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Telcos
Face Tough Road Deploying IPTV: Report
Forrester report warns that telcos are far behind cable companies in
deployment; will cost billions to catch up.
04/26/2005, 7:27 AM ET
After the false starts of the late 1990s, North American
telecommunications carriers are salivating at the prospect of
delivering television to consumers over their IP networks. However, a
new report from Forrester research notes that, for all their
excitement, "it is a long road from today's flashy Consumer
Electronics Show (CES) demos to mass adoption of telco IPTV."
Both SBC and Verizon have already invested substantial capital to
deploy IPTV-capable networks. According to the report, "Telcos' IPTV
Reality Check," Verizon expects to pass three million subscribers with
5 to 30 Mbps fiber to the home by the end of this year. By late 2007,
SBC plans to pass 18 million subscribers with its 5 to 20 Mbps fiber
to the neighborhood network.
Nevertheless, report author Maribel Lopez notes that the carriers'
success in IPTV will depend on a lot more than pulling broadband
connections to subscribers' living rooms. "Listening to telco pitches,
you would think that it was simply a matter of flipping a switch to
deliver TV to any consumer anywhere," she writes. "But before telcos
can launch a widespread TV offering, they must replace part of the
copper plant with fiber, update the billing and provisioning system to
support video, and bulletproof the equipment that will go into the
home."
The carriers are far behind cable providers, their main competition in
television delivery, and it's going to cost a lot for them to catch
up. The price tag on SBC's network upgrade plans is a cool $4 billion,
and Verizon will add 3,000 to 5,000 outside plant engineers at
considerable cost to upgrade 2 million copper lines to fiber by the
end of 2005.
To make matters worse, much of the technology on which the success of
IPTV depends, like advanced set-top devices, is still in development.
Microsoft TV will only enter advanced trials this year. Moreover,
Lopez notes that, because IPTV can connect devices like PCs as well as
televisions, carriers will have to implement copy protection on the
set-top devices. She writes, "until content owners believe that telcos
can secure their content from illegal use, telcos must add digital
rightsmanagement security to their set-top boxes and limit
distribution to PCs."
Will it all happen, or will Verizon's and SBC's forays into IPTV fail
like Americast and TeleTV before them? Lopez believes that, this time,
they're playing for keeps. "Despite these challenges, telcos won't
pull the plug on TV," she writes. "SBC and Verizon have committed
billions to upgrade networks for broadband tiering, and TV services
will ease the pain by offering a new revenue opportunity of $35 to $65
per month for each subscriber."
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