IPTV could give incumbent US telcos the lead in triple play

Analysis: IPTV (Internet Protocol Television) technology may give incumbent US telcos the chance to take the lead in triple play Currently, the cable operators have the first-mover advantage in triple play. Successfully exploiting the capabilities of IPTV – such as interactivity and a potentially unlimited selection of channels – could stem the tide while yielding increased revenue, higher ARPU and lower churn for incumbent US telcos. However, a number of important uncertainties remain that will impact the success of telco IPTV.

Incumbent telcos see IPTV-based triple play as a way to counterattack in the face of competitive pressures from mobile and broadband technologies, cableco triple-play offerings and falling revenues from traditional telephony. But, in this report, Analysys goes beyond the industry hype and takes a close look at the business and technological realities behind IPTV. US cable operators have well-established video and broadband services, and over 73 million TV subscribers, generating revenues of nearly 60 billion dollars per annum. With such formidable competition, incumbent telcos will need to execute strong business cases if they are to succeed with this new technology.

Using switched-video technology, IPTV can support scheduled programming, video on demand and, unlike cable TV, a practically unlimited number of TV channels and video content. In addition, IPTV could enable a range of interactive features – allowing viewers, for example, to change the camera angle during a TV programme or purchase products shown in a TV programme by using Web-browsing functions built into the TV programming itself.

However, there are potential obstacles to IPTV deployment. The regulatory climate, cablecos’ reaction and telcos’ ability to gain access to compelling content are among the variables that will determine the future of telco IPTV in the US market. “Despite the strong arguments for telco IPTV several issues could affect implementations and weaken the IPTV business case for incumbent US telcos.” It also remains to be seen whether IPTV will generate real interest among advertisers and stimulate significant mass-market appeal.

• Incumbent US telcos see IPTV as a means to regain the revenue and market share that have been eroded by competition from mobile services, broadband technologies and cableco triple-play offerings.

• Unlike cable TV, IPTV supports a virtually unlimited number of TV channels and enables a range of new interactive features.

• Ultimately, a number of variables – such as regulation, technology and content access – could prove obstacles to IPTV deployment for incumbent telcos.

IPTV: a breakthrough for US telcos? Publ. 20051114