IPTV's fuzzy signal

07 Aug 2008
00:00

In the novel 1984, Room 101 is everyone's worst nightmare. When the near-hero Winston Smith is banished there, he's tormented by his deepest, most secret fear - rats.

We don't need Big Brother to know what most terrifies telcos. Any carrier exec banished to Room 101 would find a dumb pipe.

Fear of become a mere bit-carrier is driving telcos' long-term strategies today, and for that reason IPTV is on every roadmap - despite the fact that in the half-decade since the first launch, no carrier has turned a profit from it.

There's no shortage of optimism about the concept, either. At last month's Broadband World Forum Asia conference, several keynotes and half a dozen panels were devoted to IPTV's prospects.

Research firm IDC predicts IPTV subs in Asia (excluding Japan) will increase at CAGR of 45.4% over 2007-2012 to 25 million. Last year from 11 Asian markets just 3.92 million subs had been signed up, of which nearly a quarter were from Hong Kong's PCCW.

Cisco forecasts that IPTV and cable video traffic, will dominate growth on network traffic in the coming year. It expects that between 2007 and 2012, consumer IPTV and CATV traffic will grow at a 68% CAGR, compared to 43% CAGR for consumer internet.

Yet IPTV today offers more questions than answers. Is it a rewarding new category, like SMS, or a dazzling non-event like the videophone‾ Is it more vendor snake oil, or an important new product‾ Is it purely defensive or will it one day deliver real income‾ Will it be overtaken by YouTube and online TV‾ Does IPTV even matter‾

The likely answers: neither, possibly both, possibly both, perhaps, and - yes.

The problem for telecom carriers is that, yes, IPTV promises to carry them out of the valley of commoditization and into the sunlit uplands of the content sector.

But it also represents a hideously expensive departure into an uncertain new business with an alien culture.

The reason is what former British prime minister Margaret Thatcher used to call TINA: 'there is no alternative'. It's either the dumb pipe or the IPTV superhighway.

The competitive plight of fixed-line carriers can be seen starkly in China. China Telecom and China Netcom between them lost three million customers, or 0.8% of all lines in service, in just six months last year following a round of price cuts by mobile carriers - the first time either of them had gone backwards.

That haemorrhaging was one of the main reasons for this year's industry restructure. But because of the government's tight control over media, as well as continuing turf wars between the cable and telecom ministries, IPTV is only permitted in just a handful of mainland markets.

That's changing - China Telecom has just tendered for 574,000 set-top boxes for affiliates around the country.

Leaving aside China's exceptionalism, industry diffidence toward IPTV is not hard to find.

'IPTV is one of those markets that are tough to call,' says Jayesh Easwaramony, head of Telecoms Research for Frost & Sullivan Asia-Pacific. 'Most operators are likely to introduce IPTV simply because of the decline in the fixed-line business.' Carriers felt 'a lot of apprehension and confusion' about it right now, he said.

'The technology is probably the easiest part of all,' Peter Papaioannou, Cisco Asia-Pacific director operations for video and cable solutions told Telecom Asia.

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