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Tuesday, September 12, 2006

IPTV – the Future of Broadband in Ireland?


Hardly a day goes by without the broadsheets lamenting the state of broadband in Ireland. In fact, Ireland’s broadband growth rate has slowed to 19% in the first quarter of 2006, down 28% from the fourth quarter of 2005. The latest score card from the European Competitive Telecommunications Association reveals that Ireland is ranked 14 out of the original 15 EU member companies. Anecdotal evidence from one leading telecommunications provider in Ireland suggests that of their churn from broadband (i.e. those customers who do not renew their broadband subscription), a worrying 60% have gone, not to another provider, but back to dial-up.

So what’s happening? Well, price is obviously still an issue with the majority of subscribers to broadband using the more familiar ADSL option over their existing phone lines. When the price of phone line rental and broadband subscription is added – regardless of the offer – it seems high. With the average price being €45 a month for broadband, it compares unfavourably with, for example, digital TV which seems to offer much more at first glance (80 channels) for a similar price.

Perception is a major part of the problem. Broadband is now accepted by the government as being a utility, potentially every bit as important as gas, water, electricity or television. But whereas, you can see the immediate benefits of water and electricity, the same cannot be said for broadband – hence those returning to dial-up. For example, if your regular websites of choice on dial-up were, for instance, http://www.ireland.com/ for news, http://www.rte.ie/ for entertainment, the odd purchase on Amazon or eBay and checking your emails, a move up to broadband will see very little difference in terms of service, but significant difference in out of pocket expense. The benefits of broadband over price are just not readily apparent to the average user in this situation.

What needs to happen is that average users need to become more fully aware of the utility of broadband and that broadband providers need to offer more in terms of service. This is not about cost, speed or bandwidth – it is about content. One of the potential white knights on the horizon then is IPTV. So what is IPTV?

IPTV, as the name indicates, means the delivery of television over Internet Protocol (IP) networks i.e. broadband. This is not the same as streaming television over the web (often confusingly called WebTV) but rather using the same protocols as you use for the internet, to deliver television and other multimedia content. Again this goes back to another Hub hobbyhorse – the misconception that the Internet is the web. In fact, the Internet is simply a group of interconnected networks using the TCP/IP protocol.

The web is just an application of the internet, as is email and Instant messenger – which also use the same protocols. In the case of the Web, you use a Browser on a PC to interface with the network. In the case of IPTV, you will use an interface on your television


Fig.1 – Triple Play

For broadcasters, IPTV is just another platform for them to deliver broadcast channels – like Satellite, Cable or DTT. But for telecommunications companies, it is the chance for them to offer an entirely new multimedia experience extending the borders of conventional “broadcast” television.

It is an integrated, ‘all-embracing’ media platform offering a bundle of diverse content and communication services from a single provider over a single network to a single user device – all with a single payment. In other words, it’s the Holy Grail.

Frustratingly for traditional landline telecommunications companies, they have been left out of the internet boom as they are resigned to being merely the “carrier”. Unlike mobile operators, they can’t take a share of any revenue from transactions made over the internet through a PC. However, with IPTV that could change. For many telecommunications communications - eircom included – who have a full bouquet of service offerings, it paves the way towards “triple” play, and in some case a “quadruple” play. This relates to the bundled offering of television, broadband internet, telephony and mobile with just one bill. The fact that the main interface is a set-top box and television means that they can offer other revenue-generating services – such as Video On Demand services, interactive shopping channels, games and other unthought of applications. They can also potentially offer a whole new level of interoperability, whereby content and services can be offered on demand - anytime, anywhere – to the television, the PC, the mobile or the PDA. The idea of setting your TV to record Extras on BBC 2 (and perhaps even watching it) through your mobile phone handset would be particularly appealing.
Already, BT in the UK is offering BT Vision IPTV set top boxes which gives customers access to over 30 Freeview channels through their TV aerial (a DTT Tuner); Video on demand offering a huge library of movies, comedy, music and kids shows that you can order and watch at the touch of a button and pay accordingly.

A Digital Video Recorder that allows you store up to 80 hours of programming and press pause while watching any programme. Also on offer are instant messaging, chat and video telephony all through the TV (to and from BT Vision customers only). You are also able to control your BT Vision service via the internet whenever you're online

An effective IPTV offering in Ireland would be a god-send for broadband uptake as it would offer a clear and simple USP for broadband to the customer. It would also offer an ideal platform (i.e. the television) to educate customers to the benefits of broadband in terms of lifestyle and business when using their PC online.

Currently, the size of the IPTV market is still relatively small. The total number of IPTV subscribers worldwide is currently estimated at around two million, with Korea, Hong Kong and Japan as the main markets. Subject to realistic market predictions, by 2010 IPTV could reach 34 million households . An example of 2 successful services in Europe are Free IPTV in France with 200,000 subscribers as of March 2005 and FastWeb in Italy with 250,000 subscribers.
A few barriers to its adoption remain however.

One is that telcos do not have the experience to aggregate, or indeed programme, content. Secondly, set top boxes – as Sky have long understood – need to be carefully handled. Consumers are not used to their television “crashing” – where as they are well used to their PC doing so. Any applications that run on IPTV set top boxes will need to be robust and carefully monitored. Again, this is not part of the average Telcos experience. Thirdly, there is the bandwidth problem that occurs when users start to demand High Definition broadcasts. The average HD image is generally 4 times the size of a standard one in terms of bandwidth constraints. Although it is likely that compression technologies will develop in tandem with the roll-out of HD, Telcos will still find it hard to compete with the likes of Sky Digital who have been in the set top box game for years and who also are now looking at subscription broadband offerings.

To get an idea of how the IPTV battle might be waged in Ireland, you need only look at the applicants for the Digital Terrestrial Television trials being run by the Department of Communications, Marine and Natural Resources. They are BT Ireland, Channel 6, Chellomedia Services, the Communicorp Group, Magnet Networks, Sky Ireland, TVONE Broadband Media, USP Ireland and a joint bid from RTE and Eircom. It is interesting to see that four of the applicants are telecommunications companies. It seems that the IPTV revolution may be underway and that broadband may finally find a home.

posted by Neil Leyden @ 12:20 p.m.

1 Comments:

At 12:09 p.m., Anonymous Anonymous said...

Good article and fair assessment but what about the OTT players Joost, Blinkbox, GoogleTV etc

And you still owe me a pint!

Allen McCaskill
Director – Media Solutions
Ericsson Limited
Mob: +44 7774 281809

 

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