The flat-screen television in Randall Stephenson's office in downtown San Antonio, Texas is tuned to the CNBC business news channel. But AT&T's chief executive is not watching broadcast, cable or even satellite television. The video signal feeding his desktop television is running over the telecommunications company's new broadband video network, dubbed “U-verse”.
AT&T's U-verse service uses a rapidly emerging technology called IPTV (internet protocol television) that many analysts and industry insiders believe is poised to become the standard for next-generation television delivery. Despite some early technology hiccups, IPTV could help revitalise a telecoms industry facing the steady decline of traditional fixed-line voice revenues. In the process, it could also disrupt the traditional television broadcasting industry and create a new distribution channel for media companies and content creators big and small.
“We are in the calm before the storm,” says iSuppli, a California-based market research company. “As the major telecom carriers deploy services, there will be an escalating battle for subscribers between cable, satellite, IPTV and internet TV/ video-on-demand.”
IPTV services are mostly being rolled out by telecoms companies and internet service providers. They can deliver multiple channels of high-quality television and video content over dedicated broadband links to specialised television set-top boxes in consumers' living rooms. Programmes are typically viewed on ordinary television sets.
IPTV has the same technology underpinnings as internet television services, which are usually watched on PCs – they are based on the IP technology standard that powers the internet and the web, in which small packets of data are sent down a communications link and then reassembled at the other end. But while internet television services are offered on a “best-effort” basis, IPTV operators generally control the network from end to end and are therefore able to provide guaranteed quality of service. This is important because viewers – particularly those who pay to receive a signal – have grown to expect a high-quality service free from picture freezes, interference and other anomalies.
In addition, IPTV services are usually bundled with broadband internet access and other video services such as video-on-demand. Most also include interactive options that enable consumers to control aspects of the viewing experience such as camera angles, watch multiple channels simultaneously and receive e-mail messages or incoming caller ID information on their television set.
IPTV works quite differently from traditional unidirectional “multicast” networks such as cable or satellite television. In these systems, all the content is pushed down to the consumer's set-top box. With IPTV, by contrast, only the content selected is pulled from the network.
This frees up precious bandwidth and makes IP-based networks much more efficient than their multicast counterparts. So, for example, a 25Mbps (megabits per second) broadband connection of the type being installed by AT&T in the US can support the viewing of two simultaneous high-definition channels and two standard-definition TV programmes.
AT&T is one of dozens of telecoms groups – led by operators in Europe and Asia – that have turned to IPTV technology in the past few years to deploy the television and advanced video services that they believe are necessary to compete head-to-head with cable operators and drive a new video-based wave of growth.
“The total number of IPTV households will grow dramatically over the next five years, rising from just under 6m homes worldwide in 2006 to more than 80m in 2011,” predicts Strategy Analytics, a US-based telecoms consultancy.
European telecoms groups have been in the vanguard of this trend. “Western Europe dominates the IPTV market, with 68 per cent of global IPTV subscribers,” says Ditterberner, an international market research company that tracks broadband usage. “Only Asia, with 28 per cent, has a comparable slice of the market.”
While Hong Kong-based PCCW claims the largest number of IPTV subscribers, with around 700,000, six of the top 10 providers are based in Europe and include France Telecom, Spain's Telefónica, Belgacom and Italy's FastWeb. France Telecom, which had around 450,000 IPTV subscribers at the end of last year, ranks as Europe's biggest supplier, while rival operators Free and Neuf Cegetel are both in the top five.
