After one of the longest gestations in the history of North American telecom services -- the first implementations having occurred in a small way in the late 1990s -- telco IPTV has finally reached a sizable early-adopter phase, with U.S. carriers such as AT&T Inc. and Verizon Communications Inc. moving aggressively ahead with their deployments. By fall 2008 these two had about 1.5 million IPTV subscribers between them, although the figures are slightly misleading because Verizon is running a hybrid IPTV system.

Elsewhere, IPTV indeed seems to be beginning to boom. By the end of 2007, Asia-Pacific  accounted for about one third of the world’s then 10 million or so IPTV subscribers. Hong Kong has seen particularly rapid take-up: Over 40 percent of DSL subscribers now use IPTV, following its 2003 launch by incumbent telco PCCW Ltd. and the Hong Kong Broadband Network Ltd. (HKBN) , according to the International Telecommunication Union (ITU) ’s "Asia-Pacific Telecommunication/ICT Indicators 2008." And significant IPTV deployments are underway in such European countries as Belgium, France (over 3 million subscribers), Italy, the Netherlands, Spain, and Sweden.

And rapid growth is forecast. Analyst firm Infonetics Research Inc. estimated earlier in 2008 that there will be 93 million IPTV subscribers worldwide by 2011. Similarly, Pyramid Research, in January, predicted that the IPTV market worldwide would have 99.4 million subscribers by 2012. Strategy Analytics estimates that U.S. IPTV service revenues will approach $14 billion in 2012, growing from $694 million in 2007.

In the U.S., total IPTV subscribers went from a mere 17,000 in 2004 to more than 1.6 million at the end of 2007, according to Pyramid Research . Pyramid's October 2008 subscriber data contains a forecast that puts the U.S. as having more than 10.4 million IPTV subscribers by the end of 2011, with nearly 60 percent of those connecting to the service via fiber-to-the-home.

Now comes the but. Although the U.S. has clearly passed the initial technology hurdle and is probably getting close to the end of the early-adopter phase, the country is still at a point where the number of subscribers is very small compared to those for traditional forms of video delivery -- over the air, cable, or satellite.

“The general consumer today has a couple of choices for pretty good video content delivery,” says David Foote, chief technology officer for GPON vendor Hitachi Telecom (USA) Inc. “IP video itself does not yet provide a compelling reason to switch away from traditional satellite or cable TV, for example. But you can see on the horizon some compelling potential reasons to do so eventually.”

This gets to the root of the problem. The U.S. pay-TV market is served by a very mature cable industry, as well as a robust satellite industry -- and, of course, there are over-the-air TV broadcasting and upcoming alternatives such as Over The Top (OTT) Web/Internet video services, too, as the following video discusses:

The established cable and satellite players have highly honed strategies for customer retention, and the cable operators have been very aggressive in building triple-play TV/video, broadband, and VoIP bundles that have gone down well. So there is currently a strong element of me-too in the telcos’ IPTV as they try to get a foot in the consumer’s door. That reality has led to unprecedented price competition, as discussed in the following video, which recaps a recent Heavy Reading consumer survey:

What will really count for the telcos is whether (and, if so, how quickly) they can reach the tantalizing things on the IPTV horizon, and whether they turn out to be a mirage or not. As Light Reading’s sister site Cable Digital News recently pointed out, there’s quite a list of issues that could take some of the shine off telco IPTV, and this report looks at a few more.

Source:lightreading