OTT clouds gather over telcos IPTV dreams

Tony Brown/Informa Telecoms & Media
28 Apr 2014

It was never meant to be like this. When Asia Pacific's cutting edge telcos began rolling out their FTTH networks way back in the 2000s, one of the driving reasons was that the huge bandwidth boost would allow them to launch their own pay-TV services, which would present them with a big fat new profit center.

However, more than a decade after the first IPTV services launched in the world's leading FTTH region, technological and competitive pressures have completely changed the pay-TV landscape and are placing huge pressure on the traditional pay-TV business model deployed by many of the region’s telcos.

From a competitive point of view the big problem for the telcos are - of course - the OTT content providers that are quite merrily running their content over the telcos expensively deployed FTTH networks for free - safe in the knowledge that net neutrality provisions means that there is little the telcos can do to stop them.

Even where telcos have tried to push back against the OTT players - as Korea Telecom did with Samsung's connected TV services - they have been quickly slapped down by regulators and forced to let the OTT players "ride for free" on their networks.

This has been hugely galling for the telcos themselves which are - in most cases - still losing money from their IPTV services and yet can only sit and watch as rival content providers drain eyeballs and revenues from the services being offered by the telcos.

While king of the OTT players - US streaming service provider Netflix - has yet to launch in the Asia-Pacific region (although there have been plenty of rumors of an impending launch) there have been no shortage of OTT players entering the online video market.

In some markets such as Japan and South Korea the big challenge has come from the local terrestrial broadcasters that have launched their own online content platforms - similar to the BBC iPlayer - which provide on-demand and catch-up TV services to viewers.

While one of the global OTT giants - Hulu - did launch into the Japanese market back in 2012 (although Hulu recently sold out to Nippon TV) the real problem for the telcos is that technological changes are now opening up the market to an unprecedented degree without global OTT giants even having to launch into new markets.

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