Video services

FastWeb Offers IPTV Lessons

LONDON –- Italian triple-play pioneer Fastweb SpA (Milan: FWB) gave a host of IPTV hopefuls the benefit of its experience at an industry conference here in London on Tuesday, handing out tips and observations borne of four years of triple-play experience.

Addressing delegates at the IPTV World Forum, the carrier's chief marketing officer, Paolo Agostinelli, told fellow European operators such as BT Group plc (NYSE: BT; London: BTA), KPN Telecom NV (NYSE: KPN), and Belgacom SA (Euronext: BELG), all of which are at the early stages of their video service strategies, how it built a triple-play empire. (See BT Closes 21CN Deals, Touts IPTV, KPN Updates on IPTV, and Belgacom Adds to Its IPTV.)

The carrier targeted its rollout in cities with high population densities that are home to 10 million of Italy's 21 million homes, building out a high-speed access infrastructure based on FTTH and DSL. Currently, it has just more than 700,000 broadband customers, an 11 percent share of the Italian market's near 7 million users, compared with Telecom Italia's 70 percent share. (See FastWeb: We're Going It Alone.)

Over these connections, FastWeb markets an entry-level subscription service comprising 300 minutes of voice (VOIP) and broadband access for €19 per month. Every customer has to have at least that service, and can then build upon it, adding bigger voice bundles and broadband packages.

To the voice and Internet access, customers can then add a basic TV package for €8 euros per month, including a set-top box, free TV channels and access to pay TV and video on demand (VOD) services that cost extra.

So, a customer can sign up for an entry level triple-play package for €27, which equates to an annual spend of €324.

Yet FastWeb's annual average revenue per user (ARPU) is nearly three times that amount, at €887. So what's driving the additional revenue? Mostly voice and broadband service upgrades, says the FastWeb man. The carrier's statistics show that a TV-over-broadband service is not an attraction in itself, but a potential value added service to customers that want high speed broadband and bumper voice minute packages.

Of the carrier's 650,000 customers, 28 percent subscribe to any TV services. And of the €887 average annual customer outlay, €817 of that, 92 percent, comes from voice and broadband revenue and the basic TV package: just €70, or 8 percent, comes from the pay TV channels, such as Sky Sports and Sky Movies, and the VOD services.

No wonder, then, that Agostinelli says service providers need more than just a good triple-play package story. "Being a good triple-play service provider means being the best at each individual service. You need that, because not every subscriber wants all the services," says Agostinelli.

Agostinelli has some other pointers for the triple-play hopefuls. He says service flexibility -- the ability for customers to order TV channels and packages for just one month if they want, and not demand that they sign up for a minimum period of six months or a year –- is essential.

He also says carriers shouldn't get too excited about the potential of locally produced content and programming made by the service provider's customers, something that KPN and BT are keen to offer. "Local content that doesn't have mainstream appeal hasn't been very successful for us," says the Fastweb man.

What the punters do want, though, is children's programming, old TV shows, and music videos targeted at a teenage audience. Agostinelli says that the introduction in the autumn of 2005 of music videos and old TV shows to its VOD lineup boosted VOD sessions by 75 percent, from about 800,000 a month in August to 1.4 million in October.

— Ray Le Maistre, International News Editor, Light Reading

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