Smaller Telcos Can Differentiate Their IPTV Offers
Some of the immediate challenges for smaller carriers, such as the availability of content and a choice of middleware platforms, have been addressed. Among the experts addressing the TelcoTV crowd were Anna White, director of IPTV sales for the National Telco Television Consortium, and Peter Bryant, senior VP of business development for IPTV at Avail Media Inc. , who each provide one piece of the content puzzle and target Tier 2 and Tier 3 markets. Bruce Churchill, channel manager for Microsoft Corp. (Nasdaq: MSFT) Mediaroom, was also on hand to tout his firm’s new lower cost, less service-intensive approach to IPTV middleware that makes the global market leader now a possibility for smaller telcos.
More importantly, smaller telcos don’t really have a choice about offering video solutions, said Chandler Kim, director of solutions marketing for Alcatel-Lucent (NYSE: ALU), because broadband competition is much more pervasive than many people think. "Having broadband Internet access and voice is not enough to retain installed base and attract new customers," Kim said. "Tier 2 and Tier 3 companies are seeing much more intense competition from service providers and satellite companies alike."
Even telcos in underserved areas who want to use broadband stimulus funding must prove their network construction projects have a viable business plan, and usually that will need to include video, said Rich Wonders, VP of strategic marketing for Alcatel-Lucent. Since the first round of broadband stimulus grants have been delayed, it now looks as if there will be two rounds of funding, not three as originally thought, Wonders added. (See Recovery Act: Round One Brings 'Nearly $28B' in Bids.)
"As we look at round two we are encouraging all of our clients to begin planning now," Wonders said. Part of that planning includes a next-generation video plan, and another part is getting local and state political support.
Many of the ideas presented for differentiation were based on future capabilities, such as a "digital butler" -- suggested by Microsoft’s Churchill -- that would scan the Internet for content of interest and present it to the subscriber’s TV set, or the ability for the network to recognize the type of device engaged and the subscriber’s rights to content and then deliver that content in the appropriate format.
But whole home DVR, which cable and satellite can't yet match, is available today, Churchill said, and the ability to offer content customized to user interests is, as well.
Ric Brovedani, senior director of multimedia integration services for Alcatel Lucent, admitted that personalized or targeted advertising, long put forth as an advantage and potential revenue source for IPTV providers, is still a ways off.
"It is very much of an interest in the ad community and the content community," Brovedani said. The technical capability exists to identify users' interests, either by noting browsing habits or offering an opt-in self description process, he said, but service providers still don’t have the internal systems to take information from their customer databases and "marry that with relevant information that the advertiser is going to care about." In addition, there is a need for ways to discuss privacy concerns and the business model on the advertiser side.
"There is investment and movement, but is it rocketing along? No," Brovelani said. "In the next one to two years, you will see more functionality, and the rate cards will come together."
IPTV still lacks the critical mass to attract major advertisers, Microsoft’s Churchill admitted.
Smaller telcos can still do local ad insertion and target local companies and sponsors, Brovelani said. "There is a lot of opportunity that is being overlooked. Yellow Pages was driven by local adds; you need to see how you can exploit or leverage your community ties."
Similarly local content matters -- even things such as local court proceedings, or local high school football games can differentiate a telco’s service from that of a larger cable competitor.
"If you make it easy for local teenagers to upload video, they will create the content for you, for free," said Manny Trujillo, director of product management for Motorola Inc. (NYSE: MOT).
Avail’s Bryant warned any telco that creates that kind of local content to also lock up the local rights -- or they are likely to find incumbent cable companies will simply duplicate their offerings.
"Be smart about how you do it -- get a lawyer and lock it up," Bryant said.
— Carol Wilson, Chief Editor, Events, Light Reading