LONDON -– IPTV World Forum 2010 -- Colombian carrier ETB SA is looking to launch IPTV services in an effort to stay relevant in an increasingly triple-play market.

Despite being the incumbent, ETB is Colombia's fifth-largest operator by revenues, with annual revenues of more than $750 million (2008 figures) from its fixed line voice and broadband services. But it needs to add to its portfolio to keep up with its larger fixed-line competitors: Telefónica Colombia, part of the Telefónica SA (NYSE: TEF) group; and EPM Telecomunicaciones S.A., better known as UNE; and smaller rival Teléfonos de México (Telmex) .

Launching IPTV is a difficult enough proposition for well-established operators with a firm base of relatively prosperous customers. But for an operator such as ETB, adding pay-TV services to its services mix is even tougher.

Liliana Gonzalez, IPTV manager at ETB, the country's fifth-largest operator by revenues, says Latin America in general is not a favorable region for IPTV services, and Colombia in particular is difficult given its low level of disposable income: The country's GDP per capita is just over $5,000, though set to grow markedly in the coming five years, according to figures from the Economist Intelligence Unit included in a recent Pyramid Research report on the Colombian market.

But the hurdles for an incumbent operator shackled by regulatory restrictions are even higher: UNE has already launched IPTV services, and has broken through the 100,000 customer barrier and set itself a target of 150,000 telco TV subscribers by the end of this year, according to local reports.

Speaking in London this week, Gonzalez said regulatory constraints and network costs are the two key obstacles for ETB, which is seeking ways to prevent its business from being eroded by triple-play service providers.

At present, ETB is the only one of the country’s four operators that does not have a TV service. Pay-TV penetration is currently around 26 percent in Colombia, according to the Pyramid Research Country Intelligence report, with cable the dominant medium.

Gonzalez says Telmex has more than 50 percent of the pay-TV market currently, while UNE has around 25 percent and Telefónica about 5 percent.

She said ETB is planning to start offering IPTV services in the next 12 months, "but the reality is that margins are very low." Because of this, ETB's strategy is to launch services in a number of steps. For example, the first step will be merely a defensive and localized strategy to halt the erosion of the company's business. Once that has been established, the company will add further value and develop new sources of income.

"We have to start with customers that are able to pay for the service," said Gonzalez. "We have to keep a close eye on the business model... and we have to be patient."

ETB expects the return on investment to take around seven years. "We are not talking about millions of subscribers, but thousands," she added.

At least ETB is launching into a growth market -- Pyramid expects the IPTV services market in Colombia to grow from about $14 million in 2010 to around $55 million in 2013.

— Anne Morris, freelance editor, special to Light Reading