IPTV's 2009: Growth Will Continue, but Consumers Have Options

Carl Weinschenk

One of the oldest debates in telecommunications pits the relative value of the network against the content that rides on it. The proliferation of relatively low-cost broadband networks suggests that the content holders are firmly in control.


Short version: A relatively well-served home or business in, for instance, Houston or Minneapolis will have several wired and wireless options for broadband, making the connectivity a commodity or close to it. However, there is only one Britney Spears, one New York Yankees and one Jon Stewart. The companies that own the rights to distribute the proprietary content those folks create have an advantage over those who don't.


I asked David Deans, the keeper of Digital Lifescapes and senior partner of Deans & Associates, what he expects to happen in the IPTV sector next year. He sees a dynamic in which content owners continue to do no favors for the FiOSes of the world. Says Deans:

IPTV will continue to experience subscriber growth across most markets globally. However, the major media companies (Disney, Fox, Universal, etc) will continue to utilize over-the-top video distribution models (such as Hulu.com) for direct to consumer delivery that will raise questions about the long term viability of IPTV network investments by the incumbent local exchange carriers.

The bottom line is that FiOS, U-verse and builders of smaller FTTH last-mile networks hopefully aren't basing their business assumptions on distributing IPTV to consumers. Prudent carriers will make entertainment video the icing on the cake.


IPTV is a topic that I've followed fairly closely this year. Earlier this month, I referred to a post written by Deans and made the point-one with which he probably would agree-that IPTV is a tough environment for providers because, at the end of the day, they offer the same fare people get from their satellite and cable companies. I didn't differentiate, as Deans did, between "over the top" providers-those who use the existing Internet to traffic the content-and service providers and carriers who spend money to create a more robust delivery platform. It is, as Deans's comment points out, an important differentiation.


In January, I wrote a post that noted healthy worldwide growth in IPTV in 2007 and said that the smart money was on continued gains this year. That turns out to be so. This press release highlights generally mixed to positive findings on the worldwide market by InfoCom. In retrospect, perhaps the most interesting element of my January post was a link to a Telephony Online story that details Qwest's decision to eschew IPTV and stick with DirecTv. Qwest, either prescient or lucky, pointed to the fact that an increasing amount of youngsters, the prime demographic group, don't even use televisions to watch television (or, I guess, to receive video content).


That is not to suggest that fiber-based IPTV projects don't enjoy some success. This week, according to this note at IPTV News, AT&T is expected to sign the millionth customer to its U-verse TV service. The network, which will pass 17 million "living units" by the end of the year, will expand the number of high-definition offerings to more than 100. The in-home capabilities of the service also will be expanded, the piece says.


The bottom line is that IPTV is just another way to transport television programming. While it's great for the Hulu.coms of the world, it can't form the main rationale for an investment in fiber infrastructure. That said, it is equally certain that the days of total television dominance by cable, satellite and legacy broadcasting entities are over.


The unique value of IPTV will be in the business world. Instead of presenting a "me-too" service -- with, perhaps, a few bells and whistles thrown in -- businesses will use IPTV for remote meetings, instructional downloads, a wide variety of marketing initiatives and other offerings that either aren't possible or are prohibitively difficult on legacy networks.

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