Top Ten: IPTV Carriers

IPTV is one of the hottest topics, and most contentious new services, to emerge in years.

And rightly so: It provides carriers with a new revenue stream and an opportunity to build services around broadband connections that should make it harder for customers to leave. (See Monetizing IPTV: The Next-Gen Video Advertising Opportunity, BT Trials Ad-Funded Video Service, and Report: IPTV a Potential Goldmine.)

IPTV is the long-term solution carrier executives need as their voice revenues (and expense accounts) dry up.

In addition, the emergence of IPTV has also given the vendor community something of a lift. Adding video delivery capabilities to telco infrastructure isn't cheap, and once there's video traffic on the network, then capacity upgrades quickly follow. According to Infonetics Research Inc. , global IPTV equipment sales totaled $682.5 million in the third quarter of 2007, up 23 percent sequentially. In the first nine months of 2007, the research house believes, IPTV equipment sales reached nearly $1.67 billion.

However, it is not yet proven that carriers have the technical and marketing know-how to capitalize on IPTV's potential. There’s little evidence yet that delivering TV services over a broadband connection will directly help boost operators' profit margins. That's where the contention comes in.

Given IPTV’s potential to either be the savior of, or a stake in the heart of, today’s carriers, we’ve looked around the world and identified the operators that have the most IPTV subscribers, and then ranked them in order.

Here are the Top Ten IPTV carriers, as we see them:

10. FastWeb
9. TeliaSonera
8. Belgacom
7. China Telecom
6. Chunghwa Telecom
5. Telefónica
4. Neuf Cegetel
3. PCCW
2. France Telecom
1. Iliad (Free)

This table lists the carriers as well, with subscriber data:

Table 1: Global IPTV Top 10 Carriers (by subscribers)

Ranking	Carrier	Country	Number of IPTV subscribers*	IPTV middleware platform by vendor
1	Iliad (Free)	France	2,170,000	Homegrown
2	France Telecom	France	975,000	Thomson SmartVision
3	PCCW	Hong Kong	818,000	Homegrown (Cascade, owned by PCCW)
4	Neuf Cegetel	France	600,000	Homegrown
5	Telefonica	Spain	469,067	Homegrown (Imagenio, now managed by Alcatel-Lucent)
6	Chunghwa Telecom	Taiwan	358,000	Orca, Alcatel-Lucent
7	China Telecom	China	310,000	UTStarcom
8	Belgacom	Belgium	249,434	Nokia Siemens (Myrio)
9	TeliaSonera	Sweden	216,000	Homegrown
10	Fastweb	Italy	170,000	Homegrown
* Most recent available data from carrier

Our criteria
We defined an IPTV carrier as one selling a standalone IPTV service or a triple-play package that includes IPTV.

We defined IPTV as a service that includes linear TV streams delivered via Internet Protocol (IP) over a DSL or fiber that is also designed to deliver other services, such as Internet access or VOIP. So we're not including TV content that has to be accessed from an online portal and watched on a PC.

As a result of our being so specific, services not included in this survey are Verizon Communications Inc. (NYSE: VZ)'s FiOS TV service, which is delivered using a dedicated overlay network, and BT Group plc (NYSE: BT; London: BTA)'s BT Vision, which doesn't include linear TV channels as part of the DSL-delivered service.

We also only counted the IPTV subscribers in each carrier's domestic market, as a number of our Top Ten operators have telco TV services in a number of countries.

In addition, we have only included service providers that have provided us directly with IPTV subscriber data. So while we believe that China Netcom Corp. Ltd. (NYSE: CN; Hong Kong: 0906) and Japan's Softbank BB Corp. likely merit a place in our Top 10, we won't be adding them until we have sourced data directly from those operators, which haven't yet responded to our requests.

That set of criteria is important, as it gives our Top Ten a clear leader – and it's a service provider that's often not mentioned when the world's leading IPTV players are discussed.

We expect to be challenged about the ranking, our criteria, and the way we have applied it. Please use the message board at the foot of this page to make your views public. While you’re sharpening your arguments, following are some observations we picked out of the list, as it was compiled.

Homegrown middleware rules
Six of our entries are using homegrown IPTV middleware platforms to manage and deliver their services. Those six include Hong Kong's PCCW Ltd. (NYSE: PCW; Hong Kong: 0008), which developed its own system and then spun it out as an offshoot called Cascade Ltd. , and Telefónica SA (NYSE: TEF), which developed its Imagenio middleware in-house before handing it over to Lucent. (See Lucent, Telefonica Team on IPTV.)

Imagenio is now part of the extensive Alcatel-Lucent (NYSE: ALU) IPTV portfolio. (See Alcatel-Lucent Updates on IPTV and AlcaLu Buys IPTV Apps Specialist.)

AlcaLu is, of course, the lead telco TV partner for Microsoft Corp. (Nasdaq: MSFT), which is intent on dominating the IPTV delivery system landscape with its Mediaroom platform (formerly Microsoft TV IPTV Edition). (See Microsoft Adds VOD, IPTV Extras, DT Plans M&A, IPTV Push, Alcatel-Lucent Unveils IPTV Strategy, SingTel Picks Alcatel-Lucent, Alcatel Lands TDC IPTV Deal, Alcatel & Microsoft Going Steady, SBC Awards Microsoft $400M IPTV Deal , and Microsoft Wins at BT.)

Yet despite many high-profile carrier engagements, and much bragging about how popular its IPTV technology is, Microsoft doesn't have a single entry in our Top Ten yet. (See Microsoft Adds VOD, IPTV Extras.)

In terms of commercial, third-party IPTV platforms, pride of place currently goes to French vendor Thomson (NYSE: TMS; Euronext Paris: 18453) – its SmartVision platform underpins France Telecom SA (NYSE: FTE)'s service, and is slowly finding its way into other deployments. (See Thomson Boasts IPTV Success, Thomson Wins IPTV Deal, SiOL Does IPTV With Thomson, and Thomson Buys IPTV Player.)

IPTV penetration
We also looked at the IPTV penetration rate of each of our Top Ten entries – that is, the percentage of the carrier's retail broadband subscriber base that is paying for IPTV service. Check out that different view on the IPTV Top Ten below.

Table 2: IPTV Penetration Rates of IPTV Top 10 Carriers

Ranking by IPTV Subscribers	Carrier	Country	Number of IPTV subscribers*	Broadband subscriber base	% of broadband base paying for IPTV service	Ranking by IPTV penetration level
1	Iliad (Free)	France	2,170,000	2.77 million	78.4	1
2	France Telecom	France	975,000	6.9 million	14.1	6
3	PCCW	Hong Kong	818,000	1.18 million	69.3	2
4	Neuf Cegetel	France	600,000	3.12 million	19.2	5
5	Telefonica	Spain	469,067	4.34 million	10.8	8
6	Chunghwa Telecom	Taiwan	358,000	4.07 million	8.8	9
7	China Telecom	China	310,000	35.1 million	0.9	10
8	Belgacom	Belgium	249,434	1.20 million	20.8	4
9	TeliaSonera	Sweden	216,000	1.03 million	21.5	3
10	Fastweb	Italy	170,000	1.25 million	13.6	7
* most recent available data

Iliad (Euronext: ILD)'s abnormally high score can't be beaten at present, but behind the alternative French carrier comes PCCW with a very creditable 70 percent, making it the only other operator other than Iliad to have the majority of its broadband subscribers paying for IPTV services.

— Ray Le Maistre, International News Editor, and Raymond McConville, Reporter, Light Reading

Next Page: FastWeb