informitv / news
Opinion
Telco and Internet TV can be complementary
Rather than being a threat to each other, Telco TV and Internet TV have the potential to be mutually beneficial if their synergies and differences are fully understood, writes Karl Sin of BNS in Hong Kong.
The recent rapid growth of fast broadband access, accelerated computer power and larger storage capacity have turned service delivery mechanisms such as Telco TV and Internet TV or broadband video into real opportunities. For service providers keen to open new revenue streams and increase ARPU or average revenue per user, IPTV and Internet TV are just two types of new entertainment platform. But, contrary to common belief, the two actually sit next to each other, as opposed to at opposite ends of the broadband spectrum. While there are significant differences between Telco TV and Internet TV, both in technology and business model, the two services can be just as complimentary as competitive.
Mapping the differences
A Telco IPTV service is usually delivered over a complex and investment-heavy walled garden network, which is carefully engineered to ensure bandwidth efficient delivery of vast amounts of video traffic. This enables distribution of high quality standard or high-definition programmes to subscribers’ homes.
This makes IPTV by default the preferred delivery platform for premium content. But of course this comes at a price and the investment for a telco to build an end-to-end IPTV service can be substantial.
Compared to Telco IPTV, Internet TV is a quick-to-market and relatively low investment service. Internet TV rides on existing broadband infrastructure, which makes it a valuable tool for a wide variety of service providers and content owners looking for new revenue streams.
However, due to the fact that IPTV is generally delivered to low cost set-top boxes, which have limited computing power, the capability for IPTV operators to provide diverse multimedia services is restricted. This is where Internet TV can shine and do a much better job as it is delivered to a subscriber’s generally more powerful PC.
And of course a major advantage of Internet TV is that it allows content delivery to a huge population with virtually no geographical limitations.
But while Internet TV is a much easier and cheaper way of publishing content, operators who are pondering whether to launch an Internet TV service nevertheless have to carefully assess the factors affecting their business cases.
The big issue here is quality Internet TV services require subscribers to have continuous access to high bandwidth, so pricing, bandwidth and network neutrality are all interdependent factors affecting the business case for Internet TV.
For example, while subscribers are generally required to pay more for higher internet bandwidth, it doesn’t automatically guarantee good enough bandwidth quality for receiving Internet TV services. So to receive Internet TV, a subscriber will be required to sign up to an even higher premium service which may present a barrier to scaling up subscribers quickly. This will be particularly the case if network neutrality becomes an issue in countries such as the United States.
Recognising the synergies
While the relative ease of establishing an Internet TV service seems at first a threat to Telco TV operators’ multimillion dollar investment, it actually does not have to be.
TelcoTV and Internet TV services are both value added services that generate higher value for every Mbps delivered compared to just web surfing, file transfers, or VoIP applications. But both services do not necessarily compete for the same customers and there are actually synergies between the two that operators should consider.
For one, Telco TV’s technology platform today already resembles the Internet TV platform: both use web-based technologies for content storage and delivery, allowing easy adaptation of content across both platforms.
But there are also synergies from a business perspective. There is a lot of merit behind an Internet TV service actually supplementing a Telco TV’s traditional channel line up with a portal for niche content and diverse multimedia content. Internet TV content, by definition, is created, managed and distributed via the open internet. An almost endless array of entertainment options on the PC can be directed to the premium IPTV service from the same provider or partner.
Conversely, Internet TV providers can also benefit from partnering with a Telco TV operator. TelcoTV enables an Internet TV provider to offer much higher quality multimedia content to their customers via the TelcoTV walled garden network. A partnership between the two would be a mutually beneficial arrangement without cannibalizing each others customer base.
Towards a common goal
If these synergies and the resulting opportunities are not enough, both operators should consider future threats from competing platforms, namely traditional pay TV. It will be just a matter of time before cable TV and satellite TV operators embrace IP technologies to complement their weaknesses in back-end communication and interactivity. The earlier both parties realise this, the greater their advantage and the potential to lock in customers through both types of services.
Karl Sin is vice president of sales at Broadband Network Systems Limited in Hong Kong. BNS provides consultancy, content and technology for broadband television and video services.
Copyright © 2007 BNS Limited. Reproduced with permission
RSS