Euro Telcos Flirt With TV

PARIS -- TV over DSL Conference -- Europe's broadband players have a new interest for 2004: TV. The success of Italian service provider FastWeb SpA in rolling out the service to hundreds of thousands of people has whetted the appetites of the DSL service providers looking for a way to capitalize on the still growing uptake of high-speed Internet access (see TV Over DSL Over Italy , FastWeb Piles On the Users, and Europe Doubles Down on DSL).

Among those looking for guidance at the TVoDSL conference this week were: BT Group plc (NYSE: BTY; London: BTA), France Telecom SA (NYSE: FTE), Telecom Italia SpA (NYSE: TI), Telefònica SA, and representatives from at least six other incumbent operators. Of the big hitters, only Deutsche Telekom AG (NYSE: DT) appeared to be absent.

The main problem for all these service providers is to find the right strategy. Presenters and attendees at the conference, while all excited about the potential of multicasting television signals across DSL connections, agreed on just a few things.

• First: There is no single strategy that service providers can adopt when planning this service. Each country has a different set of circumstances regarding existing TV services, regulation, available infrastructure, and cultural habits.
  
  
• Second: Providing TV over DSL connections as a standalone service is a non-starter. It needs to be a service that is part of a constantly growing bundle of services that makes use of the interactive potential that DSL, with its upstream bandwidth, provides. The consensus of opinion is that a triple-play offer of TV (and video on demand), high-speed data, and voice is the minimum offer that will entice customers to part with more money.
  
  
• Third: The DSL service providers, especially the incumbent national operators, need to develop services to run over the plain vanilla DSL connections they are currently activating. These services, it is hoped, will help counter the decline in fixed-line revenues that is currently resulting in job losses (see Continental Carriers Continue to Cull).
  
  
• Fourth: The market is immature, and the business case for TV over DSL is not proven. This carrier viewpoint isn't shared by equipment vendors, who say technology is now stable and everything is ready for carriers to reap revenues.

Of Europe's major players, France Telecom has been the most vocal about its plans and has already begun a pilot service in the city of Lyon, though it is keeping current progress under wraps (see France Telecom Intros TV Over DSL). Next stop is Paris, where the carrier plans to launch its service in March.

Other European operators now trialing the service include Belgacom, KPN Telecom NV (NYSE: KPN), Telekom Austria AG (NYSE: TKA; Vienna: TKA), and Telenor ASA (Nasdaq: TELN).

France Telecom says the main challenges have been in maintaining the high quality of service needed to deliver TV pictures as good as over-the-air and cable broadcast, and in dealing with compatibility issues between the broadcast delivery system and the set-top boxes that receive the signal in the home. "This isn't a mature area," a spokesman concedes.

That immaturity is confirmed by Carsten Rossenhövel, a managing director at the European Advanced Networking Test Center AG (EANTC). He is preparing a white paper based on the results of TV-over-DSL tests undertaken late last year for the European Telecommunications Standards Institute (ETSI). While unable to supply much in the way of details before the paper is completed, Rossenhövel says that, in addition to compatibility problems, the tests revealed response times for TV channel changes that were deemed too slow for a commercial service.

— Ray Le Maistre, International Editor, Boardwatch