IPTV Offers Telcos a Way to Get in on Video Delivery

Apr 18, 2005  •  Post A Comment

IPTV is the It word.

The term has flitted about the cable and broadcast industries for many years but entered the lexicon as a recurrent buzzword in late 2004 as Verizon, SBC and other telephone companies detailed plans to offer video service to compete against cable and satellite operators. IPTV will be a major topic at the National Association of Broadcasters Convention in Las Vegas this week.

Despite its widespread use, the term is still often misunderstood, meaning different things to different people. “IPTV,” in its most precise definition, refers to Internet protocol television, or the delivery of video signals using an IP network.

Broadening beyond that, “IPTV” also is used simply to refer to “telco TV”-any telephone company’s plans to offer video services, even though not all telcos will deliver video using IP networks. Stretching the definition even further, the term has been used to refer to portable video that’s distributed digitally.

In its purest form, IPTV is a delivery mechanism using Internet protocol rather than the hybrid fiber network of cable systems, said Bruce Leichtman, president of Leichtman Research Group.

IPTV uses Internet technology to convert a TV signal into packets of data. That information is then sent to a set-top box. Cable operators must send all channel signals at the same time, but an IPTV network sends only the signals that are requested-a more efficient process.

Specifically, IPTV is the mechanism by which telco SBC has said it plans to deliver video services later this year as part of its $4 billion Project Lightspeed initiative. SBC said its IP network will enable high-definition TV, video-on-demand, four simultaneous streams of video, picture-in-picture, a digital video recorder on every TV in the home and instant channel changes, as opposed to the lag of up to two seconds on some cable systems.

Verizon, which also has garnered much attention for its TV plans, is deploying a fiber architecture instead. In many ways it’s similar to cable, except that Verizon relies on fiber and its network is all-digital. The Verizon TV service will also enable digital TV, VOD, DVR, HD and an interactive program guide. Verizon will add IP-based applications in the future.

Broadcasters are particularly interested in the topic of IPTV because regardless of the ins and outs of the distribution mechanism, telephone companies offer another option to deliver broadcast content to consumers, NAB spokesman Dennis Wharton said.

“There’s a feeling that there’s really something to this, whereas five years ago people viewed [telco interest in video] with some skepticism, and now the technology is in place for it to happen,” he said.

Still, most industry observers agree that consumers don’t care about how a service is delivered. “How something gets to your house doesn’t matter,” Mr. Leichtman said.

Brahm Eiley, an analyst with Convergence Consulting in Toronto, said he doesn’t even use the term “IPTV” but instead chooses “telco TV” or “DSL TV.”

“Everyone is talking about it because the idea is that they are going to be able to offer everything over one wire,” Mr. Eiley said.

Telcos will have their work cut out for them, though, Mr. Eiley said. At the top nine cable companies in the United States, about 35 percent of video customers also take Internet service, but fewer than 15 percent of residential telco customers get high-speed access from the telephone company. “It will be a lot easier for cable guys to get phone customers than it is for telephone guys to get TV customers,” he said.

At the NAB show, CNN President Jonathan Klein will discuss IPTV more broadly in a keynote speech. He said that to him, IPTV means distribution of content digitally to any device.

For instance, Mr. Klein uses a Samsung portable media center to watch on the go any CNN show he happens to miss, using an internal network. “I can download encoded versions of all of our prime-time shows and call them up on our server in a matter of seconds,” he said.

“That means giving consumers the chance to watch news on the atomic level, piece by piece, story by story, according to what interests them the most. I envision [IPTV] as a completely untethered means of watching CNN.”

He said CNN is working on devising a business model for such digital distribution of its content. To do so, the network will need to ensure it doesn’t cannibalize the ecosystem it has established with existing cable and satellite operators, he said.