Wednesday, January 31, 2007

Verizon's FiOS TV Takes Off

Verizon ended the year with 207,000 FiOS TV IPTV subscribers, adding 89,000 in the fourth quarter of 2006. Its FiOS FTTP service now has 687,000 subscribers and is available to 6 million homes. The service is not widely enough deployed that Verizon is starting to feature FiOS TV in its retail locations.

Verizon aggressive fiber strategy which enabled a conservative IPTV architecture is paying benefits for it. It is way ahead of ATT in both in terms of homes passed and IPTV subscribers. ATT thought that its FTTN VDSL strategy would enable it to enter the market faster than Verizon. So far it is not working out that way.

France Telecom IPTV Surge

France Telecom ended 2006 with 577,000 IPTV subscribers. This is an increase of 390,000 in the year and 271,000 in the second half of the year. France Telecom lowered its prices for its broadband and IPTV services in June to compete directly with Free and Neuf/Cegetel. Its IPTV sales took off after that.

France Telecom is the leading IPTV company in terms of new subscribers in 2006. It has started marketing the service aggressively with excellent results. Its should have a strong 2007 as long as it holds to its current course.

Arris and Tandberg to Merge

Arris will acquire Tandberg for $1.2 billion. Arris provides cable modem and VoIP systems to cable service providers. Tandberg is one of the leading IPTV video headend system providers.

This merger will put Arris into the video business and into the IPTV business. It did not seem that Tandberg's acquisition of Skystream last year would not inoculate it from acquisition. Given the pace of acquisition in IPTV today, it will be interesting to see if this merger inoculates Arris.

Swisscom has 20,000 IPTV Orders

Swisscom has received 20,000 orders for its Bluewin IPTV service since it was introduced two months ago. It has installed 10,00 subscribers and its installation rate is running 1,500 per week. Its working to get its backlog down to three to four weeks.

This makes Swisscom the largest announced Microsoft IPTV Edition Software installation. It is generating orders at a significant rate. Now if ATT could only do this!

Monday, January 29, 2007

Xbox 360 IPTV Set-top Box

At CES Microsoft announced that it will turn its Xbox 360 game console into a Microsoft IPTV Edition set-top box by Christmas 2007. It expects that its IPTV software service provider companies will offer the Xbox 360 as an alternative set-top box.

Microsoft is in a perfect position to do this. Its IPTV Edition software treats the set-top box as a dumb piece of hardware, so it can load its software into the Xbox as well as a Motorola set-top box.

This is a good move for the family with serious gamers. The rest of us will most likely be better off with a purpose built set-top box that has been optimized for the recording and display of TV programming.

AT&T BellSouth Merger Complete

The merger between ATT and BellSouth was finally completed at the end of December. The deadlock at the FCC was broken when ATT&T promised to honor net neutrality. It promised net neutrality on its broadband Internet service but not in its enterprise or IPTV services. It made a number of other concessions. The full text of its concession letter can be found at

The old Bell System is being built back up. The merger means that BellSouth will adopt ATT's FTTN VDSL broadband and IPTV architectures. This is not good news for Tellabs, in particular, which was supplying FTTC equipment to BellSouth.

AT&T's U-verse stalled

ATT just announced that it had only 3 thousand U-verse IPTV subscribers at the end of December, 2006. This is exactly the number that it said that it had at the end of September.It expanded this service to Houston, Texas and to the San Francisco Bay Area, Indiana, and Connecticut in December. In spite of this, it added no new customers according to its fourth quarter earnings announcement.

ATT's CTO, Chris Rice, stated to the Wall Street Journal that the slow pace of its IPTV rollout was largely due to problems with its Microsoft IPTV Edition software.

On the other hand Ed Whitacre, ATT CEO, stated that its IPTV service was working better than expected and that its FTTN service would be available to 8 million homes by the end of 2007.

ATT has been running an extended technical trial for its U-Verse IPTV since it was introduced in San Antonio, Texas in June 2006. We have felt since the middle of last year that the Microsoft software was holding ATT up. That has now been confirmed.

It will be interesting to see how accurate Whitacre is. ATT said that it would install 2 million FTTN homes in 2006 and ended up installing 1.6 million. He is now saying that they will install 5.4 million this year. That is a heady rate.

Thursday, January 25, 2007

Motorola to Acquire Tut Systems

21 DEC 2006

Motorola, Inc. and Tut Systems, Inc. announced that they have signed a merger agreement, under which Motorola will acquire all of the outstanding shares of Tut Systems for approximately $39 million. Tut Systems provides carrier-class end-to-end digital video encoding, processing and distribution products including MPEG-2 and MPEG-4 AVC video compression, local ad insertion, forward error correction, and real-time conditioning of video and audio. Today, more than 160 service providers worldwide deliver IPTV using Tut Systems digital video distribution technology.

Acquiring Tut will make Motorola the market leader in IPTV encoders, which complements its position as the market leader in IPTV set-top boxes. Tut's customers include the small, independent U.S. telcos as well as many smaller telcos internationally. Tut has had an partnership where Huawei has brought Tut's systems into IPTV deployments in Asia (outside of China) and in the Russian Federation.

It is not clear that Tut's customer base is a good fit to Motorola, which has previously sold its encoding systems to large cable companies. It also does not give Motorola into the large IPTV accounts that are typically served by Tandberg and Harmonic today.

It will be interesting to see how Motorola is able to take advantage of this acquisition.