service reaches over 35 percent of homes in Hong Kong. PCCW's approach proved that broadband is more than just Internet access and he said that having exclusive deals as part of the content mix was a "must have".

As well as the Premier League rights, Now also has an exclusive deal with movie channel HBO. "It's almost like by having key content we're restoring our monopoly," he said, referring to the company's past as the incumbent operator. "And it shows content providers like this model," he added.

The company has also started creating its own channels and Berriman said that gave it more freedom to generate more advertising and sponsorship revenues. Another area of growth is in transactional services such as stock trading and online ticket sales.

Also speaking at the IPTV World Forum Asia was Paul Sanchirico, senior director of the Cisco Video/IPTV Systems Test & Architecture (C-VISTA) group, who pointed to the changing nature of audiences in the "video 2.0" era. "People are looking to express themselves and share content. It's viral and organic," he noted.

His message was backed up by Sal Arora, general manager of Microsoft TV India, who said that IPTV is here today but the industry needed to take the next step and grow the market. He noted that audiences were a moving target, one that it is hard to pin a business model on.

According to Arora, consumer viewing habits are changing and things such as personalisation and social media are now important, while more people were "snacking" on short video clips. "The amount of traffic YouTube is generating is staggering. People don't think about it but YouTube is very social and connected," he pointed out.

Microsoft provides the so-called "middleware" for delivering the services to users and has recently scored major deals for its platform in India and before that in Singapore with SingTel's recently launched "Mio" IPTV service. Low Ka Hoe, director of Mio TV and content, Singtel consumer group, told the IPTV World Forum Asia that Mio was already looking at adding such social networking functions as "phase two" of its IPTV rollout, although he said the most important thing was to prove the reliability of the service.

"This is pay TV and not Internet TV over the public Internet, so we focussed on getting the basics right. But in phase two we will roll out more features to take advantage of the IPTV platform we're on," Ka Hoe said.

Some of the new features are likely to include video conferencing and messaging, integration with gaming platforms such as the Xbox and the ability to view personal media such as pictures and video over the IPTV box. Mio will also look at adding relevant information services as well as more targeted advertisements.

Ka Hoe also revealed that soon customers will be able to program their IPTV service from outside the home, either via mobile phone or the Net. "We have quite a lot of work ahead but the basic premise remains - consumers have lots of choice but need help to manage it."

Mio TV launched in July and had some 10,000 customers by August, which Ka Hoe said was consistent with Singtel's targets. "We are very happy with our numbers. Obviously it's not going to be profitable in the first year but we had a 10-year plan and we're very happy in terms of our targets," he said, adding that "launching pay TV is not about putting everything out on day one."

He also spoke about the opportunity for IPTV operators to partner with content owners, pointing to Mio's collaboration with the likes of Sony Pictures, Chinese-language content producer Dragon TV and BBC Worldwide, which created two documentary channels on Mio TV.

Collaboration between content producers and IPTV operators was also a theme picked up on by Yew Ming Lau, VP of business development for Turner Broadcasting Asia Pacific. "I was very encouraged by the Mio TV presentation. It's good to see we're having a meeting of minds," he told the IPTV World Forum Asia.

Lau said that the challenge for original content producers will be how to attract consumers for its traditional content but also for the "long tail" of niche content - something that Turner is developing now through a number of Internet TV experiments. "Consumer behaviour is moving more towards the tail. As a company we need to be both at the head and the tail, but the problem is how you do it cost effectively," he noted.

He said IPTV operators had more potential to reach niche audiences than cable or satellite operators, as they could create mini-channels or on-demand content rather than 24-hour programming.

In the meantime, whether IPTV has enough to attract consumers away from traditional broadcasters and new Internet-only TV services is something that will play out over the next few years.

Bangkok Post