Thursday, April 26, 2007

The outbreak of IPTV's war

IPTV is the concept of using TCP/IP as a transport for digital television, usually so that it can travel on the same physical infrastructure as already existing IP traffic. The next big thing in television could be a technology borrowed from the Internet. IPTV (the ''IP" stands for Internet protocol) will let users choose from a vast variety of video entertainment, available on demand through a simple piece of wire. Telephone wire, to be exact, because phone companies -- not cable TV firms -- are leading the way.

Cable companies could adopt IPTV technology as well. But for telephone companies the technology offers the first chance to sell TV services. It's also an opportunity for Microsoft Corp., which is providing much of the underlying technology, to become as powerful in entertainment technology as it is in software. IPTV could shake up
the cable industry in the same way that voice-over-Internet phone systems have roiled SBC's own voice telephone business.
Already, about a million people use IPTV systems, mostly in Hong Kong and Italy.

In related television news, it looks like the squeeze play is underway against the satellite industry. The telcos, such as AT&T, have generally partnered with a satellite company in order to offer television service. Now that they're getting into the game themselves, these partnerships are dying. Pressure is also coming from the cable companies, which are getting onboard with Cablevision's plan to move the DVR into the headend.
This kind of pressure from the cable companies, combined with the price war which could ensue between cable operators and the telcos, will certainly make it harder for satellite to compete over the next few years. Whether they can carve out a niche and remain a viable proposition remains to be seen, though it should be noted that satellite is not sitting still waiting for the axe to fall. DirecTV, for instance, has been pondering plans to roll out broadband services of its own, and satellite can still claim to offer a higher-quality picture than cable (in most cases). IPTV, though it could spark a price war with both services, won't be coming to most cities for some time, so satellite should have a few years of breathing room before the squeeze is on in earnest.
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