Korean Bill Enables IPTV

The Korea legislature passed a law allowing telecom companies to offer IPTV services over their broadband networks. Korea Telecom, Hanaro Telecom and LG Dacom have provided video on demand services through their Mega TV, Hana TV, and My LG TV services, respectively, without relevant laws. These services offer TV programs several hours or days after terrestrial broadcasters have first broadcast them. The new law means these programs can be broadcast over IPTV services live.

Korea Telecom will not be required to spin off its IPTV business. The country’s broadcasting sector had demanded that Korea Telecom spin off its IPTV unit on concerns that the firm is expanding its monopolistic position into the IPTV market.

It appears that the regulatory issues that have plagued the Korean IPTV market have been resolved by this new law. Hopefully the dueling regulatory bodies in the government that have held it back will now cooperate to create a strong IPTV industry in Korea.

Sun Sets Up IPTV Lab in India

Sun Microsystems India and Tech Mahindra along with AMD will jointly set up an IPTV lab at the Tech Mahindra facility in Pune in India. Tech Mahindra is already engaged with various service providers to offer IPTV solutions in various geographies.

The IPTV lab at Tech Mahindra will include solutions from companies such as Digisoft, Envivio, Harmonic, I-Make, Verimatrix Mototech, and Sun’s Streaming System. The lab will demonstrate a pre-integrated end-to-end IPTV system for tier1, tier2 and tier3 service providers.

This looks like a good move for Sun. There is significant potential for IPTV in the Indian market as well as in other Southern Asia countries.

Guangdong Telecom Investing in IPTV

Guangdong Telecom, a subsidiary of China Telecom, will invest $US700 million more on its IPTV network. The result of bidding will be opened by the end of 2007.

Two years ago, Guangdong Telecom made its first purchases of IPTV equipments. Huawei won Guangzhou and Shenzhen with 60 thousand subscribers. ZTE won Dongguan and Foshan with 24 thousand subscribers. and UTStarcom won Zhuhai, Shantou and Zhongshan with 6 thousand subscribers.

Guangdong Telecom expects more revenue from IPTV service based on this upgrade.

This is another sign of growing emphasis on IPTV in China. Guangdong includes Shenzen, which is one of the fastest growing areas of China.

Shanghai has 220,000 IPTV Subscribers

China Telecom reported that its Shanghai Telecom subsidiary now has 220 thousand IPTV subscribers and 3 million broadband subscribers. It stated that half the families in Shanghai now have broadband connections. 85 percent of these broadband lines are at 2 Mbps or above and can support IPTV services. The company is planning to upgrade to 16 Mbps (ADSL-2+ I assume) and will be capable of supporting HDTV. It charges about $20 per month for a broadband line.

Broadband and IPTV is continuing to grow rapidly in China. This is clearly a market where there are still large opportunities available for IPTV systems companies.

Shenick Launches IPTV Monitoring Capabilities

Shenick launched its IPTV network monitoring products earlier this month. I just had an interview with them today. Shenick's servicEye products provides the following functions for monitoring IPTV networks:

• servicEye provides monitoring capabilities at the head end of the network on pre and post IPTV encoding stages .
• Active probe functions with full reference video analysis for detailed video analysis. The active probe also provides a multi-application traffic injection capability that enables service providers to emulate and analyze network and application layer traffic.
• servicEye monitors both variable bit rate (VBR) and constant bit rate (CBR) video streams for SD, HD TV and picture-in-picture (PiP) TV with encrypted and non encrypted video payloads.

Shenick's systems are generally used in carrier IPTV labs to test IPTV systems. They are also used to prove out newly installed networks. These monitoring products take the next step and move Shenick into operational networks. Shenick stated that it expects that its products will be used in the headend to monitor video traffic at the source and at the access nodes to monitor video traffic as it enters the access network and is delivered to the viewer.

These kinds of products are key to the success of IPTV services. IPTV Service providers are starting to see churn due to dissatisfaction with video quality. These carriers have to be able to consistently deliver a high level video experience in order achieve the levels of success that they are looking for.

ZTE Interview

I had an interview with ZTE yesterday to discuss its recent announcement that it won the first IPTV AVS deployment in China with China Netcom.

ZTE offers a complete IPTV system but uses video headends from other companies. It uses Envivio, USC, and Shanghai broadcast for AVS encoders. It may use other vendors for set-top boxes or may include content security from Irdeto or Verimatrix in addition to or in place of its own set-top boxes or content security software.

ZTE's China Netcom AVS deployment will start with 30 thousand subscribers. It is in a city of 2 to 3 million people, so there is room for significant growth.

ZTE believes that its AVS capability gives it a significant competitive advantage in the China market. It stated that China Telecom is testing AVS and that over the air broadcasters are starting to use AVS for digital terrestrial services. ZTE cited three advantages for AVS:

• AVS provides similar quality to MPEG-4 with H.264 at similar bit rates.
• AVS requires less hardware resources than MPEG-4 H.264.
• The intellectual property fees for AVS are less. Specifically AVS does not require the broadcaster to pay royalties as MPEG-4 H.264 does. In addition, the intellectual property fees stay within China.

ZTE believes that it is the number one IPTV systems company in China. It said that UTStarcom is its closest competitor. Huawei is not a significant factor with IPTV in China.

ZTE stated that there are currently 1.14 million IPTV subscribers in China. People generally prefer IPTV over cable even though it is about 50 percent higher in price because if its interactive and convenience features.

ZTE said that the lack of consensus between MII the telecom regulator and the broadcast regulator is holding IPTV back today. It stated that China Telecom and China Netcom are made up of a set of independent local subsidiaries. ZTE stated that each of these subsidiaries will make its decisions about which IPTV system to use independently.

Keep in mind that this is ZTE's view of the world. It is clearly a significant factor in the China market even though UTStarcom would probably dispute which is number one. I do believe that AVS will be an important factor in China and one where ZTE seems to have an advantage today.

SFR to Acquire Neuf Cegetel

SFR, a mobile service provider, plans to acquire Neuf Cegetel in France. SFR currently owns 40 percent of Neuf Cegetal and is looking to acquire the remaining 60 percent. It appears that the combined company currently has about 600 thousand IPTV subscribers.

The combination of SFR and Neuf Cegetel will be strong competitor to the incumbent, France Telecom. Neuf Cegetel is a major IPTV provider in France and will bring that to the combination.

DSL Forum Issues IPTV Standard

The DSL Forum issued Technical Report, TR-135 Data Model for a TR-069 Enabled STB and the amendment of TR-069 in order to expedite IPTV rollouts and improve the way operators manage their IPTV offering.

TR-135 defines the data model for remote management of Digital Television (IPTV or broadcast) functionality on set-top boxes using protocols defined in TR-069 Amendment 2 and TR-106. This report provides the data model for describing set-top box capabilities such as PVR, IGMP, quality of service, as well as providing a means to enable video service performance monitoring. General use cases are also described in the report, including standard data model profiles that would typically be seen while remotely managing a device of this nature.

In TR-135, the Auto-Configuration Server (ACS) may perform some initial configuration of a newly installed set-top box , but its main functions are configuration of set-top box parameters for trouble management and collection of statistics for Quality of Service (QoS)/Quality of Experience (QoE) monitoring.

The goals of TR-135 are:

• Enable configuration by the ACS of those objects and parameters that are not the responsibility of the IPTV Service Platform.
• Enable operational status monitoring and checking of specific parameters of an STB from an ACS.
• Enable performance monitoring of an arbitrary set of STBs, from one to millions, through estimates of QoS and QoE
• Support various types of set-top boxes, including DTT and IP STBs, with or without PVR and other optional functionality.
• Accommodate set-top box devices that are embedded as part of an Internet Gateway Device (IGD).
• Accommodate set-top box devices that are standalone, i.e. implemented in separate hardware devices.

The trouble management feature of TR-135 means a trained technician may take control of the set-top box remotely to do a number of tasks such as upgrading software and performing diagnostics. This will enable faults to be fixed more quickly and effectively, and negates the needs for many IPTV related truck rolls.

Improved performance management will also allow the automatic monitoring of the set-top box performance. This will enable providers to produce reports on QoS parameters, such as average bit rate, jitter and packet loss ratio; QoE parameters, including including visual quality indicator; and usage statistics, for example, how many set-top boxes are on at a certain time and for how long each of them remains tuned to a certain channel. set-top box QoS/QoE reporting capabilities will allow measurements to be done at the service level, which is of fundamental importance to any operator.

Also approved at the meeting was the update to TR-069, TR-069 Amendment 2, which arose from collaboration and input from the Digital Video Broadcast (DVB) organization. The DVB Project required support for Multicast download protocols. Working closely together, TR-069 Amendment 2 was developed and now contains changes that add support for Multicast downloads, including some additional fault codes, and for autonomous file transfers, transfers that were not directly requested by the ACS. These changes define CWMP v1.1, and therefore include some new rules for guaranteeing interoperability between CWMP v1.0, v1.1 and future CWMP versions.

Together TR-135 and TR-069 Amendment 2 provide the first stage of the IPTV evolution. These reports set the bar high for quality delivery and customer experience, and give the service provider the tools needed to customize and dramatically improve their IPTV offerings, while reducing their support overhead on new IPTV implementations.

For more about these technical reports check out the following link.

This is important work because TR-069 is the fundamental technology that has been developed to provide remote monitoring, management, and support of devices on home networks, including set-top boxes.

Deutsche Telekom Reaches 100K IPTV Subscribers

Deutsche Telekom has been reported to have 100 thousand IPTV subscriber. This appears to be up 75 thousand from the beginning of 2007.

This is a reasonable increase for the first year of service. This install rate will have to increase significantly in 2008 for the company to build its IPTV business.

Pace to Acquire Phillips Set-top Box Business

Pace has agreed to acquire Philips' set-top box business for 95 million euros. Philps' set-top box business is based in France and has 335 employees. Pace expects that the combined company will produce about 8.5 million set-top boxes a year and have revenues of more than $1.0 billion in revenue.

With this acquisition, Pace will add BT and Telefonica of Spain as IPTV set-top box customers.

Pace has focused primarily on the cable and satellite set-top box market. Philips will acquire to plum IPTV accounts with the acquisition in BT and Telefonica.

Motorola Introduces RF FTTH Option

Motorola will introduce a new alternative for cable companies that want to offer services using FTTH technology. Called RF Over Glass (RFoG), this technology transports an RF cable signal to each home using a fiber connection. An NIU at each home converts the optical signal to a signal that can be transmitted over the coax network in the home. RFoG provides standard cable video, data, and telephony services in the home.

This is a separate development from its Cable PON products that have been discussed earlier in this blog. Cable PON can provide and RF signal over the fiber for the broadcast video channels, but uses 2.4 Mbps in the case of GPON to support data, VoIP, and video on demand services.

RFoG does not improve the performance of an HFC cable network. It is still limited to the 850 MHz to 1 GHz of spectrum that is available today. Consequently, this approach does not provide any advantage for cable compared to a telco FTTH service.

Motorola is introducing RFoG and Cable PON as alternative architectures to respond to the requests from new housing developments for fiber connections. Developers find that they can command a premium up to $10,000 for new fiber connected homes. Verizon and ATT are both offering GPON FTTH services for these greenfield developments.

Cable companies can compete head on with the telcos using Motorola's Cable PON products. Some cable companies would like to stay close to their existing architecture and are interested in the RFoG approach and believe that their existing networks provide sufficient performance to be competitive. Motorola stated that it is looking at ways to facilitate the evolution of an RFoG network to a Cable PON network so that cable companies initially selecting an RFoG approach can move to Cable PON as performance requirements increase. Motorola will start delivering RFoG in 2H08 for trials and initial deployments.

It looks like Motorola has the cable companies covered with both GPON and RFoG technologies. Personally, I think there will be increasing resistance to RFoG as people realize that they are not getting any additional performance with their $10,000 fiber connections.

ITU Delivers IPTV Standards

The International Telecommunication Union (ITU) announced standards for IPTV. The standards were built with technical contributions from leading service providers and manufacturers. The new standards were developed by the Focus Group on IPTV (FG IPTV) in ITU’s Telecommunication Standardization Sector (ITU-T).

These standards are intended to give service providers — broadcasters, ISPs, cable operators or telecom service providers — control over their platforms and their offerings. Standards will encourage innovation, help mask the complexity of services, guarantee quality of service, ensure interoperability and help players remain competitive.

Contained within the documents produced by the Focus Group are the high-level architecture and frameworks needed by service providers in order to rollout IPTV services. ITU’s next phase of IPTV work — IPTV-GSI (global standards initiative) — will centre on the preparation of standards based on documents produced by FG IPTV as well as on the detailed protocols required.

Twenty-one documents covering IPTV requirements, architecture, quality of service (QoS), security, digital rights management (DRM), unicast and multicast, protocols, metadata, middleware and home networks will be submitted to the ITU-T Study Group charged with progressing and distributing the work. The IPTV-GSI will build on the momentum generated over the past 20 months, and it is foreseen that contributions and participation will continue to increase.

The first meeting of IPTV-GSI will convene in Seoul, Republic of Korea from 15 to 22 January 2008.

IPTV standards are surely needed, but they will probably be too late to strongly influence the major IPTV deployments already underway in Europe, Asia, and North America. These IPTV services have made their implementation decisions and are not likely to change them in major ways to accommodate new standards.

Chinese AVS Alliance

Eighteen Chinese companies including telecom service providers, content creators, and system manufacturers including China Telecom and Huawei recently formed China Interactive Media Industry Alliance (CIMIA). CIMIA aims to develop and promote technologies for AVS standard based IPTV.

It does appear that AVS will become a significant factor in the Chinese IPTV market. IPTV encoder, video on demand systems, and set-top box manufacturers should pay close attention to these developments.

Qwest Says "No" to IPTV

Qwest has gone on record as saying that it will not include IPTV as a part of its intended VDSL rollout to pass 1.5 million homes in 20 markets. It believes that it can pay back its expected $300 million VDSL investment with an increase of $10 per month in ARPU. It expects that other applications other than IPTV such as gaming would generate the additional revenue. Based on its current VDSL/IPTV trials in Arizona and Colorado, it expects that its VDSL service will achieve a 40 percent market penetration.

Qwest is taking on a significant strategic risk by not going against its cable competitors head on. The cable companies can provide all of the services that Qwest's subscriber's want - voice, data, and video. Qwest will only be able to offer the first two. Its video offering will depend on reselling satellite services. This may not be strong enough.

Qwest has had long running IPTV trials in Phoenix and areas near Denver. It understands how to offer these services. It is also interesting that it is acquiring video licenses in cities such as Portland, Oregon, but will not use them. Strong success by ATT and Verizon could cause Qwest to change its strategy.

Vyyo Increasing Cable Capacity

Vyyo is offering products that increase the amount of spectrum that cable companies can use in the coaxial cable portion of their Hybrid Fiber Coax (HFC) networks by 860 MHz. I recently had interviews with the CEO and the CTO of Vyyo to understand the impact of its technology on cable networks competing with the new Telco IPTV networks.

Vyyo stated that if the new spectrum that it makes available is used for IP based services such as IPTV, video on demand, and DOCSIS 3.0 cable modem services, that cable companies can support four TVs simultaneously watching HD on demand content as well as support VoIP and DOCSIS 3.0 100 Mbps data services for groups of 50 to 100 homes.

The cable companies introduced HFC to groups of about 500 homes and several of them are decreasing the size of these groups down to about 100 homes. The Vyyo system does not require a significant decrease in the size of these groups to provide services that should be competitive with ATT's U-verse and Verizon's FiOS services in the U.S. It appears that Vyyo's products go further in making the cable companies competitive with Telco IPTV services than other technologies such as switched digital and coarse wave division multiplexing.

Orca Introduces Content Search

Orca Interactive has introduced a content recommendation engine called COMPASS as part of its IPTV middleware software system. COMPASS will be in beta test at a small number of IPTV service providers in 1H08 and will be released for general availability before the start of 2H08.

There are three components to COMPASS:

• The user interface
• The recommendation engine
• The backend management console

Orca's goal is to make the user interface simple so that the recommendation service will be easy for viewers to use and, consequently, useful. The tool will cover broadcast content, video on demand content, content recorded on the local DVR or the network PVR service, and user generated and other kinds of long tail content.

The recommendation engine is the software that generates recommendations. Its recommendations will be based on popularity, recommendations, and user preferences as defined by past selections. The recommendation engine that Orca provides is based on research work funded in part by the Israeli government.

The backend management console permits the IPTV service provider to define how the selection process works. For example, the IPTV service provider can define:

• The relative importance of each type of recommendation type in the results. For example, the weighting of popularity, ratings, and user preference can be adjusted to favor one over the other to optimize the results for the service providers specific subscriber population.
• The IPTV service provider can include recommendations from premium packages that the viewer does not subscribe to to encourage up selling and increasing ARPUs.

Orca has found out that it is important to give individual viewers to filter out content that they do not want rather than to positively select content. For example, families without children, will filter out children's programming.

I think that Orca is onto an important feature here. Identifying content and having interesting content presented to you without having to search for it will be a key to IPTV and other long tail services. It will be interesting to see how well Orca's efforts pan out.

Accenture Reports on Digital Advertising

Accenture has published brief results of a survey on Digital Advertising in two parts at the following link. There were only a few results published, including:

• 79 percent say that advertising will become more performance based.
• 87 percent say that analytics will become more accurate and more critical to the business.
• 97 percent say that advertising relationships with customers will become more interactive.
• 52 percent of DVR users skip all ads and 36 percent skip most ads.

None of these results is surprising, but it is interesting to see them confirmed. The reports give some of the background behind these numbers.

Orange Postponed IPTV in the UK

Orange, the France Telecom Subsidiary, has postponed the introduction of its IPTV service in the UK until 2008. It was originally scheduled for introduction before the end of 2007. Orange is currently operating an IPTV trail with 350 subscribers in Leeds and London.

The coverage of Orange's broadband network in the UK is about 40 percent compared to about 60 percent for other competitive carriers.

France Telecom is a leading TelcoTV service provider and has the technology well in hand. It appears that its broadband coverage and other network issues are causing it to delay its IPTV service introduction in the UK.

KT to user IPTV Advertising

Korea Telecom the will acquire Nasmedia, an online advertisement agency for $US28 million. Nasmedia will sell ads for Korea Telecom's IPTV and mobile Internet platforms starting in 2008. The acquisition is a response to SK Telecom, the largest wireless carrier in Korea, which bought an ad company Aircross in 2000.

The purchase of Nasmedia is one of the steps Korea Telecom is taking to transform itself from a telecom operator into a media and entertainment company. It plans to provide tailored advertisements for new media outlets.

Korea Telecom believes that its IPTV subscribers will increase five fold to 1.5 million over the next 12 months and it will become a major source of advertising income.

Advertising is becoming a major emerging source of new revenues for mobile and IPTV services globally. This is a clear trend on a global basis.

IPTV Market in The Netherlands

While I was in Amsterdam, I met with KPN as well as Versatel to discuss the IPTV market in The Netherlands. My previous post discusses Versatel's offerings and strategies. I also recently did a post discussing KPN's strategies.

The Netherlands is dominated by cable with more than 6 million of its 7 million homes subscribing to the service. The cable service costs 16 euros per month. There are about 1.2 million digital subscribers in The Netherlands.

KPN stated that it believes that it is a battle with cable for each home. It believes that by 2010, 70 percent of homes will choose either a telco or the cable company to provide all voice, data, and video services to the home.

Digital Terrestrial is becoming a significant factor in the Netherlands and accounted for over half of the conversions to digital television in 3Q07. KPN offers a digital terrestrial service for 6.95 euros per month for the first set-top box and 3 euros per month for additional set-top boxes. Its digitial terrestrial offering is generally intended for the TV sets in the home that are not connected to the cable service.

Both KPN and Versatel offer services competitive with cable at 14.95 euros per month. They also share the same football programming, which is produced and broadcast by Versatel and broadcast by KPN as well under license from Versatel.

The IPTV providers in The Netherlands have to overcome strong, established competition from cable providers. It is interesting that KPN and Versatel seem to be cooperating with each other to some degree to establish IPTV. I think this is a smart approach. The more that they can establish an IPTV brand in that country, the more business there will be for both of them.

Tele2 Netherlands

When I was in Amsterdam last week, I met with Tele2, which was formerly known as Versatel in The Netherlands. It now has 200 thousand Tele2 Vision IPTV capable subscribers out of its 281 thousand broadband subscribers. It offers three packages:

• The Visionbox plan has no recurring monthly fees and provides access to Tele2's on demand services. This plan is targeted at cable subscribers that want access to Tele2's on demand sports and entertainment services.
• The Vision Silver plan is offered at 7.95 euros per month and includes 20 broadcast channels as well as its on demand sports and entertainment services. It also expects that this service will supplement cable services in the subscriber's home.
• The Vision Gold plan is offered at 14.95 euros per month and includes 41 broadcast channels as well as its on demand sports and entertainment services. It also includes the first six months of its football services for free. It expects that this service will be a replacement for cable services.

Tele2 now offers interactive services that are being used to market and sell mobile telephone and banking services. Its has found that 18 percent of its viewers clicked into the mobile interactive service and that 10 percent convert to mobile subscription. It will be introducing branded channels with the Grolsch brewery.

Tele2 has experienced strong growth with its broadband service recently. It had 6 percent broadband subscriber growth in 3Q07.

Tele2 has had good growth with its IPTV service that has been driven by a strong football offering. It is facing strong cable competition and will have to continue to develop creative approaches to the market to fuel further growth.

Tiscali Launches IPTV in Italy

Tiscali has launched Tiscali TV in Caligari, Milan, and Rome. The service will be offered over all of Italy in 2008 and will be offered for free until the end of March, 2008. Tiscali TV offers 50 TV broadcast channels and supports both HD and video on demand content. It also offers an NPVR service that makes all broadcast programs available for 48 hours after their original broadcast. The service also gives the users the ability to create a personalized electronic program guide.

IPTV is offered by FastWeb, Telecom Italia, and Wind in Italy. Tiscali needs an IPTV offering in this market to remain competitive.

Tiscali UK Aims for 200K Subscribers

Tiscali UK intends to have a total of 200 thousand IPTV subscribers by the end of 2008. It hopes to have 50 thousand IPTV subscribers by the end of 2007, which will bring it back up to its previous high water mark. It is currently adding 250 new subscribers per day.

Tiscali UK will begin a major marketing campaign in January 2008. It currently has 2 million broadband subscribers and covers 55 percent of the market.

IPTV is becoming an important component of a broadband strategy in the UK. BT is now offering its BT Vision IPTV service and Orange is about to introduce its own IPTV service in the UK. It is important that Tiscali UK strengthen its IPTV offering to remain competitive.

ATT's New U-verse IPTV Forecasts

ATT made a number of predictions for its IPTV U-verse service at its analyst conference. The full presentation is on its website. ATT expects that its U-verse service has the "potential to be a multi-billion dollar revenue stream over next two to three years". The company expects the service to grow to more than 1 million subscribers in service by the end of 2008. It had 126 thousand subscribers at the end of 3Q07. It is still forecasting that it will be installing 10 thousand new subscribers per month by the end of 2007 and expects this rate to be 40 thousand per week by the end of 2008.

ATT is maintaining its forecast that the service will pass 17 million homes by then end of 2008, up from 5.5 million homes at the end of 3Q07. It announced a new goal of 30 million homes passed by the end of 2010. At this point the service would pass 50 percent of living units and 33 percent of businesses in 22 states. It expects the cost of home passed to be in the low $300's.

ATT plans to increase its maximum data speed with U-verse from 6 Mbps to 10 Mbps as well as support 4 HD channels and 2 VoIP lines with a total budget of 36.4 Mbps. This compares to today's budget of 21.4 Mbps with 1 HD and 3 SD channels, 6 Mbps of data, and 2 VoIP lines today. Both services will be available to 80 percent of the homes passed not including the former BellSouth territory. The 36.4 Mbps budget will require pair bonding while the 21.4 budget can be provided over a single pair. It expects to start offering a bonded service by 2H08.

ATT expects that the average installation time for the U-verse service will decrease from 6.4 hours today to 5.3 hours with experienced technicians. Its target is to bring this time under 5 hours. Its CPE cost per customer is about $550 today and is expected to drop to somewhere around $400 in 2010.

ATT plans to introduce TV ad insertion to its U-verse service in 2009.

ATT continues to make aggressive forecasts for its U-verse IPTV service. It will have to put in a lot of effort to pass 17 million homes by the end of 2008. To achieve this it will need to pass more than 750 thousand homes per month. To go from 17 million homes by the end of 2008 to 30 million by the end of 2010 will require a rate a bit higher than 525 thousand per month.

ATT's goal of 1 million U-verse subscribers by the end of 2008 seems doable if it does pass 17 million homes. That is a subscription rate of about 6 percent.

Surewest Acquires Everest Broadband

Surewest is a California independent telco that acts as an incumbent in one area near Sacramento, California and as a competitive FTTH carrier in another area also near Sacramento. Surewest has agreed to acquire Everest Broadband, a competitive carrier offering voice, data, and video broadband services in areas near Kansas City. This acquisition will complete by the end of 1Q08 and will double Surewest's IPTV subscriber base with an expected total of 54 thousand.

This is an interesting move for SureWest. There are about 1,000 small, independent telcos in the U.S., so there is plenty of opportunity for further consolidation. Surewest is a solidly managed company and should do well with this and possibly other acquisitions.

Siemens Developing Fiber IPTV Distribution Network

I had a hallway conversation at its analyst conference in Amsterdam this week, Nokia Siemens told me that it is developing a long reach PON system that will permit the OLTs to be located in the regional headends rather than the central offices serving the subscriber. There will then be an optical connection from the head end to each subscriber, which will eliminate any chance for the congestion that now can occur in Ethernet or IP metro/aggregation networks, especially when the demand for on demand unicast services is high.

This architecture is right in line with the report Networking Strategies for TelcoTV Services that we published a few months back. The conclusion in this report is that IPTV service providers will need to create a non blocking optical network rather than use an Ethernet or IP network to connect the regional headend to the OLTs in the serving central offices.

Few companies are stepping up to this requirement that is a direct result of the increasing amounts of personalization on on demand services that everybody expects to be part of the evolution of IPTV networks. It is good to see that Nokia Siemens is taking this seriously.

Nokia Siemens says Fiber is Green

Nokia Siemens stated that fiber is greener than VDSL in a presentation at its industry analyst meetings at Nokia World in Amsterdam this week. The main part of the presentation was about reducing the carbon footprint of mobile networks, primarily by reducing the power consumption of the base stations as well as by using techniques for turning off unneeded capacity.

In response to my question it pointed out that PON based FTTH architectures also reduce carbon footprint. On the other hand, VDSL increases the carbon footprint of a network because of the large number of remote systems that must be deployed.

I guess this means that fiber is just good all around. This is one more reason to select fiber.

Wind Introduces IPTV in Italy

Italliand competitive carrier, Wind Telecommunications the launched an IPTV service that is largely basein on broadcast channels from Sky Italia. This new service is called Infostrada TV. It includes free to air digital terrestrial channels and a package of international channels for a monthly fee of 7 euros. Service activation costs 99 euros and is now at a promotional price of 49.50 euros and a set-top box with a PVR and 100 hours of recording time.

Wind will also offer the premium services Sky Italia with various options starting at 36 euros per month for a combination of basic, cinema, or sport channels and is now being offered with promotionpromotional price of 15 euros until the end of February 2008. Wind joins Telecom Italia (Alice TV) and Fastweb. with IPTV offering in Italy.

This is another example of how IPTV is becoming a basic requirement for broadband services in Europe. Wind appears competitive with Telecom Italia but has to do more work to catch up with FastWeb's well developed service.

ZTE Wins China Netcom AVS Project

ZTE won the first AVS-IPTV commercial network bid from China Netcom. ZTE will be the sole IPTV provider for the project.

AVS is intellectual property developed in China that enables local providers to save on patent fees required with foreign systems. China’s Ministry of Information Industry (MII) and China Netcom have been working toward the commercial implementation of AVS standard. AVS IPTV commercial trials started in November 2006.

In 2006 ZTE won deals for IPTV projects at Beijing Telecom, Shanghai Telecom, and China Netcom. ZTE claims that it has over 50 percent share of China’s current IPTV product solutions market.

This is a significant win for ZTE. It shares virtually all of the IPTV systems business with UTStarcom in China. AVS support should give it a significant advantage in the Chnese market since the country has a major push under way to use as much local intellectual property as it can.

Comcast to Start DOCSIS 3.0 Deployment

Comcast plans to have DOCSIS 3.0 cable modem technology available to about 20 percent of its subscribers by the end of 2008. Comcast is looking to deliver video content to TV's using this data technology.

However, the initial DOCSIS 3.0 deployment will increase speeds only in the downstream direction. It appearts that DOCSIS 3.0 equpment that supports higher speeds in the uupstream direction will not be available at that time.

This is a move that ATT will have to watch closely due to the limited bandwidth available from its VDSL approach. Verizon's fiber based FiOS network should be able to compete nicely with DOCSIS 3.0 without much difficulty.

The good news for ATT is that the initial deployment is limited in both scope and function. My guess is that Comcast will create a premium, higher priced service, based on DOCSIS 3.0. If Comcast follows such a conservative strategy, ATT will have some time to adjust its strategy to be competitive with this new cable technology.

Qwest Wins IPTV Franchise in Portland

Qwest went to the city of Portland, Oregan stating that it would bring competition to the cable incumbent Comcast. Qwest povided maps of the city indicating where it would upgrade its bandwidth speed from the current 3 Mbps maximum to its new FTTN network delivering at least 20 Mbps. Qwest said it planned to have the video service available to 20 percent of Portland in four years and 50 percent in six years.

Qwest's Portland video franchise goes into effect on January 1, 2008 after which Qwest will have 18 months to notify the city of when it plans to begin cable service.

Qwest's Portland video franchise goes into effect on January 1, 2008. At that point, Qwest will have 18 months to notify the city of when it plans to begin cable service, if at all.

This is a pretty tentative and slow rollout of IPTV services. Qwest seems to have made the decision that IPTV is not an important strategy. Frankly, I am skeptical that this will lead to an IPTV rollout of any significance.

ICTV Providing Interactive TV to PCCW

I went to the ribbon cutting for ICTV's new offices in downtown San Jose. It was quite a ceremony with the mayor of San Jose and two council members attending. The company moved to a downtown high rise rather than a Silicon Valley tilt up in order project an image appropriate for a media entertainment company.


ICTV gave me a demo of the kind of interactive services that its systems can provide. It showed a browser like screen on the TV that included one or more video windows along with surround texts and menus that can be selected using the remote control. It is proposing a business model in the U.S. where the programming would be built by programmers such as CNN and then delivered to cable companies as MPEG-2 streams. These cable companies would then deliver them over their video on demand infrastructure. This approach means that any digital set-top box capable of receiving video on demand services will be able to receive this interactive content.


PCCW accounts for 850 thousand of the one million viewers supported by ICTV's systems and services. PCCW uses ICTV for its TV based shopping service as well as for PCCW's successful film trailer service. A PCCW viewer can watch trailers for movies currently at the theater and then reserve seats and buy tickets for a particular showing. PCCW told me that it is selling more seats using the TV service than are being sold over the Internet.

ICTV looks like it has a good approach that will complement both cable and TelcoTV services. PCCW is showing that it is an effective way to enhance an IPTV service. From what I saw, I think that other IPTV service providers should take a look at it themselves.

Indian Regulator Proposes IPTV Rules

TRAI, the regulator in India, has issued recommendations for rules for IPTV services in India. These recommendations state that IPTV providers can offer only broadcast channels that have been approved by the Ministry of Information and Broadcasting. They also recommend a technical change that includes the IPTV providers in the companies that can receive broadcast feeds.

These recommendations also would permit cable companies and larger Internet providers to also offer IPTV services without any additional licensing.

These draft recommendations are being put on the TRAI website inviting further comments from stakeholders. After this TRAI will issue the final recommendations to the Government.

These recommendations seem straightforward. They permit IPTV services to operate and give the cable companies the right to create their own IPTV services.

In fact cable companies, particularly in Europe, are starting to deploy telco style broadband and IPTV services rather than expanding their cable networks and buying unbundled loops from the incumbent telco for these services.

I would appreciate comments from readers in India about these regulations.

City Telecom to Deploy Alcatel GPON

City Telecom in Hong will start deploying Alcatel GPON systems as part of its FTTH network starting in January 2008 to support its Hong Kong Broadband Network service. City Telecom has a firm plan to extend its fiber coverage from 1.4 million homes passed today to 2 million by 2010. This will give it 90 percent population coverage in Hong Kong.

City Telecom will use both active Ethernet and GPON in its future deployments. It has found that the cost performance of GPON has improved to the point where it is competitive with Ethernet in certain deployment scenarios, particularly in lower density applications. It has also found that GPON can overcome the 100 meter distance limitation of 100 BaseT Ethernet over Category 5 cable.

This is an interesting move. City Telecom has been using Cisco point-to-point Ethernet until now. It indicates that GPON does provide real benefits over active Ethernet in some applications but has not yet won the technology battle.

TeliaSonera Launches TelcoTV in Finland

TeliaSonera launched an IPTV services in the Greater Helsinki Area on November 29, 2007. Sonera Broadband TV offers broadcast channels, video on demand, and HDTV. The service is designed for households for which Sonera’s 100 Mbps FTTH broadband is available. TeliaSonera has about 170,000 cable TV customers in Finland.

In addition to free digital terrestrial channels, Sonera Broadband TV provides eight ty channels, of which Discovery Channel, Silver, Voom and Luxe are in HD. In addition to these, Animal Planet, Discovery Civilisation, Discovery Science and Discovery Travel & Living are also available. The offering is supplemented by SF Anytime, a video on demand service with a weekly updated selection of over 1,000 videos including, Finnish movies. The basic service is free of charge for the first 12 months. A premium option is available with a movie package with a monthly charge offer of 29 euros. In addition, this package also includes the Canal+ Total channel package.

This TelcoTV service is available today to 85,000 households in the Greater Helsinki Area that are covered by its FTTH network. This network provides coverage in the 15 largest towns in Finland and should cover 150 thousand homes by the end of 2007.

An IPTV offering is an important part of an FTTH service. TeliaSonera has not aggressively deployed a DSL based IPTV service since it also offers a cable TV service. FTTH is a clear upgrade from cable technology, so including a video service is an important strategy.

Virgin Abandoning IPTV Plans

Virgin Media is abandoning its planned IPTV service announced in April 2007 following the departure of CEO Steve Burch.Virgin's IPTV offering was to provide nationwide coverage for Virgin Media services for those outside the reach of its cable network, and was set to launch in 2008. The company is leaving the possibility open that it will revive this effort in 2009.

Virgin Media reported a gain of 13 thousand customers in 3Q07, following a loss of more than 70,000 customers in 2Q07.

Virgin Media has had to pull in its horns to defend its base business in the face of significant financial losses. In the long term it will face increasing competition as BT's BT Vision and other TelcoTV services in the UK build momentum.

HD Coming to UK's Freeeview

The four broadcasters that participate in the Freeview digital terrestrial service in the UK have agreed on an approach to offering HD service starting in late 2009 or early 2010. The BBC, ITV, Channel 4 and Five agreed to approach that does not require the additional spectrum that they have been looking for to support HD services until now.

This will put significant pressure on BT to upgrade its access network to VDSL or FTTH to be able to support HD services. Its current ADSL network cannot supply enough bandwidth to most customers to support HD services today. BT Vision customers will want HD video on demand services to complement the Freeview HD broadcast services.

Most of BT's broadband competitors rely on wholesale broadband loops that it provides to support their IPTV offerings. They will also be in a bind if BT does not upgrade its upgrade its network or if there are limitations on unbundling of VDSL or FTTH loops.

PCCW Introduces ! Gig FTTH Services

PCCW, the incumbent telco in Hong Kong, now offers the PCCW 1000M+ gigabit Ethernet FTTH service two two thirds of Hong Kong's households. It also offers the 100M 100 Mbps Ethernet FTTH service. It stated that it plans to offer a 1.25 Gbps service some time in 2008.

The 100M service is priced at $US75 per month and the 1000M+ service is priced at $280 per month.

PCCW is stepping up the level of broadband competition in Hong Kong. These FTTH are premium services but are well priced for technology based small and home businesses.

PCCW's new offerings now compete directly with City Telecom's Hong Kong Broadband FTTH services in Hong Kong. This will put pricing pressure on City Telecom in order to maintain an advantage in this market.

Hong Kong Broadband IPTV Flat

City Telecom added 4 thousand IPTV subscribers to its IPTV service over the last 12 months bringing its total to 120 thousand.

City Telecom's chairman stated that he foresees dramatic changes in the pay TV market in the coming year in Hong Kong. PCCW’s acquisition of the English Premier League football matches and the most popular movie’s broadcasting rights has been a major blow to Cable TV. Many of cable's long-time subscribers would consider changing to other services, one of which is PCCW's, but to pay a higher price than Cable TV, another alternative is not to subscribe any pay TV service at all. In view of this market change, City Telecom is considering an offering that is similar to Cable TV, attracting some of their subscribers to its service.

City Telecom started its IPTV service with a bang and added 100 thousand subscribers in its first year. Its growth has been slow since then. I think that part of the problem has been churn caused by its introductory offer of one year free IPTV service. But I believe that the more serious problem is that City Telecom has not yet come up with a compelling offer that is competitive with both the cable company and PCCW. It appears that the company recognizes this and is going to do something about it.

TeliaSonera Reaches 276K IPTV Subscribers

At TeliaSonera the total number of IPTV subscriptions grew to more than 276 thousand, mainly due to the successful IPTV push in Sweden which increased the number of IPTV subscriptions there by 58,000 to 216,000 during 3Q07. During this period the total number of IPTV subscribers increased by 76 thousand across the entire country.

Since TeliaSonera included IPTV in its basic broadband service, the number of IPTV subscribers has grown in proportion to the growth in its broadband service. The increases in its broadband service are offsetting its losses in fixed voice subscriptions.

Verizon Pushing for 400 Mbps MoCA

Verizon is pushing the MoCA alliance to increase the bandwidth of the MoCA data service to 400 Mbps in the next two years. MoCA is a home networking technology that supports Ethernet over coaxial cable and coexists with cable and IPTV RF video delivery. The most recent version of MoCA provides a 270 Mbps wire speed with 175 Mbps throughput.

Verizon has more than 3 million MoCA devices installed in FiOS TV customer homes today.
Considering the telco's deployment and customer ramps, that number will only continue to rise. Verizon ended the third quarter with 717,000 FiOS TV subscribers and is adding about 3,200 new video customers per day. On the high end, the company forecasts having 4 million FiOS TV subs by 2010.

Today, Verizon delivers broadcast video via an RF overlay, similar to a cable architecture, but uses IPTV to deliver video on demand content and widget data. Eventually, Verizon plans to introduce an IP video hub office and eliminate the analog RF transmission package. The company will use IPTV to deliver video on demand, interactive capabilities, and a few broadcast channels. It will later migrate to IPTV multicast for all broadcast content and the eliminate the RF overlay.

Verizon is making a good point; however, it should be shooting for a gigabit in the home network.

IPTV Legal Status in Korea Approaching Resolution

The National Assembly of Korea is expected to pass a special law before the end of the year that will allow Internet companies to broadcast TV shows using IPTV technology.

The assembly's Broadcasting and Communications Special Committee's subcommittee on bill deliberations reached an agreement on some difficult points in the proposed law. If the IPTV bill is passed at a parliamentary plenary session, Internet service providers like KT and Hanaro Telecom will be allowed to broadcast IPTV programs in real time like terrestrial and cable broadcasters. The committee plans to pass the bill at its meeting on Tuesday before submitting it to the floor the following Friday.

This law should resolve the legal issues that have held IPTV back in Korea for years now. If it is actually resolved by the end of 2007, 2008 will be an excellent year for IPTV in Korea.

Broadband Slowdown Pushing IPTV

Lightreading published and article that described the slowdown of broadband adoption in the U.S. It quotes a financial analyst as saying that the days of wireline broadband connectivity as a major growth driver of U.S. telecom are largely over.

We see broadband reaching a saturation point with slowing growth rates across Western Europe, North America, and the developed countries of Asia. On the other hand, we see IPTV continuing to grow at high rates in these areas. In fact, IPTV is causing carriers to upgrade their broadband networks to VDSL and FTTH. IPTV has become the engine driving broadband spending in these countries.

Tiscali UK Expanding IPTV Service

Tiscali UK was supporting IPTV at 450 exchanges in the UK and can now offer the service to 34 percent of UK homes. While the number of IPTV subscribers has decreased to 36 thousand since the beginning of the year, the company stated that it is now added new subscribers at a rate of 250 per day. Its ARPU for IPTV customers now stands at GBP40 ($US82) per month.

Tiscali has been doing a lot of work to absorb Video Networks, which had established an IPTV service and had reached over 50 thousand subscribers. With its national expansion, it appears that Tiscali is turning this situation around and will become a significant factor in the UK pay TV market.

Telecom Italia to Expand IPTV in Germany

Telecom Italia’s subsidiary in Germany, HanseNet, plans to offer its Alice homeTV IPTV package in 150 cities by the end of 2007. This will provide coverage of 10 million households.

Its IPTV service will be offered in Bremen, Leipzig, Dresden, Stuttgart and the Ruhr region. This services is currently available in Hamburg, Lubeck and parts of federal state Mecklenburg-Western Pomerania. It includes approximatesly 60 free to air channels and 40 pay channels plus video-on-demand with about 1,200 titles.

IPTV is becoming a standard part of a broadband service offering in Germany as it has in France. This will certainly increase the amount of competition in this market.

O2 Ends 3Q07 with 53K IPTV Subscribers

Telefonica's Czech subsidiary O2 ended 3Q07 with 53 thousand IPTV subscribers, a net gain of 16,000 in the quarter. O2 TV recently began broadcasting live O2 Extraliga hockey matches, and expanded the number of films offered in the Videotéka, O2’s virtual video rental shop, through deals with Warner Brothers and Disney.This was an increase of 50 thousand subscribers in the last 12 months and 37 thousand since the beginning of the year. O2 also ended 3Q07 with 545 thousand broadband subscribers.

O2 is seeing steady growth in its IPTV service. Its penetration of its broadband based is still low, so its IPTV service should continue to see good growth.

Telefonica adds 18K IPTV Subscribers in 3Q07

Telefonica added 18,142 subscribers in 3Q07 giving it a total of 469,067 at the end of the quarter. It stated that it now has 12 percent of the pay TV market in Spain. The number of subscriber's to Telefonica's IPTV service grew by 165 thousand in the previous 12 months and by 86.1 thousand since the beginning of 2007.


Brasil Telefonica started an IPTV service in September and had 8.5 thousand subscribers by the end of the month.

Telefonica has not maintained the pace of 80 thousand new subscribers that it set in 4Q06 in 2007. Its third quarter was quite far from this mark. While there may be some seasonal factors at work, it does looks like Telefonica needs to step up the marketing for its IPTV service to build its momentum back.

FastWeb to Offer Disney Content On Demand

FastWeb in Italy will start offering Disney content on demand targeting teens, tweens and preschoolers. The Disney Channel On Demand offer will include live action series such as Hannah Montana, the sitcom Quelli dell’intervallo, animated programs such as Kim Possible and American Dragon, and Disney Channel Original Movies such as High School Musical 2 in its Dance Along version. For younger viewers, Disney Channel On Demand will offer a range of series for preschoolers, such as the newly launched Disney My Friends Tigger and Pooh, Mickey Mouse Clubhouse, and Handy Manny.

FastWeb is a real IPTV pioneer on a global basis. This is a good addition to its on demand service. Children's programming is a popular segment of an on demand service.

Telecom Italia France Has 80K IPTV Subscribers

Telecom Italia reported that its broadband subsidiary in France had more than 80 thousand IPTV subscribers at the end of 3Q07. It did not report IPTV subscriber numbers for its domestic IPTV service in Italy or in its Hansenet broadband subsidiary in Germany.

Telecom Italia is doing well with IPTV in France where IPTV is a standard and popular broadband option. I think that if the results were strong in Italy or Germany, it would have reported them.

Belgacom Added 58K Subscribers in 3Q07

Belgacom added 109,769 IPTV subscribers in the first nine months of 2007 and 58,086 in 3Q07. It stated that this increase was due to promotions that it introduced in 2Q07. It now has 249,434 subscribers. Its additions in 3Q07 were a significant improvement over the 41,857 added in 2Q07. It added less than 10 thousand new subscribers in 1Q07 largely due to churn caused by a "try & buy" program.

Belgacom received 29M euros revenue in the first 9 months of 2007 compared to 10M euros for the first 9 months of 2006. The ARPU for its TV service increased to 15.8 euros in 3Q07 compared to 11.6 12 months earlier.

Belgacom has gotten itself back on track. It is doing well picking up subscribers in a very competitive market with strong cable competition.