Swisscom Still Dogged by IPTV Issues

A year after commercial launch Swisscom's IPTV service is still experiencing technical difficulties

November 7, 2007

4 Min Read
Swisscom Still Dogged by IPTV Issues

Want to know how hard it is to add IPTV services to a telecom network? Ask Swisscom AG (NYSE: SCM).

The Swiss incumbent, which today announced it has 60,000 customers for its Bluewin TV service, has been dogged by delays and technical difficulties since 2003, when it first announced its intentions to offer TV over broadband services. (See Swisscom IPTV Stall Sends Shivers and Swiss IPTV Trial Hits 'Glitches'.)

Having suffered setbacks during 2004 and 2005, the carrier finally launched its commercial service on November 1, 2006, a year later than originally planned. (See Swisscom Finally Launches IPTV.)

During the delays, various Swisscom officials noted problems with set-top boxes, content availability, the bandwidth capabilities of the carrier's access network, and the IPTV content delivery system sourced from Microsoft Corp. (Nasdaq: MSFT). "Our partner Microsoft had some problems with stability," stated the operator's head of fixed network developments, Urs Bratschi, at a Light Reading Ethernet event in April 2006. (See Swisscom Eats Up Ethernet .)

Now, a year after it launched the service, Swisscom has 60,000 Bluewin TV customers (including received orders not yet fulfilled) and is aiming to increase that to 80,000 by the end of 2007.

The service includes more than 120 TV channels, 80 radio channels, video on demand (more than 500 movies), live sports coverage, and up to 30 "Teleclub" subscription-based channels. Monthly prices (in addition to line rental and broadband service) start at 29 Swiss francs ($25.64) for the basic TV and radio channels package, plus an installation fee of CHF95 ($83.98). (See Swisscom Adds to IPTV.)

Yet the carrier is still experiencing technical problems. That, and significant competition in the form of cable operator UPC Cablecom , maybe explains why its uptake is not what it could be. Swisscom has 1.56 million DSL customers (about 45 percent of Switzerland's 3.5 million households), but only 60,000 have signed up for the TV services, so its IPTV penetration level is currently less than 4 percent of the carrier's broadband customer base.

During today's third quarter earnings presentation, the carrier's CEO, Carsten Schloter, noted that while customer satisfaction with Bluewin TV's is high with regard to content, features, and usability, a "significant portion" of customers is unsatisfied due to remaining technical issues.

The carrier's problems still seem to be across the board. It is addressing its access network bandwidth issues by investing in a VDSL2 upgrade that, as of November 1, can deliver up to 20 Mbit/s to each broadband home. (See Swisscom Boosts Broadband.)

The VDSL upgrade also addresses the needs of homes with more than one TV set: Only one TV channel can be delivered over Swisscom's ADSL lines, while VDSL enables the delivery of two IPTV streams to each home, as well as high definition TV, something that Cablecom, which provides TV services to 1.6 million Swiss homes, is now also offering.

On the video systems side of things, Schloter noted that Swisscom is working to further increase the stability and quality of the IPTV service by addressing issues with its video encoding system and the TV delivery platform.

The carrier is currently deploying a new encoding platform, the iPlex UltraCompression head end, from Ericsson AB (Nasdaq: ERIC) business Tandberg Television . This encoder will help lower the bandwidth needed to deliver the TV streams and, from the first quarter of next year, will help improve audio and video quality, noted Schloter. (See Swisscom Deploys iPlex.)

The carrier is also introducing measures to reduce its IPTV operating costs. It aims to cut the cost of provisioning each IPTV customer from around CHF1,300 ($1,152) to CHF750 ($664) by the end of 2008.

These measures include: enabling customers to self-install the Bluewin TV set-top box; the pre-qualification of access lines; and the sourcing of cheaper set-top boxes.

The carrier currently uses set-top boxes from Cisco Systems Inc. (Nasdaq: CSCO) company Linksys , which has incorporated technology from another Cisco acquisition, Kiss technology, to build home multimedia products. (See Cisco KiSSes Up to Telco TV.)

Swisscom had not responded to requests for further details as this article was published.

— Ray Le Maistre, International News Editor, Light Reading

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