Deployments are growing, specialist vendors are making headway, and the incumbents have services in the pipeline

April 4, 2005

5 Min Read
Europe Tunes In to IPTV

While this week's NCTA 2005 show in San Francisco is already attracting a lot of attention and generating a lot of news, across the Atlantic the telco video market is hotting up. (See Arris Struts at NCTA, Tut Wins Kansas IPTV Deal, Cox Plans to Launch Interactive TV, RGB Teams Up With Motorola, Arroyo Intros 'Always ON' VOD, and BigBand Enhances Cable Gear.)

More and more European service providers are latching on to TV and video services as a way to attract broadband customers and fend off competitors, and they are now moving quickly to deploy the required equipment and roll out services.

The region already boasts a number of triple-play and IPTV deployments, but they are mostly isolated and specialist rollouts. (See Competition Trumps Demand in Euro IPTV, Neuf: Time Is Right for IPTV, Iliad Ramps Up Broadband to the Homer, and Italians & Triple Play: It's Amore.)

Now things are picking up. The latest example is a new triple-play pilot undertaken by national operator Telekom Austria AG (NYSE: TKA; Vienna: TKA). (See Telekom Austria Does Triple Play.)

The incumbent plans to launch a commercial triple-play package, including network-based personal video recorder (PVR), video on demand (VOD), and interactive services, in the third quarter of 2005 in competition with the country's cable operators, particularly pan-European player UnitedGlobalCom Inc. (UGC) (Nasdaq: UCOMA).

"Telekom Austria faces strong competition from one of UGC's most aggressive country operations," notes Heavy Reading senior analyst Graham Finnie in his recent report on the European broadband market, Next-Generation Broadband in Europe: The Need for Speed. "Forty-two percent of UGC's customers in Austria take the triple-play package -– one of the most successful triple-play offers in Europe." (See HR Tracks Europe's Need for Speed and Broadband in Europe.)

And there's no guarantee that the carrier (or any of the other major carriers lining up video and TV service launches) will benefit financially from its new entertainment offerings, notes the analyst. (See TeliaSonera Offers TV Over DSL, BT Lines Up VOD Launch, Microsoft IPTV: Now That's Italian!, and Swisscom to Trial IP TV Service.)

"No European mainstream telco has yet demonstrated that telco-delivered video service over DSL is going to change the face of TV distribution –- as it must if it is to be sustainable and deliver the ARPU uplift that telcos hope for," states Finnie.

Telekom Austria's move is also notable in that the carrier is using Alcatel's (NYSE: ALA; Paris: CGEP:PA) Open Media Suite middleware solution for the management and delivery of its video and TV services. Some industry commentators believe that middleware system will register few deployments with large operators now that the French vendor has an IPTV partnership with Microsoft Corp. (Nasdaq: MSFT). (See Alcatel, Microsoft Confirm IPTV Deal.)

And it's not only the large, incumbent vendors that are benefiting from the ongoing uptick in demand for telco TV systems in Europe. IP video equipment firm SkyStream Networks Inc. recently announced it has won deals with seven European service providers in the past six months, with deployments in Austria, Finland, Germany, Italy, Portugal, Russia, and Slovenia (see SkyStream Wins Euro IPTV Deals ).

Scott Dougall, general manager of SkyStream's software platforms business, says the European market really took off after last September's International Broadcasting Convention (IBC) event in Amsterdam, and since then there's been an increasing number of RFPs and technical evaluations (see Vendors Stage IP TV Demo at IBC).

He says two of the new deployments are cable operators that are expanding outside their physical network coverage areas by offering services over wholesale or unbundled DSL connections. "We see that as a major growth trend."

But there have been few major RFPs from Europe's biggest incumbents so far, Dougall notes, though he believes they all regard video as "another service their subscribers will pick up once they start offering it. But they'll hit a brick wall when they find themselves competing head to head with the cable operators and satellite players." (Telekom Austria take note!)

The major carriers will need "content as good, technology as good, and a financial offer that's better if they're to tempt subscribers away from their current providers," reckons Dougall. "Telcos have a long way to go before they can position themselves competitively against the cable and satellite operators."

And when Europe's major operators do commit to widescale video system deployments, Dougall is hoping that SkyStream's partnerships will help it hold off competitors such as Harmonic Inc. (Nasdaq: HLIT), Optibase Ltd. (Nasdaq: OBAS), and Tandberg Television, in providing equipment for the operators' headend and distributed video server offices.

He is particularly hopeful of the relationship with Alcatel, which has already resulted in the contract award in Portugal (see Skystream, Alcatel Team for IPTV). SkyStream also has reseller deals in Italy, Spain, the Netherlands, Germany, and the Balkans to help the handful of U.K.-based staff win more continental business.

Other recent IPTV and video service news of note:

  • Amdocs Ltd. (NYSE: DOX) has been working with IPTV system vendors to provide an integrated rating, billing and customer care package that allows operators to offer such services as real-time onscreen billing (see Amdocs Joins IPTV Crowd). In addition to the vendors named in its press release, Amdocs has confirmed that it is also working with Alcatel, a relationship it expects "to expand in the future."

  • The number of IPTV subscribers worldwide is forecasted to grow from 1.9 million in 2004 to 25.3 million in 2008, according to analysts at Multimedia Research Group (MRG) Inc. They predict this will lead to growth in IPTV-generated revenues from $635 million in 2004 to $7.2 billion in 2008 (see MRG Predicts IPTV Growth).

    • Optibase Wins IPTV Deal in Vietnam

    • Scientific-Atlanta Wins $195M SBC Deal

    • Moscow CableCom Reports 2004

    • SeaChange Unveils New Video Gear

    • Tut Lands French Deal

    • BigBand Offers Net Video Decoding

    • BitBand Lands Indian IPTV Deal

    • Orca Finds IPTV Partner in China

    • Coaxsys Touts 20th IPTV Deployment

    • Optibase Enables IPTV in China

    • BigBand Wins Cablecom Deal

    • BT Expands Its Mediahive

    • Labs2 Chooses Net Insight for IPTV

    — Ray Le Maistre, International News Editor, Light Reading

    For more on this topic, check out the Heavy Reading report: Next-Generation Broadband in Europe: The Need for Speed.

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