Let's start by reviewing the latest announcements:
- October 28: Tut Systems Inc. (Nasdaq: TUTS) pledged to buy VideoTele.com Inc., a subsidiary of Tektronix Inc. (NYSE: TEK), for $7 million plus a 19.9 percent interest in the company (see Tut to Buy Videotele.com). Tut, which has been active in the video-over-DSL market, seems intent on breaking into a larger market, adopting ATM-based hubs and using VideoTele.com's technology, which also runs over cable and Ethernet, to help carriers extend video over a range of access types.
- November 4: Internet Photonics Inc., which makes optical Ethernet equipment, announced that a partnership with Path 1 Network Technologies Inc. (OTC: PNWK; Frankfurt: PNT), which makes video-over-packet gear, has produced a series of gateways that let cable operators run video over Gigabit Ethernet (see Internet Photonics Intros Cable Kit).
- November 5: PON vendor Optical Solutions Inc. announced a field demonstration featuring its first deployment of switched digital video, using a combination of its own gear with equipment from VideoTele.com, Myrio Corp., which makes software for digital TV, and Turin Networks Inc., which makes a multiservice provisioning platform (see Optical Solutions Trials IP TV ). Optical Solutions also has a partnership in place with Minerva Networks Inc., which competes with VideoTele.com.
More announcements are on the way, too: Next Level Communications (Nasdaq: NXTV), which makes broadband access equipment that supports multimedia, is on the verge of announcing a contract with Canada's fourth-largest carrier. SkyStream Networks Inc., which makes IP TV gear, plans to announce a sizeable contract win next week.
Still, only some of the news seems aimed at the market hotspots, according to Ryan M. Jones, media and entertainment strategies analyst at Yankee Group.
He says the largest market opportunity today is coming from cable operators, who are intent on making the most of their network resources by putting video over data-oriented transports like Ethernet. In contrast, he sees the video-over-DSL market, which consists chiefly of small, independent telcos, as more iffy.
"The TV-over-DSL market has movement in it, but it's very fractionalized, more scattered. The opportunity on the cable side is very much larger and more straightforward," Jones says. He notes that until the RBOCs are freed from some of their regulatory contraints, which could happen in 2003, it will be tough to see ongoing dependable activity in the video-over-DSL market.
The vendors themselves have differing opinions on the market segmentation. Tut sees its chief opportunity with independent telcos, where it currently has a presence, and with European PTTs. "The independents aren't as affected by the telecom downturn as the RBOCs," says Mark Carpenter, executive VP at Tut. He says Tut's mission is to extend video content over any access network, using its newly acquired gear to help and partnering with third-party makers of access networking equipment, such as Alcatel SA (NYSE: ALA; Paris: CGEP:PA) or Advanced Fibre Communications Inc. (AFC) (Nasdaq: AFCI), and Next Level.
In contrast, Internet Photonics sees its key market where Jones does, in helping cable operators make more efficient use of existing facilities that often run video and data on separate networks. Putting both data and video over Ethernet is seen as a key strategy for unification. "I think this could be a $500 million market before 2006," says Gary Southwell, VP of marketing.
Optical Solutions sees a combination of independent telcos and cable operators as key to its future success. "I would predict that as independent telcos, municipalities, and the former Bells get involved in video, the majority will be digital," says Darryl Ponder, CEO of Optical Solutions. From his viewpoint, that spells opportunities for any kind of access technology that can handle video, including PON.
Coincidentally, video over IP is the subject of a new Light Reading poll. To participate, click here.
— Mary Jander, Senior Editor, Light Reading