Intelsat's super headend could blow IPTV market wide open

18 Apr 2006

It's been said for well over a year now that growing interest in IPTV is as much an opportunity for the satellite business as it is a threat - depending on which part of the business you're in. For DTH service providers, the idea of broadband telcos getting into the pay-TV business is undoubtedly one more headache they don't need. For satellite players who deliver the video, broadband telcos are new video delivery customers waiting to happen.

Intelsat undoubtedly sees opportunity in IPTV - hence last week's launch of its 'Ampiage' service. Described as a 'satellite-based, open-architecture, content delivery and management service' that in effect amounts to a satellite-based super headend, Ampiage allows IPTV players to outsource the content transport, distribution and content management segments of their network to Intelsat, into which they can plug in whatever existing or new equipment they care to use. That includes support for MPEG-4 signals, which promises better transmission quality and efficient bandwidth utilization.

What's even more interesting, however, is that Intelsat is also targeting Ampiage at cable operators as a cost-efficient upgrade to MPEG-4.

In other words, Intelsat is not only offering telcos a fast, low-cost way to take on the cable players in the pay-TV space, it's also offering the cable guys a fast, low-cost way to fight back.

Time will tell how this all works out, but for now it seems like a clever move on Intelsat's part. It's been understood for some time that IPTV hopefuls will need video distribution, but most of those hopefuls are either big telcos that don't know much about setting up a large video distribution system, or small startups that don't have the cash to build everything from scratch. The smart play from the satellite segment would be to make starting a pay-TV service as painless as possible for neophytes coming in.

If there's a drawback to this, it could be that a good chunk of the new players won't survive the first couple of waves of rollouts.

No one should lose sight of the fact that IPTV is still in its hype phase. Yes, real rollouts are underway or planned, but not everyone's sure how much money IPTV will pull in for everyone, or at least how fast.

A number of analysts are already hedging their bets on IPTV's short-term success. Firms like Gartner and Frost & Sullivan have recently warned that IPTV - at least in Europe - is not going to catch on fast and will take years to build itself up as a significant moneymaker.

In a sense, this is a problem for companies like Intelsat only in that a failing Ampiage customer is a bad debt risk. And that alone is no reason not to try. It will be interesting to see which of Intelsat's competitors follow suit in developing super headend-type solutions (bearing in mind that Intelsat is on the verge of becoming the world's biggest satellite operator pending the completion of its merger with PanAmSat, which itself has some pretty cutting-edge video delivery capabilities). Ampiage is a North American play now, but Intelsat is surely planning to take it worldwide. When it does, regulatory reforms permitting, the pay-TV sector could be in for a major shake-up.

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