KPN to Resell Narrowstep's Web TV

Dutch incumbent operator KPN Telecom NV (NYSE: KPN) has formed a partnership with Web TV player Narrowstep (OTC: NRWS) in an effort to sell ready-made online video capabilities and content to its wholesale customers. (See KPN, Narrowstep Team Up.)

The operator says it plans to sell a wholesale Internet TV service to other carriers and ISPs, and that it chose Narrowstep, which has 180 TV channels available on its platform, as its partner after extensive deliberation.

News of the deal did little to help Narrowstep's stock: the company's share price is down $0.01 (1.85%) to $0.53.

Narrowstep spokesman Barak Bar-Cohen says his company's relationships with Venezuelan carrier CANTV, Telefónica SA (NYSE: TEF), and Virgin Media Inc. (Nasdaq: VMED) helped to attract KPN, which, he says, will try to sell the Web TV's delivery platform and content to its wholesale customers such as Yahoo Inc. (Nasdaq: YHOO), as well as to other service providers. (See Telefonica Trials Narrowstep's IPTV.)

Neither company is revealing any financial details associated with the partnership, though Bar-Cohen says there are "a number of components," including Narrowstep's usage of international capacity on KPN Wholesale's IP network.

He also wouldn't say if Narrowstep has been talking with VOIP service provider iBasis Inc. (Nasdaq: IBAS), which is set to merge with KPN Wholesale in the next few weeks, about the integration of the two companies' video and voice services. (See KPN Scopes Out More M&A and KPN International, iBasis to Merge.)

Heavy Reading senior analyst Adi Kishore says the partnership is an "interesting idea, basically creating a one-stop-shop for a media company looking to build an online distribution business or a service provider that doesn't have the size and scale to build it themselves."

Kishore says KPN's proposition provides video hopefuls with a chance to enter the market without having to cede control of the customer relationship to the underlying distributor. "The primary concern of many media companies looking to build an online business is control and ownership of the consumer -- nobody wants to duplicate the pay TV business where the ownership of the consumer lies with the operator. This deal allows for media companies to do so while at the same time giving KPN a revenue stream from the event. That gets them in the game in a non-threatening manner."

It's also a "differentiator for Narrowstep," which is, says media industry specialist Kishore, "one of the major Internet video platforms out there." (See Narrowstep Raises $10.5M, Narrowstep Powers Frontier TV, and MSN Picks Narrowstep.)

Narrowstep is one of a number of companies that have developed Web TV distribution platforms. Others in the same sector include: Aggregator Ltd. , which has just been acquired by RawFlow ; Brightcove Inc. ; Maven Networks ; thePlatform Inc. ; and Vividas. (See RawFlow Buys Aggregator TV, Brightcove Bags $59.5 Million, Internet Video's Scale Scare, Maven Launches Platform, and BBC Selects thePlatform.)

— Ray Le Maistre, International News Editor, Light Reading