Telecom Italia Added 36K IPTV Subscribers in 1Q09

Telecom Italia added 36,000 IPTV subscribers in 1Q09 giving it a total of 365,000 at the end of the quarter.

The pace of its IPTV subscriber additions slowed significantly from the rate that it achieved in 4Q08.

Telecom Itallia Adds 111K IPTV Subscribers in 4Q08

Telecom Italia added 111,000 IPTV subscribers in 4Q08, giving a total of 329,000 at the end of 2008. It was able to achieve its objective of 300,000 IPTV subscribers at the end of 2008. Its IPTV service has now achieved a penetration of 4.9 percent of its broadband customers.

Telecom had a great fourth quarter. Let's see if it can keep up the pace.

Telecom Italia Projects 1.5M IPTV Subscribers in 2011

In its update to its strategic plan for 2009-2011 Telecom Italia stated that its goal is to increase its IPTV subscribers to 1.5 million by the end of 2011. The company had 218,000 IPTV subscribers at the end of 3Q08 and plans to have 300,000 IPTV subscribers at the end of 2008.

The goal of 1.5 million IPTV subscribers by the end of 2011 is attainable with an aggressive offering. However, the company is struggling to meet its 2008 target and has not yet shown that it has found how to generate significant growth in its IPTV 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.

Telecom Italia adds 44K IPTV Subscribers in 2Q08

Telecom Italia had 180 thousand IPTV subscribers at the end of 2Q08, and increase of 44 thousand in the quarter and in increase of 100 thousand in 1H08. It is maintaining its target of 300 thousand IPTV subscribers by the end of 2008.

The company added 337 thousand broadband subscribers in 1H08 giving a total of 1.653 million at the end of the half. It did not announce any IPTV numbers for its Hansenet subsidiary in Germany.

Telecom Italia is continuing to add IPTV subscribers. Its rate of increase is low considering the number of its broadband subscribers and the lack of cable in Italy. I believe that it is still number two in IPTV in Italy to FastWeb.

Its goal of 300 thousand IPTV subscribers in 2008 appears possible but will require it to accelerate its sales rate.

Free to Acqure Alice France

Variety has reported that Free in France will acquire Telecom Italia's Alice broadband provider. It has arranged a loan for $1.6 billion for this deal. Alice new has 850 thousand broadband subscribers. This will be a merger of the number three and four broadband providers in France and will put the combination into the number two position. France Telecom is number one and Neuf Cegetel will be pushed from number two to number three.

This is a good move for Free in response to the series of mergers that Neuf put together over the last few years that added Cegetel and Deutesche Telekom's Club Internet.

FastWeb and Telecom Italia to Cooperate on Fiber

Telecom Italia have signed a memorandum of understanding (MOU) to share fiber infrastructure in Italy and to cooperate as follows:

• Joint planning of the civil infrastructure for fiber networks
• The reciprocal exchange of rights to use civil infrastructure
• Joint study and testing of new techniques in civil infrastructure such as latest generation micro-tubing for laying fiber

As part of this MOU the two companies settled a number legal and regulatory issues between the two companies, including:

• Fastweb's claim against Telecom Italia's alleged unfair practices in the business customer segment
• Disputes relating to Fastweb's fixed line tariffs and to those applied by Telecom Italia on the mobile network
• Telecom Italia's contesting Fastweb's adjudication of the tender to supply telephone services to public governments in Italy
• Reconciliation of a number of account items under dispute between the two companies

This agreement shows a path forward that may be followed in other companies with strong telecom competitors. FTTH is a very expensive proposition and both incumbents and competitors will be well served by cooperating in the deployment of fiber infrastructure.

Free Negotiating for Alice France

Free, the competitive carrier in France, is negotiating to buy Telecom Italia's Alice broadband service in France for about 800 million euros. Free stated that it expects to complete this transaction by the end of 3Q08 subject to consultation with the employee representatives and other necessary approvals.

Free also stated that this transaction would move it back into the position of the leading competitive broadband carrier in France. It lost that position last year when Neuf Cegetel acquired Deutsche Telekom's Club Internet broadband service in France.

Free makes it sound like a done deal. It appears to be a good move by Free as long as the subscriber turnover is low during the transition.

Telecom Italia has 136K IPTV Subscribers

Telecom Italia ended 1Q08 with 136 thousand IPTV subscribers, an increase of 56 thousand in the quarter. It has set a target do have 300 thousand IPTV subscribers by the end of 2008.

Telecom Italia did not announce the number of IPTV subscribes at its Hansenet subsidiary in Germany.

Telecom Italia made modest progress in IPTV. Its goal of 300 thousand subscribers for 2008 is not that large and should be achievable.

Telecom Italia Rejects Microsoft Mediaroom

Apparently Telecom Italia made a decision not to use the Microsoft Mediaroom IPTV software system that it had been testing its its labs for the last several years. The reports are that Telefonica preferred that that Telecom Italia use the MyView middleware software that it developed. Alcatel-Lucent took over the development and marketing of this package in 2006.

Telecom Italia has been using Alcatel-Lucent's OMP system since its IPTV service was introduced.

While this is a significant blow, Microsoft still has a large number of tier 1 service providers using its Mediaroom software. This loss does not threaten the eventual market dominance that we projected for Microsoft in our report Global Opportunities in Wireline Broadband Networks.

It is clear that Telecom Italia will need to move from OMP to another middleware package. Moving to My View will at least keep it within the Alcatel-Lucent orbit.

Telecom Italia Misses 2007 IPTV targets

Telecom Italia ended 2007 with 80 thousand IPTV subscribers, which was well below its target of 200 thousand for the year. It stated that this shortfall was "due to slight delay on IPTV stabilization". It did end 2007 by adding 30 thousand IPTV subscribers in December.

Telecom Italia's current target is to end 2008 with 300 thousand IPTV subscribers.

Telecom Italia got off to a slow start with its IPTV service. It appears to me that it has had difficulty in managing its IPTV network. It currently uses Alcatel-Lucent's OMP IPTV middleware software, which is a well proved package. It is unlikely that this middleware is the source of its problems.

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.

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.

Telecom Italia France Starts FTTH Trial

Telecom Italia France will test fiber broadband in the 8th and 10th districts of Paris in the next few months. The company's Alice France subsidiary will connect slightly under 500 buildings to reach a target of 2,000 to 3,000 customers for the pilot service. The cost of the project will run in the low millions of euros". Alice France had 87,000 ADSL customers at the end of June, including 59,000 who took up IPTV service. Alice aims to gauge consumer interest in service over 50 Mbps.

Telecom Italia put its toe into the FTTH waters. France Telecom, Free, and Neuf Cegetel in France have all committed to FTTH deployments already. This is a necessary step for Telecom Italia to keep up with its competitors.

Telecom Italia Confirms Microsoft Commitment

Telecom Italia did not make an announcement about its number of IPTV subscribers in Italy. It did say that it has 10 thousand IPTV subscribers at its Hansenet subsidiary in Germany and 59 thousand at its Telecom Italia subsidiary in France. It did say that it expects to have 1.5 million IPTV subscribers in Italy in 2012.

it stated that it is developing new content based services with Microsoft including Time-Shift TV Personal Video Recording using a set-top box with a hard disk, and Multi-User services. Its set-top boxes will be capable of supporting HD content.

It appears that the service providers that are pleased with their IPTV subscriber numbers are announcing. My impression is that Telecom Italia is not attracting a large number of subscribers with its service.

Telecom Italia at 31,000 IPTV Subscribers

Telecom Italia said recently that it had 31 thousand IPTV subscribers at the end of 2006 and was offering the service in 250 towns in Italy. According to the report, service offers 24 broadcast channels and 500 movies at any one time. It brings in 200 new pieces of on demand content and offers 2,500 different movies over a year's time. It includes a digital tuner that provides access to digital terrestrial channels along with the IPTV channels.

Telecom Italia has had a slow start for its IPTV service, which was introduced at the end of 2005. It has strong competition from FastWeb, Sky satellite services, digital terrestrial services.

Telefonica buys into Telecom Italia

A consortium led by Telefonica is poised to spend 5.15B euros for a 23.6 percent stake in Telecom Italia. The consortium will buy Olimpia, the holding company that owns 15 percent of Telecom Italia. The members of the consortium already own 5.6 percent of Telecom Italia.

This is a bit outside of what I usually include in the blog, but I wanted to mention that this could affect Microsoft's prospects. Telecom Italia is using Alcatel-Lucent's OMP IPTV middleware but is still evaluating Microsoft's IPTV Edition middleware in its labs.

Alcatel-Lucent also the MiView TV IPTV middleware which was originally developed by Telefonica. I expect that Telefonica will encourage Telecom Italia to adopt this middleware software.

FastWeb Shifting Gears

FastWeb reported its 2006 earnings yesterday. Its presentation reflected its transformation from a consumer oriented company to an enterprise oriented company that has been enabled by the completion of its network expansion. The details of its fourth quarter 2006 results are available at http://company.fastweb.it/index.php?sid=53.

FastWeb added 105 thousand subscribers in the fourth quarter of 2006, giving it a total of 1.062 million. Its ARPU per residential customer was €797 per year, which is about €100 less than 2005. The ARPU from video subscribers was €296 per year in the fourth quarter, which is about €20 less than 2005. The decreases are generally the result of the introduction of lower cost offerings.

FastWeb stated that the number of broadband connections in Italy grew from 6.8 million to 8.4 million in 2006. FastWeb's share grew from 11 to 13 percent and the share of the other competitive providers grew from 5 to 7 percent. Telecom Italia's share shrunk to 67 from 71 percent.

FastWeb will implement its agreement with Sky in Italy in April that will permit FastWeb to offer all of the Sky TV channels over its broadband network. It will also permit Sky to offer FastWeb broadband services. The FastWeb and Sky services will be billed separately. FastWeb will provide an integrated decoder that supports both FastWeb and Sky video content.

In the second half of 2007, Fastweb will offer a new self installed home networking capapbility for both the residential and the SOHO markets. It will use Ruckus Wireless MIMO WiFi technology that has been optimized for video traffic.

FastWeb is also working on a mobile component so that it can expand its triple play strategy to a quadruple play strategy. Its MVNO agreement with Vodafone is on hold while Vodafone waits for rulings on local number portability. FastWeb has declared that it will take an alternative path if the Vodafone deal falls through that could include acquisition or the deployment of its own mobile network.

FastWeb is also seriously considering deploying WiMAX to extend its reach to 90 percent of the market. It has successfully completed trials expects to launch using wholesale services depending on resolution of spectrum issues in 2007. It also plans to deploy WiMAX into areas without broadband coverage today in 2008 and 2009.

While FastWeb is putting strong emphasis on its new enterprise offerings, it remains quite serious about the residential market. It expects 45 percent of its revenue to come from this market in the long term.

Its IPTV strategy is based on offering a profitable as opposed to a market entry service. It is keeping its prices up and formed an alliance with Sky to support this strategy. Its primary competition is a strong free to air digital terrestrial service today.

We expect that FastWeb's strategy will continue to produce strong results. Telecom Italia is clearly a strong competitor that plans to deploy VDSL. As long as FastWeb can get competitive wholesale access to this new VDSL service from Telecom Italia, it should do well.