Freeband TV News

Bigger boys stealing IPTV cake

Chris Andrews

Tier 1 telcos to carry on taking market share from smaller players

It’s not really surprising, but a study from IMS Research has found that IPTV deployments globally are largely attributed to tier 1 telcos, and by the end of 2014 there will be some 40 million households subscribing to tier 1 IPTV services.

The actual figures quoted in the report ‘IPTV: A Global Market Analysis’ forecast 40.1 million households, which seems a bit specific, but the general idea is that tier 1s will be drawing market share away from tier 2 and tier 3 telcos. This, according to Rebecca Kurlak, research analyst and author of the report, is because tier 1s have scalability and “imminent opportunity for solid ROI” and can provide more services, deeper discounts and more compelling content from major studios.

“Tier 2 and 3 telcos will continue to experience subscriber growth as well,” she said. “In 2008, tier 2 and tier 3 telcos comprised almost 46% of subscribers. Throughout the forecast, the larger telcos will essentially be stealing honey from the smaller telcos’ bee hives... Hence the reason why the small telcos will only garner close to 23 million TV households by the end of 2014, half the potential of what Tier 1 telcos are anticipated to achieve.”

Kurlak says that some of the major players, including AT&T, France Telecom, China Telecom, and BT will see “extraordinary uptake” of their IPTV services.

Bearing this in mind, it is interesting timing for America’s NTCC and Conklin-Intracom to announce that they have teamed up to “simplify IPTV” for US telcos. This is in terms of content affiliate rights & approval and the implementation process and will “represent a simplified path for IPTV content acquisition and distribution”.

The idea behind this is that market entry for telcos, and other operators looking to deploy IPTV solutions, will be accelerated through the service, as difficulties surrounding content licensing will be smoothed out. “One of the biggest hurdles to a profitable telco TV business model is the cost and complexity of securing content,” said William Shepherd CEO, of NTTC. “Our role in acquiring IP content licensing helps overcome that paramount task for new operators.”

The other paramount task, of course, is competing with the aforementioned tier 1 players. It’s all well and good accelerating into the market, but if IMS is proved correct, that market is diminishing for smaller operators who will theoretically be fighting over scraps. Of course, IPTV could end up garnering a larger market share than expected, so offering plenty of cake for everybody. But, and this is a very big but, all of this is relying on infrastructure which can withstand increasing demands.

Last week’s second Global Broadband Quality Study, put together by Saïd Business School, the University of Oviedo and Cisco, found that generally broadband quality was improving. In fact 62 out of the 66 countries analysed had improved the quality of consumer broadband services since last year. (It found that broadband quality is linked to a nation’s “advancement as a knowledge economy” and countries with broadband on their national agenda had the highest broadband quality. Um, so, countries that make an effort to improve their broadband services have better broadband. Hmm. Well, better than the other way around).

This is great for email and YouTube, smashing, however only nine countries out of 66, South Korea, Japan, Sweden, Lithuania, Bulgaria, Latvia, The Netherlands, Denmark and Romania, were found to have the broadband quality required for future web applications likely to become mainstream in the next three to five years, including high definition internet TV and high-quality video communications.  Or, arguably, wide spread distribution of IPTV services, particularly HD IPTV. If these other 57 countries, or at least a healthy percentage of them, don’t get their acts together, the future is not looking bright for widespread deployments.

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