How The Industry Will Capture The IPTV Market Remains Unanswered

By Nick Mitsis

Even though much discussion surrounding Internet Protocol TV (IPTV) has spurred interest among satellite service providers, consumers may not respond to satellite-enabled offerings, once they hit the market, as robustly as first hoped. According to a survey conducted by Harris Interactive, more than half of Americans have heard of IPTV, and a quarter of Americans are interested in adopting the technology, although they would prefer to receive IPTV from a cable company rather than from a telephony, satellite or Internet service provider.

The survey indicated that 56 percent of respondents have heard of IPTV technology. When prompted, 42 percent believed that it would be less costly than cable or satellite, while 33 percent were interested in the ability to watch a program on demand and 24 percent were interested in receiving a broader array of programming, although only 12 percent wanted to view international programming.

Likewise, of those surveyed, 19 percent expressed interest in adopting it for their PC, while 26 percent were interested if IPTV were available for their television. If available for their PC at a very reasonable price, 12 percent said that they would sign up immediately, while 18 percent said they would sign up if it were also available to their television. Of those that were likely to use an IPTV service, 17 percent said they would cancel their existing cable or satellite service.

Most importantly, when asked which type of service provider they would feel most comfortable with, 33 percent said a cable company; 25 percent said a new company; 15 percent said a technology provider like Cisco or Microsoft; 13 percent said a telephone provider like Verizon or SBC; and 11 percent said an Internet service provider like AOL.

This is why strategic partnerships such as the one between SES Americom and Bellsouth are an important step in the right direction for enabling IPTV offerings. Under the agreement, SES and Bellsouth will rollout a centralized satellite-centric video distribution solution that enables Bellsouth to bundle and distribute standard and high-definition television programming channels with voice and broadband services.

According to published company news, SES Americom will provide Bellsouth with video aggregation, encoding, monitoring, and transport over this platform called IP Prime. The IPTV solution will be delivered over the AMC-9 satellite. The open architecture of IP Prime enables plug-and-play integration with a broad range of infrastructure platforms, including Microsoft IPTV middleware and conditional access systems, which are being tested by Bellsouth.

Bellsouth initiated a technical trial of IPTV technology earlier this year in conjunction with Microsoft and plans to expand that to market trial participants using MPEG-4 encoded programming channels delivered by IP Prime.

Satellite technology’s ability to provide such broadcast services can be positioned as a strong business platform and would seem a perfect fit to distribute and deliver television programming to IPTV providers. Likewise, with satellite capacity providers already distributing programming to the major cable providers, a similar model can be adopted with them as well.

In other words, satellite capacity providers can act as headends-in-the-sky, efficiently enabling IPTV services to both telcos and cable distributors. Satellite-based service providers can likewise generate retail revenues through revenue-sharing arrangements with content providers and IPTV service providers.

But much work needs to be done before any business rewards materialize. Despite an apparent opportunity for satellites to enable IPTV on a global scale, true demand and opportunity for satellite-delivered IPTV is not entirely clear at this early stage. Many questions remain regarding the precise demand for satellite broadcasting in a telco environment, as well as whether IPTV as a whole ever will become a mainstream pay-TV application.

Either way, the foundation needs to be formed today by the satellite service providers, and more vertical partnerships must be formed. The industry cannot afford to take a wait-and-see approach. If they do, the telcos and cable programmers will move far into the lead, capturing the majority of the market share and eclipsing any future business opportunity satellite providers may be looking at long term.