Monday, July 30, 2007

Telefonica Adds 32K IPTV Subscribers

Telefonica added about 36 thousand subscribers in 2Q07, giving it a total of 450,925. This is quite consistent with 1Q07, when it also added 26 thousand subscribers. The company will be enhancing its service in September in order to give its IPTV service a boost. It expects to reach 1 million IPTV subscribers in 2008.

Telefonica has slowed down a bit and has fallen well behind France Telecom. Its coming service upgrade should increase the rate at which it is adding subscribers.

Korea Telecom IPTV Hits a Snag

It appears that Korea Telecom has hit a regulatory snag and will not be permitted to broadcast content in real time. This issue is being addressed in pending legislation.

It appears that Korea Telecom's IPTV introduction last month was premature. It could be another year before all of this gets sorted out. This is another chapter in Korea's IPTV oddysey.

Korea Telecom to Introduce IPTV in Russia

Korea Telecom will start a trial of an IPTV services in the area of Vladivstock, Russia in August 2007. It plans a full launch in 2008. Korea Telecom will introduce the service through NTC, which it has 80 percent ownership.

The service will be called Mega TV. Its content will include 30 Russian channels and live programming. It will also offer video on demand content including movies, TV programs, and sports.

Russia is becoming an interesting IPTV market. It looks like Korea Telecom will have its service going in Russia before its home market!

Verizon FiOS TV Grows to 515,000 Subscribers

Verizon announced that is FiOS TV subscriber base grew to 515 thousand subscribers, adding 167 thousand subscribers in 2Q07. It added an average of 13 thousand new subscribers per week during the quarter. The company added 460 thousand FiOS TV customers over the previous 12 months.

By the end of the 2Q07, Verizon was offering FiOS TV to nearly 500 communities in 12 states. FiOS TV was available for sale to nearly 3.9 million premises by the end of the quarter, up from 3.1 million at the end of the first quarter. Penetration for the service is 13 percent across all markets, compared with 9 percent penetration against a 2.4 million potential customer
base at the end of 2006.

Verizon ended the quarter with 1.1 million FiOS Internet subscribers, adding 203 thousand subscribers in 2Q07. Its total broadband net adds during the quarter was 288 thousand, so FiOS accounted for 70 percent of its new broadband customers during the quarter.

Verizon's FiOS service passed 7.6 million premises at the end of 2Q07, which it stated was consistent with its year end target of 9 million. Its FiOS Internet service was available to 5.7 million subscribers at the end of the quarter. It achieved a penetration of 19 percent comparing to a penetration of 14 percent against 4.8 million premises at the end of 2006.

Verizon is making good progress with its FiOS FTTP and FiOS TV IPTV services. It is meeting its fiber deployment commitments and is getting strong support from its customers. Verizon is on is way to becoming one of the top three IPTV providers by the end of 2007 along with France Telecom and Free in France.

Saturday, July 28, 2007

AT&T Has Franchising Set Back

A Federal judge has ruled that ATT's U-verse is a cable service in Connecticut. This ruling overturned a ruling by the state regulators that exempted ATT from acquiring video franchises town by town. After receiving the earlier favorable ruling last year, ATT stated that it would invest more than $300 million to upgrade its broadband network in Connecticut.

This Federal court ruling could be moot, however, due to legislation recently passed in the Connecticut state legislature and signed into law earlier this month . The new law sets up state franchising for both cable and phone companies, and state authorities would only have 45 days to act on applications before they are automatically granted.

It does not appear that this ruling will have a significant effect on ATT's IPTV efforts. It would not be good news for the company, however, if other Federal judges made similar rulings.

Friday, July 27, 2007

BT has 20,000 IPTV Subscribers

BT just announced its 2Q07 results and stated that it now has 20 thousand BT Vision IPTV subscribers. It expects to grow to 100 thousand subscribers by the end of 2007. The company is currently installing over 2,000 subscribers per week.

BT Vision requires a minimum of 2 Mbps of bandwidth. The company stated that about 90 percent of its broadband subscribers can get at least 2 Mbps downstream and can get BT Vision.

BT is making good progress and seems to be on a path to achieve its 2007 projection of 100 thousand BT Vision subscribers. It will have to figure out how to increase the bandwidth to its subscriber in order to meet the growing demand for HD services.

Wednesday, July 25, 2007

BSNL will start IPTV August 15

Indian telco Bharat Sanchar Nigam Limited (BSNL) announced that its IPTV service will be launched in Kolkata on August 15 . This enhancement of Calcutta Telephones’ existing broadband service will have 100 TV channels, video-on-demand (one movie will cost between US$.25 and US$1.25). The roll out of IPTV will begin from Salt Lake area and gradually move to other parts of the city. The monthly fixed charge of IPTV will be US$6.25plus taxes.
IPTV in India is starting to pick up some momentum. The small number of broadband lines in India compared to the rest of the world will keep its rate of growth down.

U.S. Broadband Speeds Falling Behind

The Communications Workers of America has a website that gives the results of a survey of U.S. broadband speeds. It found an average download speed of 1.97 Mbps across the country. The website has an active map that lets you drill down to the zip code level.

I think this website gives a good picture of the state of broadband in the U.S. It makes the valid point that the U.S. is falling behind. It shows that the U.S. broadband network needs to be upgraded to support TelcoTV services.

Tuesday, July 24, 2007

ATT IPTV Had Good Quarter

ATT added 38 thousand U-verse IPTV subscribers in 2Q07, growing from 13 thousand to 51 thousand subscribers. ATT found that IPTV is generating good ARPUs. It stated that 80 percent of the U-verse subscribers are taking premium packages and 60 percent are taking the highest speed offered.

ATT also stated that it expects to add subscribers at a rate of 10 thousand per week by the end of 2007. This is up from a rate of 3,000 per week in 2Q07. If ATT maintains its 2Q07 rate it will have about 125 thousand IPTV subscribers at the end of 2007. If it achieves its goal of 10 thousand new subscribers by the end of the week, it could double this and end up with about 250 thousand IPTV subscribers at the end of the year.

It is good to see that ATT is maintaining its subscriber growth. This has made me comfortable enough to increase my forecast for ATT for the report I am working on right now.

(Now if it would only bring VDSL to my home, I might even become a believer:-)

Monday, July 23, 2007

Nokia Siemens Chasing Tellabs?

There are rumors that Nokia Siemens Networks is trying to acquire Tellabs for about $7 billion, about a 40 percent premium over its stock value.

This acquisition would really push Nokia Siemens ahead in FTTH and IPTV access systems, especially in North America. Tellabs is doing well at Verizon and has excellent growth prospects, just on the basis of that one account.

KDDI Reaches 635,000 FTTH Subscribers

The number of subscribers to KDDI's Hikari-one FTTH service increased from 592 thousand to 635 thousand in the second calendar quarter of 2007, an increase of 43 thousand subscribers. KDDI acquired about 400 thousand FTTH subscribers from the Tokyo Electric Power Company (TEPCO) in the first quarter of 2007. KDDI forecasts that it will have 900 thousand FTTH subscribers at the end of March 2008.

KDDI stated that its ARPU for a voice/data/IPTV bundle was $38/month during the quarter while the ARPU for a voice/data bundle was $28/month. Thus, the ARPU for adding the TV service to the bundle is $10 per month.

KDDI has experienced a moderate rate of growth of its FTTH service. It will have to accelerate its growth rate a bit to reach its 900 thousand goal for the fiscal year.

KDDI does not disclose its number of IPTV subscribers. My estimate is that about 15 percent of its FTTH subscribers take IPTV services, which means that it has about 90 thousand IPTV subscribers today.

Friday, July 20, 2007

Singtel Introduces IPTV in Singapore with HD

Singtel in Singapore introduced its mio TV IPTV services based on the Microsoft Mediaroom software. Alcatel-Lucent is providing system integration services in support of Singtel.

Singtel will provide HD content that includes movies and channels from Mega Media, an Asian HD company. VOOM HD Networks will provide HD programming selected from VOOM’s 15 HD channels along with the first local Singapore HD channel - Sling HD. Viewers can view HD content that includes documentaries, travel, music, arts, fashion and lifestyle programs.

In addition to MediaCorp's suite of free-to-air channels (Channels 5, 8, U, Channel Newsasia, Suria and Central), MediaCorp's much anticipated HD5 will also be available on mio TV. This will be the first free-to-air HD channel in Singapore which subscribers with HD-ready displays can enjoy, as all mio TV Set-Top Boxes are HD-ready at no extra cost. Singapore is among the world's first to have a free-to-air HD channel carried on an IPTV platform.

mio TV reportedly will have the largest range of video on demand titles on any Singaporean television platform. It will include movies from major Hollywood movie studios such as Sony Pictures Entertainment, Twentieth Century Fox and Disney.

SingTel's agreement with Sony Pictures Television International brings viewers Sony’s feature films at the same time as the DVD release and before they are seen anywhere else on TV.

mio TV’s a la carte price plans allow customers to pay only for what they want to watch. No longer do customers have to contend with restrictive basic tier subscription packages.

mio TV's video on will allow viewers to choose from up to 25 selected movies for unlimited viewing for only US$8 per month. All mio TV customers will also be able to receive one free on demand ‘movie-of-the month’ - every month.

Click here for a description of the channels that are available in mio TV.

The basic monthly subscription is $US10.50 per month with no charge for the set-top box. Adding DVR capabilities to the set-top box costs an additional $7.00. Click here for complete pricing information.

This is a strong service offering with HD content, video on demand, and HD. At these prices it should prove popular.

PCCW Adding HD Channels in Hong Kong

PCCW in Hong Kong will broadcast more than 90 Barclay's Premier League football matches in HD starting in August 2007. PCCW will also broadcast other sporting events in HD, including 38 Italian Series A matches, 31 UEFA EURO 2008 matches and the Stanley Cup Playoffs, All Star and Regular Season Games and the Stanley Cup from the U.S. National Hockey League's 2007/08 season.

In addition, PCCW will provide value-added services to tie in with the launch of the 2007/08 season of the Barclays Premier League. For example, viewers will be able to view four live matches simultaneously via a split-screen function, as well as other interactive features that allow viewers to retrieve information on any Premiere League team or player by using the TV remote control.

To view HD programs, subscribers need to replace the standard set-top box with an HD version at the promotional rate of US$5/month (regular price US$10/month) for the set-top box rental. Customers subscribing to the US$62.50 Super Value Pack will receive the HD set-top box at no additional cost. The HD Sports package will be available to now TV Mega Sports Pack subscribers at at promotional rate of US$8.75/month (regular price US$11.25/month). There is a one-off charge for HD service installation and activation.

Also in August, PCCW will offer a dedicated HD channel, VOOM HD, which offers a collection of HD programming, including adventure travel, fashion, luxury lifestyles, art, live concerts, action sports and video games. Additional HD programming will be offered later.

This is the first HD IPTV offering in Asia. It shows that HD is becoming a global phenomenon. The low cost of HD sets will push all IPTV service providers into HD over the next couple of years.

Wednesday, July 18, 2007

UTStarcom wins new China Telecom Contract

UTStarcom won a bid to deploy its RollingStream IPTV system with China Telecom for a new commercial IPTV service in China's Ningxia Hui Autonomous Region.

UTStarcom stated that RollingStream is the most widely deployed IPTV platform in China with approximately 270,000 live subscribers to date in commercial deployments in more than 13 provinces throughout the country.

With a total population of more than five million people, the Ningxia Hui Autonomous Region is located near the geographical central northern edge of China. The initial deployment, which has the capacity to support 10,000 subscribers, will offer 52 live broadcast television channels, 48-hour time-shifting capabilities, 3,000 hours of video-on-demand content and valued-added services including karaoke, online gaming, TV-based SMS and other interactive applications. UTStarcom is providing the video on demand servers through the set-top boxes in the subscriber's home.

UTStarcom has a strong presence in China with both China Telecom and China Netcom. Its success in China is likely to make it one of the leading IPTV system providers as these deployments in China continue to grow.

EU Considering its own FCC

EC Telecom Commissioner Viviane Reding reportedly is considering the formation of a Europe wide telecom regulatory body. She is considering a centralized telecom regulator that would sit in the European Commission 's headquarters in Brussels and work across all of the European Union's 27 member states. She has referred to it as a one-stop shop, called the European Networks Agency, for cross border issues.

It is interesting to compare this possibility to regulation in the U.S. The U.S. Federal government has a great deal more power than the EC, which makes the FCC quite powerful.

The U.S. also has state level regulatory bodies. Many of them act as rubber stamps to the proposals from the incumbent telcos. However, the regulatory agencies in the larger states have had significant power, at least in the past. As the U.S. telcos have amalgamated into two very large incumbents, ATT and Verizon, even these regulators in the large states have been overwhelmed. The FCC is the only regulatory group that can still be effective.

Today the telecom service providers are quite segmented into separate companies in each country. Consequently, it will be natural for the national regulators to set the rules in each country. The centralized EC group will likely limit itself to setting an overall policy that provides a significant amount of wiggle room for each country.

Broadband deregulation, especially for VDSL and fiber services is a major issue where there is significant conflict between individual country regulators and the EC. Germany and Deutsche Telekom do not want to provide access to VDSL loops to competitive carriers, at least for the first few years. Telefonica in Spain is also objecting strongly to EC unbundling rules. This is likely to be a battleground for Ms. Reding's new commission and one that will have a strong effect on TelcoTV deployments in Europe.

Saturday, July 14, 2007

Verizon Issues $1B IPTV RFP

An article in Light Reading says that Verizon has issued an RFP for set-top boxes and a content protection/digital rights management system for its FiOS TV IPTV service.

Verizon is using Motorola set-top boxes today. Verizon uses an RF feed for its broadcast channels. This requires that the set-top box be a hybrid IPTV/RF cable-like set-top box.

I am currently working on an IPTV forecast that will be released in August. This forecast will show the opportunity for five IPTV product categories that include set-top boxes, content protection/digital rights management systems, access systems, video on demand systems, and middleware software.

The preliminary result from this analysis shows that Verizon will spend well over $1 billion for set-top boxes between 2008 and 2012 and over $50 million for content protection/digital rights management.

Motorola is certainly in a good position to get a piece of this business. I expect that Verizon will select at least one other set-top box manufacturer to keep inject competition. Verizon has three PON vendors today - Tellabs, Motorola, and Alcatel-Lucent.

Verizon started off with the Microsoft cable middleware. It has now taken over the further development of its middleware. I consider Verizon's middleware to be an in house development today.

I believe that Verizon started using Microsoft's content protection/digital rights management system and will replace it as part of this RFP. I believe that Verizon will select a single system. This is a real plum for the content protection/digital rights management system company that wins.

Wednesday, July 11, 2007

Sun Gets Big Order from ATT

Sun Microsystems received an order from ATT for servers and storage arrays to support the video on demand part of ATT's U-verse IPTV service. This is not an order for the Sun Streaming video on demand system but is an order for servers that support the Microsoft Mediaroom software from Microsoft.

I contacted Sun to verify that this is an order for servers to support the Microsoft Mediaroom software. I would not be surprised if Sun will make more money supporting the Microsoft Mediaroom at ATT than if ATT adopted the Sun Streaming system.

Saturday, July 7, 2007

MTNL Launches Fiber IPTV in Delhi

MTN and its IPTV franchisee Aksh Optifibre launched anIPTV service in Delhi. All MTNL broadband subscribers will be able to register for the IPTV service. The two c0mpanies deployed the service in about 200 homes in New Delhi in 2006..

This service will cost 90 rupees ($2.25) per month plus premium pay channels based. Viewers will be able to subscribe to the pay channels listed on the TV itself and start watching them immediately.

The service will include a Time-shift TV service that will allow viewers to rewind a live broadcast channel and to catch a program that has been broadcast in the previous week.

Advertisers will be able to upload full length campaigns, product videos, and detailed trailers, without the limitation to a 10, 20, or 30 second format.
An ecommerce facility will launched soon that will allow users to items shown on infomercials and pay for it using the television remote and have it delivered to their homes.

A video on demand service will also be available with over 100 movie titles in Hindi and English. Plays and serialized TV programs in Hindi, Punjabi, Marathi and Bangla will also be in the library. Additional titles will be added every week. In addition services such as booking of movie tickets with the television remote, video calling, music on demand, online chats, and virtual classrooms -are expected to be added to the service.

Based on an open platform, this service will also allow creation of third-party applications that can be offered through the system - from placing orders for cakes and flowers to trading of stocks while watching a business news broadcast channel and telemedicine for which the remote center only needs an MTNL line and a television set.

India promises to be a very strong IPTV market in time. It will have to substantially increase its broadband infrastructure first, of course.

What is interesting is the amount of innovation that is going into this service. MTNL is starting to deploy services that are only being talked about in North America and Europe. It will be interesting to see how this service develops.

Friday, July 6, 2007

Dreampark's IPTV Elder Care

Swedish middleware company Dreampark has implemented an IPTV two way video application that connects 20 people in a senior citizen apartment complex in Southern Sweden with a nearby health clinic.

These 20 trial participants have special set top boxes for and can set up a video call with Nurse the staff on call at the clinic using a standard remote control and a web cam. Patients can see both themselves and the care providers on screen as they speak, and the camera can be zoomed in to give more detailed explanations of a patent's condition. The trail participant connects to the clinic by tuning into a specific channel.

Both the clinic and the trial participants expect that this video link will provide more timely and more efficient care for minor concerns.

This is the kind of application that IPTV service providers need to offer to really differentiate their services. People will pay for this kind of service assuming that it proves of value to the patients and the medical facilities.

Thursday, July 5, 2007

Korea Telecom Starting IPTV

An STMicro press release said that Korea Telecom has just launched its IPTV service. The service provides over 1,200 on demand videos and 27 interactive services, ranging from education to finance to instant messaging. An electronic program guide and user-created content are also available. Other KT IPTV services include: digital photos and personalized stock; plus weather and sports information.

It is interesting that there was no mention of broadcast services. I am making some inquiries to find out more about what KT is doing. I will let you know when I learn more.

Wednesday, July 4, 2007

ECI Buyout

ECI has approved its acquisition by a group of investment companies that includes Swarth Investments and Ashmore Investment Management for $1.2 billion. ECI expects this deal to close by the end of 2007.

ECI has done well using IPTV to maintain and improve its position with major carriers such as France Telecom and Deutsche Telekom. It now has the strategic problem of figuring out how to maintain its growth and position now that ADSL is near or at its peak.

This buyout gives ECI's current major shareholders an opportunity to get while ECI is in a strong position. Its new owners may have a different strategy in mind, such as splitting the company up and selling off the pieces.

Monday, July 2, 2007

FCC Pushing Cable Companies to All Digital

In a ruling today, the U.S. FCC gave relief against the requirement that banned set-top boxes with integrated content protection on the condition that these companies convert to all digital by February 17, 2009. This ruling effects some IPTV providers such as Verizon and Qwest for its IPTV trials in Phoenix and Denver. The purpose of this ban is to open up a competitive retail market for set-top boxes. The conversion to all digital will free up spectrum and permit new services to be offered.

This is bad news for the IPTV providers in the U.S. such as AT&T and Verizon. Forcing the U.S. cable companies to go all digital will give them a significant amount of spectrum that they can use for DOCSIS 3.0 services, IPTV, and interactive TV. This will make the U.S. cable companies that much more competitive with the IPTV services.