Strong Demand for TV in Columbia

TVTelco Daily published an article that describes a survey in Columbia that finds strong demand for TV services in both rural and urban homes. It found that there are 1.3 TVs per home in rural areas and 1.8 TV's per home in urban homes. It also found that 95 percent of rural homes have TV and 99 percent of urban homes have TVs.

The primary result of the survey was that both rural and urban homes prefer TV over all other media including radio, newspapers, magazines, and the Internet.

This indicates that there will be demand for IPTV services. The problem will be to match pricing with willingness to pay.

Amino Acquires Tilgin Set-top Box Business

Amino has acquire Tilgin's IPTV set-top box business. Tilgin has sold about 500,000 set-top boxes. Amino will acquire new features as part of this deal that include picture in picture, whole home connectivity, and green power.

Tilgin will now focus is on IP Residential Gateways. Tilgin said that it has a strong market position and leading gateway products. Tilgin's IPTV business has not reached the volumes required for sustained profitability. Amino and Tilgin intends to commence a sales cooperation regarding IP Residential Gateways.

There are fewer major new opportunities in Telco IPTV now. We will see more companies that have not reached critical mass following the divestiture or acquisition route.

Nokia Siemens Introduces Middleware SDK

Nokia Siemens introduced a software development kit (SDK) as part of its latest IPTV middleware software release. This SDK allows for third party customizable user interface development on HTML and Java platforms. Operators and third party developers can customize and enhance IPTV offerings.

This SDK has been used by both Belgacom in Belgium and KPN in The Netherlands to customize their IPTV offerings for the last couple of years. Nokia Siemens in December will make this capability available to its other middleware customers and its small U.S. telco customers, in particular.

Belgacom has used the SDK to give the broadcasters the ability to provide a customized interactive interface along with its programs. The Belgian Idol program uses this capability to give viewers the ability to vote through their TVs for a price of one euro per vote. It shows the real time results of the voting, which creates an auction environment that encourages viewers to vote multiple times to support their favorites.

Belgacom also uses the SDK to provide a mosaic based electronic program guide (EPG). When using this mosaic EPG, the program is viewed using 65 percent of the screen. A mosaic of picture in picture windows of 16 channels around the TV window in the remaining space on the screen. The user then can request the next group of 16 channels or select one of the channels being displayed.

Nokia Siemens is taking the right approach. What it is trying to do is difficult and there are often limitations in these SDKs that limit their applicability. The proof of the pudding will be to see how successfully its customers are in using it to customize and enhance their services and to add applications.

SK Telecom Loses 36K IPTV Subscribers in 3Q08

SK Telecom (formerly Hanaro Telecom) lost 36,184 in 3Q08, leaving it with 768,625 subscribers at the end of the quarter. This was on top of losing another 77,547 subscribers in 2Q08. SK Telecom offers a video on demand service and is expected to offer a broadcast service in the next few month. Its revenue for the service was $15 million U.S. during the quarter.

The company lost 21,485 broadband subscribers in 3Q08 leaving it with a total of 3.44 million broadband subscribers. This is on top of a loss of 160,599 broadband subscribers in 2Q08. It has not added broadband subscribers since 3Q07.

SK Telecom has been hit with a significant shrinkage of its broadband business since it acquired Hanaro. Its loss of IPTV subscribers is a reflection of this trend.

Korea Telecom Adds 102K IPTV Subscribers in 3Q08

Korea Telecom added 102,245 subscribers to its Mega TV video on demand IPTV services in 3Q08, ending the the quarter with 808,101 subscribers. Its revenue for the services was $10.1 million U.S.

The company has just begun to deliver broadcast channels as part of its Mega TV' services , the day following the approval by the Korea Communications Commission (KCC) of its monthly rate of $11 per month U.S. The service provide 33 broadcast channels, including the four national channels of KBS, MBC, SBS and EBS, and about 85,000 movies and other video-on-demand assets.

KT is also planning to launch a premium IPTV service in June 2009, which will provide 80 channels for $16 per month U.S. The company will offer a discount $9 U.S. per month through February 2009.

Korea Telecom's video on demand service has been quite successful. It will be interesting to see how many subscribers convert to the broadcast service. Its video on demand revenue subscribers was about $4 U.S. per month in 3Q08, so the broadcast package represents a significant percentage increase in spending.

Hong Kong Broadband at 156K IPTV Subscribers

City Telecom's Hong Kong Broadband ended its fiscal year at the end of August 2008 with 156,000 IPTV subscribers, an increase of 20,000 subscribers over the previous six months. The company also had 316,000 broadband subscribers, an increase of 37,000 over the same period. It stated that it now has more broadband subscribers than the cable TV company in Hong Kong.

City Telecom seems to have found the way to increase its IPTV subscriber base, which has been flat over the last couple of years.

Telco IPTV Network Architecture

I just published a post on my Telecom 2020 blog that you may find interesting. It discusses the new IPTV networking announcements by Alcatel-Lucent and Cisco and their limitations.

Telefonica Spain Adds 13K IPTV Subscribers in 3Q08

Telefonica added 13,000 IPTV subscribers in 3Q08, giving it 589,600 IPTV subscribers at the end of the quarter. Its O2 operation in the Czech Republic grew nearly as much, 10,200 IPTV subscribers, leaving it 108,100 subscribers at the end of the quarter.

Telefonica's total pay TV base grew by 130,000 subscribers to more than 2.1 million at the end of the quarter. The company has a significant satellite TV offering in South America, that accounts for nearly all of the increase. Its pay TV offering in Brazil is successful with 436,100 subscribers at the end of the quarter.

Telefonica does plan to introduce HDTV before the end of 2008.

Telefonica's IPTV business in Spain has hit a real flat spopt with a significant decrease in its quarterly adds over the last four quarters. It will have to take a different approach to get sales moving again. HD should help.

I believe that Telefonica is offering an IPTV service in Brazil, but it has not split out the IPTV vs. the satellite numbers.

Telefonica Spain Adds 13K

BT Adds 38K IPTV Subscribers in 3Q08

British Telecom added 38,000 new BT Vision IPTV subscribers in 3Q08, giving it a total of 320,000 at the end of the quarter. This total has increased to 340,000 since the end of the quarter. An average of 83 percent of the customers added in 3Q08 chose to take a subscription pack, nearly three times as many as last year.

The rate at which BT added new customers to its BT Vision IPTV service declined sharply in the quarter. Apparently this rate is holding steady in 4Q08, since the company has added 20,000 new subscribers half way through the quarter. Consumer belt tightening may be a significant issue at this time.

Portugal Telecom Adds 95K TV Subscribers in 3Q08

Portugal Telecom add 95,000 IPTV and satellite customers in 3Q08, leaving it with a total of 211,000 at the end of the quarter. It stated that its TV offer is reducing churn and attracting new voice and data customers as around 60% of IPTV net adds are new customers.

In June 2008, Portugal Telecom included Disney Channel in its basic offer. It broadcasted the first free-to-air program HD to all Meo customers, including the Euro 2008 football championship as well as the Olympic Games in HD. In September, Meo started broadcasting the channels of five leading European football clubs (Barcelona, Chelsea, Inter, Manchester United and Real Madrid). In addition, it entered into an exclusive agreement with a leading Portuguese football club, Sport Lisboa e Benfica.

Meo provides more than 110 TV channels and over 1,500 VOD titles. The VOD offer, which include blockbusters from five has been used by about 40 percent of its Meo subscribers, who have consumed an average of 2.8 movies per month.

Meo TV is a real success for Portugal Telecom. It added significantly more Meo customers than broadband customers. Meo is clearly helping Portugal Telecom to increase its over all market share.

The company has not stated how many of its customers are IPTV customers. One of the readers of this blog posted that about 1/3 of its customers are satellite customers. This would give it about 140,000 IPTV customers.

Cisco Introduces IPTV Enabled Edge Router

Cisco introduced its Aggregation Services Router (ASR) 9000 that will provide significant increases in performance over its work horse 7600 routers with a total of 6.4 terabits per second of capacity.

The ASR 9000 incorporates the Cisco Advanced Video Services Module (AVSM) with 4 terabyts of flash RAM storage that offers content caching, ad insertion, fast channel change and error correction of video streams. Fast channel change and onboard error correction for both unicast and multicast video traffic helps ensure that errors can be detected by any set-top box and retransmitted within milliseconds.

The AVSM capabilities of the AVSM provide similar capabilities to Alcatel-Lucent's TPSDA 2.0 approach that provides similar capabilities. Both approach will require support from the IPTV middleware to get their full effect.

The 4 TB of storage will be enough to store about 1,000 hours of HD content. This will be enough for the most popular video on demand assets but not for the long tail of for an extensive NPVR service. Cisco will have to add a lot more storage to really offload video traffic from the network as it is currently claiming. I will write a column for my Telco 2020 blog that will discuss this issue in more detail in a couple of days. I just don't think that a distributed approach will hold up over the long term.

Broadband Forum Tackles IPTV

The Broadband Forum, formerly the DSL Forum, released BroadbandSuite 3.0, which provides specifications for triple play delivered via GPON and bonded DSL over a QoS-enabled Ethernet architecture, and remote management beyond the gateway to address video and storage
devices. BroadbandSuite 2.0, released in 2007, provided a roadmap for triple-play access via ADSL-2+.

The Broadband Forum has been the leader in developing useful standards for broadband networks. Its TR-069 specification that BroadbandSuite 3.0 is based on is being broadly accepted as the primary way to manage devices on home networks.

Singtel Adds 1K IPTV Subscribers in 3Q08

Singtel added about 1,000 new subscribers to its mio TV IPTV service, giving it a total of about 46,000 subscribers at the end of the quarter. The company experienced churn due to the expiration of its introductory “waiver of minimum spend” promotion.

In September 2008, Singtel introduced SeasonPass an on demand service which provides viewing of the latest season of Hollywood hit TV shows within 24 hours of their US telecast time, following deals with 3 major Hollywood studios.

Singtel is demonstrating once again that introductory offers that involve a significant increase in monthly fees after some period of time leads to significant churn when the promotion expires.

Microsoft Mediaroom Supporting 2M Subscribers

The Microsoft Mediaroom IPTV software now supports 2 million subscriber homes, doubling in less than one year. There are nearly 4 million set-top boxes worldwide in these homes. In the past quarter , 500,000 new Mediaroom subscribers globally. ATT is one of Microsoft’s fastest-growing Mediaroom customers with 781,000 AT&T U-verse IPTV subscribers.

Microsoft is reaping the rewards of its Tier 1 carrier wins. It moving into the number one position with merchant software packages.

DOCSIS 3.0 is Cheap

An article on Light Reading cited a statement by Charter Communications that it will cost about $8 to $10 per subscriber to bring DOCSIS 3.0 services to a home, including the new cable modem termination system (CMTS) equipment and the routing systems. It does not include the cost of the new DOCSIS 3.0 cable modem or the cost of provisioning the service.

Verizon has said that it costs them $800 to $1,000 per home to make its FiOS fiber service available with a maximum 50 Mbps data service today. The cable companies can accomplish the same thing for one percent the cost. DOCSIS 3.0 will provide the cable companies a strong defense against FiOS and be a very strong offensive weapon against ATT's VDSL U-verse service.

Telecom Itallia Adds 38K IPTV Subscribers in 3Q08

Telecom Italia ended 3Q08 with 218,000 IPTV subscribers, an increase of 38,000 in the quarter. It is continuing to say that it will have 300,000 IPTV subscribers by the end of 2008.

Telecom Italia will have to double the quarterly rate of adding IPTV subscribers that it has achieved across the first three quarters of 2008 in order to achieve its goal of 300,000 IPTV subscribers by the end of the year. This is a tall order.

Belgacom Adds 52K IPTV Subscribers in 3Q08

Belgacom added 51,679 IPTV subscribers in 3Q08, ending the quarter with 443,139 subscribers, which gives it a 30 percent share of the Pay TV market in Belgium. Its ARPU was 17.9 euros at the end of September, an increase of 11 percent, year over year. More than 85 percent of Belgian households can be served by Belgacom's IPTV service, and 54 percent can watch HD. This number will increase to 60 percent who can watch HD by the end of 2008.

The continued roll out of VDSL-2 increased the take up of second TVs. At the end of September the total number of second TV users amounted to 53,651 of which 12,063 were added in 3Q08.

Belgacom has invested 55 million euros in its IPTV service in the first three quarters of 2008, including infrastructure and set-top boxes.

Belgacom's IPTV growth continues to be strong in a very competitive market.

Deutsche Telekom Adds 83K IPTV Subscribers in 3Q08

Deutsche Telekom announced that it had 333,000 subscribers signed up for its IPTV service in Germany at the end of 3Q08, and increase of 83,000.

At the end of September, the number of its IPTV customers in Eastern Europe was at 164,000, driven mainly by Croatia, with a total of 92,000

This nearly doubled the number of IPTV subscribers added in 2Q08. Deutsche Telekom will have to double again to reach its goal of 500,000 IPTV subscribers by the end of 2008.

AT&T to Test Bandwidth Limits

ATT has begun a test in Reno, Nevada that will set monthly limits on broadband users and charge them if they exceed the caps. The trial at first will affect only new DSL users, who will be limited to 20 to 150 gigabytes of monthly downloading depending on their account. Users who go over eventually will be charged $1 per gigabyte, but only after they continue to exceed their limit after two months of warnings.

In December, the test will be applied to existing Reno DSL subscribers. The caps are:

• 768 Kbps - 20GB monthly limit or 11 min. per day of HD or 44 min. per day of SD
• 1.5 Mbps - 40 GB or 22 min. per day of HD or 89 min. per day of SD
• 3 Mbps - 60 GB or 33 min. per day of HD or 133 min. per day of SD
• 6 Mbps -80 GB or 44 min. per day of HD or 178 min. per day of SD

These limits are not a huge burden for web surfers or even Youtube viewers. They do make a big difference for people who will want to use their broadband connections to use their broadband connection to deliver content to their TV, especially HD content. These caps will make over the top Internet TV services less competitive with ATT's U-verse IPTV service.

Free at 4.1M Broadband Subscribers

Free in France ended 3Q08 with 4.125 million ADSL subscriber with 3.275 million under the Free brand and 850 thousand under the Alice brand. The number of Free broadband subscribers increased by 134,000 during the quarter.

Free did not give enough information to unravel the number of IPTV subscribers. Based on history, the number of IPTV subscribers appears to be more than 2.7 million.

Swisscom Adds 15K IPTV Subscribers in 3Q08

Swisscom added 15,000 Bluewind TV IPTV subscribers in 3Q08 giving it a total of 95,000 subscribers at the end of the quarter. The availibility of self-installation reduced the average one-time cost per new customer. At the end of February 2008, Swisscom added four HD channels in to its Bluewin TV service , and launched an offering without a hard-disc recorder.

Swisscom is experiencing steady growth of its IPTV service. It appears that its February service improvements have had a positive effect.

Orange Backs off IPTV in the UK

France Telecom's Orange has run a trial of an IPTV service in the UK following its success in France and has been ready to roll out. But it has decided that this IPTV service was too similar to BT Vision, and wants to rethink how the service should work. The company is looking at different business models.

Orange is also building out its own broadband network, rather than renting lines from BT, which will give it more control and better profit margins.

There has been a lot of discussion that Orange would roll out IPTV in the UK before the end of 2008. This is not going to happen. It looks like Orange is trying to reestablish its position in the UK broadband market. It does not appear that its chances for long term success are very good.

Comcast Starting Digital Conversion

Comcast has started the process of converting their analog subscribers to digital. It plans to offer free digital terminal adapters (DTAs) capable of supporting video on demand. Comcast will also give existing digital customers up to two DTAs at no additional cost. The company is charging $1.99 for each DTA a customer wants above that limit.

It has been clear that the cable analog subscribers are those that are most likely to move to Telco IPTV services. Cable subscribers that are considering a digital service must bring in a set-top box. That is a natural point to consider moving from cable to satellite or Telco IPTV services.
Comcast will reduce the likelihood that it will lose customers by converting them to digital with these low cost adapters.

ORCA and BCC to Wholesale IPTV in in Russia

Orca Interactive has partnered with BCC, a system integrator to deliver a wholesale IPTV service across Russia. North-West Telecom, Sibir Telecom, and Southern Telecommunications are incumbent carriers that will market this service to smaller local companies.

I spoke to Orca about this announcement. Orca said that BCC will deliver broadcast content over fiber to the local carriers that sign up to this service. Orca said that broadband penetration is growing across Russia but is still at a relatively low level. This wholesale approach will lower the cost of introducing an IPTV service by providing a shared headend service. This will improve the business case for IPTV in Russia, where the rate of growth is likely to be low compared to Western Europe and North America.

Orca is smart to emphasize less developed markets such as Russia. Less developed countries such as Russia, the Middle East, and Latin America are likely to present the best new IPTV opportunities.