Belgacom Set for IPTV Overhaul
The telco TV sector's major systems vendors are queuing up to replace the incumbent IPTV service delivery platform in use at national operator Belgacom SA (Euronext: BELG), one of Europe's most successful TV-over-broadband service providers.
And according to industry sources, Microsoft Corp. (Nasdaq: MSFT), which already has a number of national operators using its MediaRoom platform in Europe, is best placed to pick up the new business.
Belgacom launched its service in 2005 with Siemens Communications -- now one half of Nokia Networks -- as its technology partner. Siemens had committed itself to the IPTV sector by building a set of partnerships and then acquiring middleware player Myrio. (See Nokia Siemens Opens on a Downer, Belgacom Launches Siemens IPTV, and Siemens Snaps Up Myrio.)
Despite strong competition from Belgium's ubiquitous cable TV operators, Belgacom built its IPTV customer base to about 140,000 by the end of 2006, rising to 305,000 by the end of 2007. In 2008 it added a further 201,000 customers, including 63,000 in the fourth quarter, to end the year with 506,000 Belgacom TV customers, giving it a 30 percent share of Belgium's digital TV market.
That's a strong performance, considering Belgium has a total population of around 10.4 million, and about 4.2 million households. And it makes Belgacom one of the biggest IPTV players in the world's leading IPTV region. (See Europe Dominates IPTV Landscape.)
Now the carrier, which has built its IPTV success around exclusive, live soccer content, wants to add further customers -- about 87 percent of Belgium's households could receive the service -- and add extra services on top of its existing on-demand and high-definition TV (HDTV) offerings, to help raise its monthly average revenue per user (ARPU) even further. In 2008 its monthly ARPU (for TV services alone) grew by 7 percent to €17.2 (US$23.22), driven by the uptake of on-demand services. (See Belgacom Uses Ikanos and Belgacom Touts HD IPTV.)
According to a number of reliable industry sources who spoke with Light Reading at last week's IPTV World Forum event in London, and who requested anonymity, Belgacom's existing Myrio platform isn't capable of enabling the applications and capabilities the carrier wants to develop.
And with Nokia Siemens focusing its R&D efforts on other parts of its business, Belgacom, say our sources, has been checking out alternatives, though the carrier, in response to questions from Light Reading, says it has "no such plans at all." (See IPTV Roundup: What's With NSN? )
Our sources say all the leading middleware players -- Microsoft, Alcatel-Lucent (NYSE: ALU), and Thomson S.A. (NYSE: TMS; Euronext Paris: 18453) -- as well as the new kid on the IPTV middleware block, Ericsson AB (Nasdaq: ERIC), have all been keen on the opportunity. All declined to comment.
A combination of Alcatel-Lucent and Microsoft, which are still IPTV partners despite reported friction in the relationship, is regarded as the favorite to land the deal, though. That's because Belgacom is already heavily reliant on AlcaLu for its IP/MPLS network transformation process, access network, and various service platforms, and is already working closely with the vendor on integration issues. (See AlcaLu Supports Mediaroom, Belgacom Offers AlcaLu's BiCS, Belgacom Selects AlcaLu, Belgacom Picks AlcaLu VDSL2, and Belgacom Uses Alcatel.)
AlcaLu has its own IPTV middleware product, called MiView TV, but the Microsoft MediaRoom platform is believed to be preferred.
And integration, as much as telco TV functionality, is key to any IPTV platform switch Belgacom might make. All of Light Reading's sources noted that the Belgian carrier's greatest challenge will be to transfer its existing service and customers from one platform to another.
While Belgacom's catalyst for change is the need for greater functionality and scale, its neighbor, Dutch incumbent KPN Telecom NV (NYSE: KPN), has been struggling to get its IPTV business off the ground.
It also chose the Siemens/Myrio platform in 2005, but while experiencing some success with the launch of a direct-to-home satellite TV service, has struggled to sign up IPTV customers. Last week at the London event, KPN said it ended 2008 with about 800,000 customers, but wouldn't say how many of those were for its "interactive TV" service.
One source suggests KPN might even team up with Belgacom to build a joint IPTV platform that would serve both carriers. Now that would be the mother of all IPTV integration jobs.
— Ray Le Maistre, International News Editor, Light Reading