What is IPTV?

IPTV (Internet Protocol Television) is a system where a digital television service is delivered using the Internet Protocol over a network infrastructure, which may include delivery by a broadband connection.

For residential users, IPTV is often provided in conjunction with Video on Demand and may be bundled with Internet services such as Web access and VoIP. The commercial bundling of IPTV, VoIP and Internet access is referred to as a Triple Play.

Adding the mobile voice service leads to the Quadruple Play denomination. IPTV is typically supplied by a broadband operator using a closed network infrastructure. This closed network approach is in competition with the delivery of TV content over the public Internet. This type of delivery is widely called TV over Internet or Internet Television.

In businesses, IPTV may be used to deliver television content over corporate LANs and business networks. Perhaps a simpler definition of IPTV would be television content that, instead of being delivered through traditional formats and cabling, is received by the viewer through the technologies used for computer networks.

IPTV is moving rapidly towards mass-market adoption. The involvement of incumbent telecoms operators in most major markets by 2007 (France, Spain, Italy, UK, Germany, Austria and the Netherlands, for example) will provide the marketing, word-of-mouth and - for the many conservative-minded television viewers yet to switch to digital TV - the credibility that could boost the market for all IPTV providers.

Several early IPTV deployments are now reaching subscriber figures where they must be taken seriously, including Telefonica in Spain, which has over 200,000 subscribers for its Imagenio television service (launched commercially November 2004). The Spanish company is predicting one million customers by 2008. France Telecom (launched December 2003) doubled its customer count during 2005, ending the year with 200,000 subscribers for its MaLigne TV service too.

The pace of deployment is accelerating: Telekom Austria launched its aonDigitalTV video-over-DSL service in Vienna in March 2006 and KPN in the Netherlands is preparing for a second quarter (2006) commercial launch. Deutsche Telekom is hoping to roll out its 100 channel broadcast TV (including HDTV) and VOD service late summer 2006 and BT has scheduled late summer/autumn for its hybrid DSL/DTT offering.

Competition is also increasing. Utility companies continue to launch television services but the main rivals to the big telcos are alternative broadband providers using Local Loop Unbundling (LLU). The second half of 2006 and 2007 will also see the expansion of incumbent telcos into territories outside their domestic markets - where necessary using LLU to compete with their peers on ‘leased’ networks.

France Telecom has already announced that it will launch IPTV in Spain, the UK and Poland this year, followed by the Netherlands (not to mention Mauritius, Senegal and the Ivory Coast). Meanwhile Telecom Italia - through its subsidiary HanseNet - is adding television to its existing telephone and DSL services in Germany, starting in Hamburg. Telecom Italia also launched television services in France (via Telecom Italia France’s AliceBox triple-play service) in January. Meanwhile, Deutsche Telekom subsidiary T-Online is taking IPTV to Hungary, with a planned commercial roll-out of TV-over-DSL in Budapest and other major cities later this year.

And to add further spice to this market, existing Pay TV operators from the satellite and cable world are buying into DSL. BSkyB bought UK DSL network provider Easynet in January (2006) to give itself a two-way network and exploit the “exciting opportunities that now exist to combine quality entertainment with significant high-speed connections.” Europe’s largest satellite TV provider has told investors that it intends to introduce IPTV some time after 2007. Meanwhile, UPC Austria (part of the pan-European UPC group owned by Liberty Global) has agreed to acquire the Austrian xDSL provider Inode - so establishing a national footprint, initially for high-speed data and voice.

All this activity is underpinned by network upgrades across the continent, with BT in the UK now committed to delivering ADSL speeds up 8Mbps from 5,300 telephone exchanges in the UK - putting broadband in reach of 99.6 per cent of the country. France Telecom and Telefonica, among others, are using ADSL2+ and Deutsche Telekom will deploy television services exclusively on VDSL, using the 50Mbps fibre/copper network being built by its fixed network infrastructure division, T-Com. T-Com expects VDSL in 40 cities by the end of 2007, putting 11 million homes within reach of the planned IPTV service.

So with high-speed networks available and expanding their reach, multiple service launches and growing subscriber figures, the big questions are how much market share IPTV providers can take from satellite and cable, and whether they can make money - if indeed, video revenues are their real motive rather than simply reducing churn on voice/data customers. Are there digital TV newcomers who will choose IPTV ahead of digital terrestrial - and are these the customers IPTV providers want? And can companies differentiate their services sufficiently from cable and satellite to tempt existing Pay TV subscribers away from them?