BT Adds 45K IPTV Subscribers in 1Q09

BT added 45,000 IPTV subscribers to its BT Vision service leaving it with a total of 423,000 at the end of the quarter. It now has over 430,000 IPTV subscribers. It said that 90 percent of its new subscribers are taking a subscription and that its ARPU for the service has doubled.

BT is continuing to make progress in a competitive market. It appears that its strategy of riding on Freeview's coat tails is working well for it.

BBC Canvas to Compete with BT Vision IPTV

The BBC is considering its Canvas Project that will compete with BT's BT Vision IPTV service.

The BBC is seeking permission to form a new joint venture partnership with other broadcasters and Internet Service Providers to define and promote a set of standards for digital television delivered via broadband Internet connections (IPTV) as well as digital broadcasts via DSat and DTT.

Users would need to buy a new set top box or other device which takes its broadcast signal from an aerial, like Freeview, or from a satellite dish, like Freesat.

Canvas users would also require a broadband connection to take advantage of on-demand features. They would need to:

• Subscribe to a broadband service which usually carries a monthly fee, or
• Utilise their existing broadband connection. It is possible they may need to
• upgrade their existing broadband packages to a faster connection, or
• upgrade their existing broadband packages to one which allows greater volumes of data downloads

The BBC said that Canvas would help protect the competitiveness of free-to-air platforms (like Freeview) and allow audiences who do not wish to pay for subscription television services to access a range of on-demand and linear services.

It wishes to develop Canvas in conjunction with the planned launch of HD services on the DTT platform (Freeview). Subject to approval, Canvas would launch at some point in 2010.

This is an interesting approach by a broadcaster to utilize broadband to reach its audience in addition to its over the air broadcasting. It looks very much like BT Vision to me. I wonder how BT will survive with this kind of competition from the broadcaster. This is a model that could be exported to other countries and create a new competitor to the existing Pay TV outlets.

BT Adds 56K IPTV Subscribers in 4Q08

BT added 56,000 BT-Vision IPTV subscribers in 4Q08 giving it a total of 376,000 at the end of the year.

Subscriptions picked up a bit in the quarter. The market in the UK is quite competitive with a strong satellite service leading the pack. BT is facing a problem in delivering competitive HD services due to the relatively low speeds of its broadband services. It has not yet committed strongly to VDSL or FTTH architectures.

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.

BT Working Toward 2010 VDSL Rollout

BT has announced that it will operate two VDSL trials of about 15,000 customers each starting in the summer of 2009. It plans to provide up to 40 Mbps as part of this service. BT expects to announce plans for the initial market VDSL deployment in early 2010.

It looks like BT is taking a very orderly process that will lead to a commercial VDSL roll out starting some time in 2010. BT will be experiencing serious bandwidth pressures from the demand for HD content well before this. I would not be surprised to see it accelerate this schedule due to significant competitive pressure.

BT Vision to add a Download HD Service

BT Vision has entered an agreement with NBC Universal International Television for feature films that will appear on BT Vision's HD movie download service. Current HD films will be priced at 4.96 pounds each and library titles at 2.95 pounds.

The viewer selects an HD film and it is downloaded to the V-box set-top box that comes with the BT Vision service. The viewer is charged after the film has completely downloaded and viewing has started. The film may be watched repeatedly during a 48 hour rental period.

It is good that BT is supporting HD content; however its approach is technically not much different than over the top Internet downloading. BT's access network does not have the bandwidth to support HD streaming today. BT needs to deploy VDSL or FTTH to support streamed HD. This will put at a competitive disadvantage compared to satellite and cable in the UK.

BT Adds 68K IPTV Subscribers

BT add 68 thousand BT Vision IPTV subscribers in 2Q08 ending with a total of 282 thousand. It has enhanced its sports offerings with Setanta Sports 1 for free with a package along with other sports content enhancements such as increased coverage of the Scottish Premier League.

BT continues to add IPTV subscribers at a good rate. It would be interesting to have more information on how well its business model is working. It offers BT Vision as a free service and depends on premium subscriptions and on demand content to generate revenue from the service.

BT's FTTH Plans

BT announced a $3B plan to deploy FTTH services to as many as 10 million homes by 2012. Ir plans to offer speeds up to 100 Mbps.

It stated that a supportive regulatory environment is essential for this program to take place. This would include removing current barriers to investment and making sure that any company investing in fiber can earn a fair rate of return.

BT also stated that it is committed to wholesaling its new services. It will press for any other next generation access network in the UK to be open to all companies as well.

This is a necessary move by BT. HD is becoming a major competitive issue for TV services in the UK. It will be interesting to see how much of a problem the regulatory issues become.

Zeugma Introduces Service Delivery Router

Zeugma, a Vancouver based start up, has introduced a service delivery router that combines deep packet inspection with the ability to support applications in a single box. Its objective is to support the deployment of value added services over broadband networks including managed Telco IPTV services and unmanaged over the top Internet TV and video.

Zeugma's market research indicates that more than 75 percent of the people surveyed are interested in buying or renting movies over the Internet. This research also indicates that people are not willing to pay much to begin watching the movie in a few minutes rather than waiting to download the entire movie first. While more than 55 percent would pay an extra $.25, only 40 percent would pay an extra $1.00 for a more immediate experience. On the other hand, more than 60 percent would be willing to watch a 30 second ad for the more immediate service. Zeugma stated that this shows that improved QoS can increase revenues.

The company states that its product's application awareness facilitates the classification of traffic. Its bandwidth manager can allocate or deny resources. It manages QoS and bandwidth on a per subscriber and per flow basis.

Zeugma's system is under evaluation at several major carriers including at BT.

Service management is clearly an important issue for broadband service providers. I don't think that best efforts will be adequate as the number and importance of these services increase.

However, the difficulties of managing video, especially Telco IPTV video should not be underestimated. We published a report Networking Strategies for TelcoTV Services that examines these issues in detail. You can request a free white paper on this subject.

Our conclusion was that as video on demand, replay TV, and other unicast forms of content from managed IPTV services will overwhelm broadband networks with video traffic. We half jokingly state that QoS will not work in this environment because there will not be enough low priority packets to discard.

While the effectiveness of the Zeugma and other similar system may be questionable for video traffic, especially for managed services, I think that they will be key for other services, especially for VoIP. I expect that they will be important on 4G mobile networks where all services, including voice, will be delivered over packet networks.

BT at 250K IPTV Subscribers

BT announced that it had 214 thousand IPTV subscribers at the end of 1Q08, which is an increase of 94 thousand during the quarter. It had 250 thousand IPTV subscribers as of its announcement on May 15, 2008.

BT stated that it added more TV subscribers during 1Q08. It said that Sky satellite added 56 thousand subscribers and Virgin cable added 37 thousand subscribers during 1Q08.

BT stated that 68 percent of its BT Vision subscribers take a premium package when they subscribe to the service. It offers 4,660 hours of on demand content and had an average of 29 views per month per subscriber.

BT had an excellent quarter with its BT Vision IPTV service. It appears that its strategy of supplementing Freeview digital terrestrial broadcast TV with on demand services seems to be working for it. The one question is what kind of ARPU is it generating.

Pace Wins BT Order

Pace has won a significant order for set-top boxes from BT for its BT Vision service. Pace recently acquired the IPTV set-top box business from Philips, which has supplied set-top boxes for BT Vision since it started in December 2006. BT also signed a contract for IPTV set-top boxes with Motorola in January 2008.

This is an important piece of business for Pace and a major reason why it acquired the Philips IPTV set-top box business. It is quite natural that BT would bring Motorola in as a second vendor for a service as large as BT Vision is likely to become.

Microsoft Mediaroom Application Environment

Light Reading published an article describing a new version of the Microsoft IPTV software called Milwaukee. Microsoft calls Milwaukee the Multimedia Applications Environment (MAE). the MAE facilitates the development of new IPTV applications and the ability to pull in existing data feeds, including real-time updates, from websites to run concurrently on-screen with video streams; and the ability to build recommendation and personalization tools.

Microsoft gave demonstration of the streamed TV/Website data at the IPTV World Forum, using feeds and relevant background data from Nascar's Website, alongside and/or overlaid with video footage of a NASCAR race.

BT has expressed strong interest in using the capabilities of the NAE. The NAE is planned for a beta release in May 2008 and general release in August.

This is the kind of capability that Microsoft will need to takes its service provider customers to the next level of IPTV capability. It is certainly the kind of thing that they were banking on when they selected Mediaroom.

BT Reaches 150K IPTV Subscribers

BT ended 2007 with 120 thousand IPTV subscribers and currently has 150 thousand. This is an increase from 60 thousand IPTV subscribers at the end of 3Q07.

BT is continuing to make strong progress with its BT Vision IPTV service. This service is provided to any BT broadband subscriber with at least a 2 Mbps DSL connection. It includes access to the Freeview digital terrestrial services for broadcast channels. It appears that 2008 will be an excellent year for this service.

BT Upgrading Access Network

BT is now installing ADSL-2+ in its access network and plans to offer a 24 Mbps service in 1H08. BT is also deploying Huawei GPON systems to support a greenfield FTTH service in a new development in the Southeast of England. This development is planned to grow to 10 thousand homes over the next 25 years.

BT will offer wholesale access to this FTTH network with a service at 10 Mbps downstream and 2 Mbps upstream. 30 Mbps downstream and 100 Mbps downstream services will also be available.

BT is not planning a fiber overbuild at this time because it does not believe that this investment will produce adequate returns.

BT has been slow to upgrade its access network. The rest of Europe started moving to ADSL-2+ two years ago. The introduction of HDTV by satellite and digital terrestrial will put pressure for more bandwidth on the BT Vision IPTV service. ADSL-2+ will be an answer for those users close enough to get at least 15 Mbps, but fiber will be required in the long run.

BT to support the Xbox 360 as a Set-top Box

BT is the first service provider to support Microsoft's Xbox 360 game console as a set-top box for its BT Vision IPTV service. The BT Vision subscriber will be able to buy the Xbox from BT.

In addition, Xbox users will also be able to download content through the Xbox Live Marketplace, which Microsoft began rolling out beyond the US last month, debuting in the UK via a deal with Warner Bros for movies.

I saw the Xbox 360 demonstrated with Microsoft's Mediaroom software at TelecomNext in June. It looked to me like a nice solution for the gamer with an Xbox who lives alone, but may be too complex for a family.

I asked about how easy it will be for other family members such as spouses or small children that want to watch TV but do not use the Xbox for gaming. My impression was that the gamer in the family could leave the system in a state (in the middle of a game, say) so that others in the home may not be easily to changed to watch a simple TV program.

I think that this is an irritation more than a fundamental flaw. I assume that the spouse will train the gamer on how to leave the Xbox after the first time that this happens.

BT to use Motorola Set-top Boxes

BT has stated that Motorola will be the lead set-top box vendor for its BT Vision IPTV service. BT stated that Motorola's experience working with the Microsoft Mediaroom software that supports BT Vision. (Motorola was the lead set-top box vendor in 2007 at both AT&T and Deutsche Telekom, both of which also use Mediaroom.)

This is another significant set-top box win for Motorola, which further cements the number one position that we stated that it enjoys in our Opportunities in TelcoTV report that we published a few months ago.

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.

BT Triples IPTV Subscribers in 3Q07

BT added 40 thousand subscribers to its BT Vision IPTV service giving it a total of 60 thousand subscribers. It stated that its football and other sports offerings made a strong contribution to this contribution. It has recently launched a self install option for BT Vision.

BT had a good quarter. I expect that its success will continue because its support for Freeview digital terrestrial TV for broadcast service makes it an easy option to choose for the half of the UK market that does not have cable or satellite service.

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.

BBC to Launch HD

The BBC in the UK plans to launch HD on as many platforms as possible in 2008. It is currently offering HD over satellite and is getting a strong positive reception. It believes that 80 percent of the homes in the UK will have HD sets by the end of the decade.

This move to HD will put significant pressure on the new BT Vision service. BT's broadband network does not provide enough speed to support HD today. The availability of HD on satellite and cable is likely to increase the acceptance of these services.