In much the same way that the growing service capabilities of the MSOs in the U.S. have forced the arm of RBOCs such as SBC Communications Inc. (NYSE: SBC) and Verizon Communications Inc. (NYSE: VZ), so access service competition -- rather than technological advances, revenue goals, or sheer get-up-and-go enthusiasm -- is the main catalyst for the continent's national operators to commit to broadband TV services.
That's one of the few theories that speakers and attendees have agreed upon at this week's TVoverDSL 2005 event in Paris (see Paris Presents Blurred TV Picture). Several presenters have noted that, unless there is a pressing need to invest in new systems and launch a service, Europe's major operators are still very focused on building as large a broadband subscriber base as they can muster.
To wit, TeliaSonera says its new service is available in all of Sweden's main cities as of today, covering the majority of the population, and it will reach 70 percent of Sweden's 9 million inhabitants by the end of this year.
A spokesman says the carrier has been testing the service for a few years, and has had to launch the service now because of the increasing competition in the broadband market.
That competition is coming largely from the national cable company, com hem AB, which was spun off by Telia when it merged with its neighbor, Finland's Sonera (see TeliaSonera Sells Cable TV Biz). But the incumbent also faces pressure from specialist service providers such as Bredbandsbolaget AB (B2), which has grown its broadband base to about 25 percent of the market through an acquisition, and which recently launched its first video service, Broadband Cinema (see Sweden's B2 Acquires Bostream).
Telia's main technology supplier is fellow Swedish firm Ericsson AB (Nasdaq: ERICY), which has provided DSLAMs with multicasting and very high bandwidth per customer capabilities (see TeliaSonera Plans Ethernet Over DSL).
Other than that, the spokesman wouldn't talk about equipment suppliers, but he did note that the software managing the service and the customer interface was developed internally by Telia's Research division. He declined to discuss TeliaSonera's IPTV uptake targets.
The Swedish incumbent isn't the first European player to step up its broadband TV plans because of competitive pressure.
France Telecom SA (NYSE: FTE) has been active in IPTV for more than a year as it seeks to prevent its customer base defecting to rivals like Iliad (Euronext: ILD), owner of triple-play ISP Free; and Neuf Telecom, which recently launched its own TV service (see French Say Oui to DSL TV, Iliad Ramps Up Broadband to the Homer, and Neuf Expands IPTV With Cisco).
Across the border in Spain, Telefònica SA, facing pressure from aggressive ISPs, is investing heavily in further broadband rollout and has been dabbling with TV and video services as part of its Imagenio multimedia service (see Eurobites: Pump Up the Broadband and Telefónica Uses Lucent/Riverstone Combo).
And others are set to follow in their wake during the next year or so:
- Belgacom (Euronext: BELG), which faces intense competition from cable operators, is gearing up for a triple-play launch in June (see Siemens Gears Up for IPTV and Belgacom to Trial Interactive TV).
- Swisscom AG (NYSE: SCM), also under threat from Switzerland's cable operators, is in the field trial stage at present, and has encountered some teething troubles during its launch process (see Swiss IPTV Trial Hits 'Glitches').
- Telecom Italia SpA (NYSE: TI) is putting Microsoft Corp.'s (Nasdaq: MSFT) IPTV solution through its paces, and is experimenting with what people at the Paris event call a "hybrid" broadband TV service (see Microsoft IPTV: Now That's Italian!). A hybrid broadband TV services is where the TV channel comes over the air, and the DSL line provides the uplink for interactive services, such as voting in talent shows, and video on demand. That way, fewer bandwidth-hungry signals pass down the DSL connection.
And in Norway, Telenor ASA (Nasdaq: TELN) doesn't face any fierce competition on its home turf, though it has still trialed and tested the technology and services.
However, it has no plans to launch a commercial service until at least 2006, or even later, according to the operator's director of broadband development, Hans Henrik Westberg. He told the Paris conference that the business case is still not clear, and that there are still technical problems to be overcome. In the meantime, Telenor will concentrate on maximizing its broadband penetration.
And what of German powerhouse Deutsche Telekom AG (NYSE: DT)? Many view Germany as one of the most closed markets, where the incumbent reigns supreme, facing few true competitive threats.
But that could be about to change. Dr Erik Lenhard from Solon Management Consulting told the conference here that DT would have to start moving on a broadband TV strategy soon, as the country's cable operators, currently in disarray and offering hardly any threat to DT's broadband hegemony, are gearing up for aggressive broadband access and VOIP rollouts that could start hitting the incumbent hard as soon as 2007 (see Euro Giants Buy Back Offspring).
In the longer term, IPTV executives believe all the incumbents will have no choice but to launch TV and video services if they want to hold on to their customers.
"Incumbents that don't move into this market in the next 10 years will lose direct contact with subscribers and become little more than transport pipes," reckons Tomas Duffy, CEO of Swedish optical equipment vendor Net Insight AB (Stockholm: NETI-B).
— Ray Le Maistre, International News Editor, Light Reading