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The next TV revolution
The combination of broadband and broadcast could be the next big change in television, as William Cooper explains.
Just as we start to understand the impact of digital television, along comes another buzzword that promises to transform our viewing even further. If its advocates are to be believed, a disruptive digital technology, called IPTV, could herald the next revolution in television.
What exactly is IPTV?
Internet protocol TV can deliver video services over broadband data networks using the same underlying technology as the internet. There’s nothing new about the idea of delivering video over the internet, but IPTV should not be confused with the web experience of streaming video, which has generally fallen far short of anything we might expect to see on television.
With increasing broadband access speeds, together with improvements in video compression, it is now possible to deliver high-quality video services over a telephone line to your TV. In the future, it will even be possible to deliver high-definition services in this way. This opens up the TV market to telephone companies and other service providers, with lower barriers to entry than existing digital platforms.
Total worldwide subscriber revenue from IPTV is forecast to grow from a few hundred million pounds to around £3.7bn in 2008. That’s less than BSkyB earns, but around the same annual income as the BBC. By the end of the decade, such services are predicted to be in around 10% of European homes.
Why the sudden interest in Telco TV?
With revenues for fixed-line phone services threatened by mobile operators on the one hand and the prospect of free or low-cost calls over the internet on the other, traditional telephone companies need to sustain their diminishing call revenues with new services. One of their main objectives is a “triple-play” of voice, video and data services on a single bill.
FastWeb in Italy, followed by Free and MaLigne in France, have pioneered this concept with considerable success, and most European telcos are engaged in trials. Meanwhile, Hull has been an unlikely early adopter, with separately-owned Kingston Communications able to offer video over its network for several years.
New entrants in the market are now able to install equipment in BT exchanges and lease access to local telephone lines, sometimes referred to as the “local loop”. Through “local loop unbundling”, Video Networks has re-launched its HomeChoice service in London. So far it has signed up 15,000 subscribers from the 1.2 million homes it can reach, although that will soon double. The company plans to extend its network beyond the capital, but may well face competition from rivals, such as Wanadoo, part of France Telecom, with more waiting in the wings.
BT has long had an ambition to offer video services, but does not believe that it is currently cost-effective to provide broadcast television over its network. It therefore plans to provide a mix of digital terrestrial television with video-on-demand services, accessible through a single on-screen interface.
With both Freeview and broadband growing in popularity, a bundle of digital television and video-on-demand, together with telephone and high-speed internet access, may prove a compelling combination that could convert some of those that have so far been unwilling or unable to sign up to satellite and cable services.
What will be the impact?
The fusion of video with a two-way broadband network enables more sophisticated interactive services. It could address the lack of a return path on Freeview, which has so far restricted the interactive capabilities and supporting business models for digital terrestrial television in Britain. This potentially presents the perfect platform for interactive television.
Microsoft, which has previously invested billions in cable television, is aiming to be at the forefront of these developments, providing software to enable this next generation of home entertainment and information services. The software company has announced a partnership with telephone equipment provider Alcatel which will increase its credibility with the phone companies.
BT intends to upgrade its network, but the last mile of copper cable to the home remains a bottleneck. While there are plans to increase broadband speeds substantially in densely populated areas, high-speed broadband still remains a distant prospect in more remote rural regions.
In the US, billion dollar bets are being placed on building new networks. Telcos such as SBC and Verizon are merging with other carriers to re-combine long-distance networks with residential lines, using fibre-optic backbones to deliver a combination of audio, video and data. Fast fibre-based television services are already a reality in Hong Kong, with broadband connections that are up to a hundred times faster than those currently seen in the UK.
Why should we care?
Although service providers will attempt to bundle television channels and compete directly with cable and satellite companies, once a broadband connection is hooked up to the TV, programmes could potentially come from anywhere. While the public internet may not currently be able to guarantee the quality of service necessary for live broadcasts, it is certainly possible to download programmes to a local storage device.
A number of start-ups are already looking to exploit the opportunity to cut out cable companies and provide a package of programming without incurring the massive capital expenditure associated with building their own network. Significantly there is the potential to reach a global market, particularly with with niche material.
As with the web, the adult industry and pirates can be expected to be the first to exploit the potential. A considerable number of users already download illicit copies of programmes over the net, but there may well be space for legitimate alternatives offering greater choice and convenience. The BBC is experimenting with its own internet media player and given the popularity of music downloading, the scope for such video download services should not be underestimated.
Ofcom has already floated the proposal for a Public Service Publisher fund to support this model of providing content for consumption on demand, offering an alternative outlet for a new range of programmes.
What’s the catch?
Broadband TV presents some interesting regulatory challenges. While broadcasters require a licence, there is currently no such regulation for the internet, which is available to anyone. Subject to the laws of the land, there are no requirements or restrictions regarding content.
Then there is the question of whether a TV licence is required to view such material. The TV Licensing Authority takes the position that viewing a live programme service at the same that it is broadcast nationally requires a licence, although there is no such requirement for non-broadcast or on-demand material. It is also becoming increasingly difficult to define what constitutes a television service or receiver in this new digital world, and a public service funding model based on the scarcity of radio frequencies begins to look increasingly anachronistic.
Copyright issues also abound in this new digital universe. Digital rights management and content protection schemes aim to provide technical solutions, but rights owners will be forced to address new business models.
And the future?
In the future it may be possible to view any one of thousands of programmes and channels from around the world, much as it is already possible to stream radio services today. Multichannel television of a few hundred linear channels will soon seem archaic. And the network will in effect become an indefinitely expandable personal video recorder.
Dr William Cooper is an independent consultant and was previously head of interactive at BBC Broadcast. He is the co-author with Graham Lovelace of a forthcoming report IPTV: Broadband meets broadcast - The network television revolution published by informitv in association with Lovelacemedia.
This article originally appeared in Broadcast, 8 April 2005
Copyright © 2005 William Cooper. All rights reserved.
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