IPTV a defensive play as telcos position to retain clients, says researcher
Sep 12, 2006 8:00 AM
A Gartner forecast released last week that projects worldwide IPTV subscriber households to grow to 48.8 million by 2010 had to have been welcomed in the halls of telecommunications companies worldwide.
However, according to Elroy Jopling, research director for Gartner’s Consumer Communication Services group, the cause for celebration must be tempered by the fact that telecommunications companies will for the near- to mid-term be forced to compete on the basis of price with cable and satellite alternatives for TV viewers.
Relatively modest revenue from IPTV service is likely to continue until providers tap into the full potential of the technology to deliver an interactive viewing experience and create virtual communities of viewers.
IPTV Update turned to Jopling for more insight.
IPTV Update: The Gartner forecast released last week predicts the doubling of IPTV subscribers “buoyed by new service launches.” Identify the service launches you anticipate, and are you referring to things like Verizon’s FiOS, AT&T U-verse and the Deutsche Telekom service?
Elroy Jopling: The U.S. will be behind Western Europe in subscribers for a number of years and is really now in the catch-up mode. There’s no question that from a North American perspective, Verizon and AT&T will be the big players.
North of the border, an interesting one will be Bell Canada. It will be interesting from a number of perspectives because already they are in the Pay TV business; they are the largest digital-satellite-to-home company in Canada. They bring a lot of expertise from the content side. So that will give an interesting perspective to the whole area.
If you look at Europe, I think two of the key ones will be BT’s (British Telecom’s) BT-Vision and Deutsche Telekom. All of these fall within the Microsoft camp, and I suppose it is also very much a Microsoft foray.
IPTVU: According to Gartner, IPTV service providers will likely compete on price. Is that because they aren’t yet fully employing or exploiting the full potential of their technology, for example some of the interactive capabilities of IPTV?
EJ: It is a combination of factors. In the very near-term, what I think you will see them do is come out with pricing that is fairly similar to cable. And quite frankly what they are doing is getting the low-hanging fruit. That may be the telco-friendly customers, the people who just like them, people looking for a change, and people who have dissatisfaction with cable and satellite, and one of the audiences will be the analog base. So I think for the first period of time, they will have a pricing mechanism that is close to or just a bit below cable pricing.
I think when you move to the second stage of trying to get deeper into the cable companies’ and satellite operators’ consumer subscriber base, then you will have to offer something more, or probably what you will see them doing is reducing the price.
Then they will get into the various features of IPTV and what it can do. I kind of break them into four. One is the entertainment; one is communications; one is interactive; and the other is personal. When you look at some of those and the things they can do with presence and so on, a lot of that will be down the road. They will come out with launches that have a few extras. But mainly it is going to be a stable of services that pretty well mirror the cable companies, and it will take them a while before they get into the advanced services.
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