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Ericsson Suffers IPTV Evolution Pains

Ericsson's efforts to command the telco TV technology market through a series of major acquisitions and investments may have been rewarded with market leadership status, but strategic dithering following the acquisition of the Mediaroom business from Microsoft has led to uncertainty and unrest amongst customers and resulted in the defection of at least one major client.

Ericsson AB (Nasdaq: ERIC) has built itself a significant position in the IPTV and video infrastructure industry with a series of acquisitions, starting with Tandberg TV in 2007 and, more recently, the purchase in September 2013 of the Mediaroom business from Microsoft, which had amassed about 40 telco customers including AT&T Inc. (NYSE: T), Deutsche Telekom AG (NYSE: DT), Singapore Telecommunications Ltd. (SingTel) (OTC: SGTJY), Swisscom AG (NYSE: SCM), Telus Corp. (NYSE: TU; Toronto: T) and Telefónica SA (NYSE: TEF). (See Ericsson Offers $1.4B for Tandberg TV, Ericsson Closes Mediaroom Acquisition, Ericsson Buys Microsoft's IPTV Unit and Telefónica, Microsoft Build Global Video Platform.)

But industry sources tell Light Reading that Ericsson failed to act quickly following the Mediaroom acquisition, which closed a year ago, and left customers in the dark about its platform evolution plans.

That dithering contributed to the decision by Swisscom, which had built a successful IPTV business with more than 1 million customers based on the Mediaroom platform since its launch in 2006, to opt for an alternative IPTV technology strategy that is instead based on Android software and cloud capabilities. (See Swisscom Boasts FTTX Milestone and Swisscom Finally Launches IPTV.)

The operator, which faces intense competition from rivals such as Sunrise and UPC Cablecom (part of the Liberty Global empire), wanted to offer a video service that included full network DVR and multiscreen delivery capabilities to advance its service offerings, and ultimately couldn't wait for Ericsson to communicate and then act on a suitable evolution strategy for Mediaroom.

As a result, Swisscom launched its TV 2.0 service in April this year with a set-top box running an Android-based service delivery system that supports cloud-based DVR capabilities and multi-screen delivery.

"With Swisscom TV 2.0 we switched to an Android-based cloud solution which is mainly developed by Swisscom," said Olaf Schulze, a spokesman at the operator, in response to Light Reading's questions. "The reason for changing to a new TV platform is simply the higher flexibility we gain with our own developed cloud-based solution," he added.

The Mediaroom system is not being ripped and replaced -- it just doesn't feature in the operator's most up-to-date and recent IPTV offering. "There is still our Mediaroom-based TV product on the market for our more favorable TV bundles," added Schulze.

For the latest multiscreen, OTT and IPTV services developments, check out Light Reading's dedicated video content channel.

So what happened with Ericsson and Mediaroom -- does it have a platform evolution strategy yet?

It seems that something might be revealed at the upcoming IBC trade show in Amsterdam, but for the moment the company isn't saying much.

In an email to Light Reading, it stated: "Ericsson is making big investments in the TV space, which has included the acquisition of Mediaroom. Ericsson IPTV platforms are the most deployed platforms in the world, powering services to over 15 million consumers in 34 countries via 77 pay TV operators. Ericsson has shared its Future TV Anywhere vision outlining how we believe Pay TV platforms will evolve over the next several years. As the cloud will be a major transition for the industry, Ericsson is working very closely with operators to realize this vision." (See Ericsson Broadcasts its TV Anywhere Message.)

It did, though, admit that it had some work to do. "We have not yet launched any products related to the vision or shared timelines for availability," stated the company, adding that it expects to be able to share "a lot of news on the positive progress that has been made a year since the acquisition closed" during the IBC show.

It's unclear whether other operators have shared Swisscom's frustration and sought alternative IPTV delivery technology platforms. One industry source told Light Reading that many Mediaroom customers had issued RFIs (requests for information) to the industry seeking details of alternative solutions, but that source also noted that this was standard practice to keep all the vendors on their toes, adding that Ericsson had also managed to pick up some new and quite significant deals for the Mediaroom platform since the acquisition.

Other vendors in the telco TV service delivery platform sector include Beenius, Espial Group Inc. , Huawei Technologies Co. Ltd. , Minerva Networks Inc. , Netgem , Viaccess-Orca and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763).

For more on Ericsson's IPTV developments, see:

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

COMMENTS Add Comment
mendyk 9/3/2014 | 8:03:44 AM
Re: Timescales are getting squeezed all the time Sounds reasonable ... it's probably the IPTV label that's grinding the gears a bit. Video service delivery is more au courant as they say in Brooklyn now, if a bit wordy.
Gabriel Brown 9/3/2014 | 6:46:48 AM
Re: Timescales are getting squeezed all the time Ericsson's acquistion of RedBee Media is one I have never really figured out*. It's probably a small acqusition in the scheme of things, but still it's a little puzzling. 

It does get SoHo offices and an entry into London media land, but how it meshes with the rest Ericsson is not blindingly obvious to me.

* I don't cover media so haven't tried that hard
[email protected] 9/3/2014 | 3:04:50 AM
Re: Timescales are getting squeezed all the time Like the other major vendors Ericsson will be looking way beyond the traditional telco customer base to sell its wares, including video, and especially video + managed/professional services. It has invested a lot of time and effort in video over the years and it most certainly wants to be one of the (if not THE) major supplier of video delivery capabilities to any company that wants to deliver quality video services to viewers, whether that be a telco, MSO, utility, financial institution, Web servcies giant etc

Financially it's not tipping the scales currently -- Ericsson's video business is part of its Business Unit Support Solutions, the smallest of its units by revenues. That unit also includes OSS/BSS and other service provider IT (SPIT) assets, and is Ericsson's long-term 'player'.

Cloud/network DVR and multiscreen delivery are 'must haves' and no doubt that will soon be part of the next gen Ericsson Mediaroom offer. 
mendyk 9/2/2014 | 3:07:15 PM
Re: Timescales are getting squeezed all the time Ray -- Given the general cooling of interest in video services, how critical is this sector to Ericsson today?
[email protected] 9/2/2014 | 2:10:33 PM
Re: Timescales are getting squeezed all the time I think the challenge Ericsson had was that it already had its own IPTV delivery system and then it acquired Microsoft's -- if the plan was to bring the two together tna d integrate the best of both platforms to create a mega platform, then it either didn't communicate that well or it communic ated it badly and/or was too slow with that evolution/integration.

Do note, though, that one of the informed people I spoke with also noted that while Swisscom gave up and went in a different direction for its next gen IPTV platform, other companies have signed up to Ericsson Mediaroom, and I'm sure we will be hearing about those customer wins in due course. :-) 
DOShea 9/2/2014 | 1:53:03 PM
Re: Timescales are getting squeezed all the time Really unfortunate development, given that a lot of those customers might have assumed they were in more telco-friendly hands when Mediaroom. was transferred from Microsoft to Ericsson.
[email protected] 9/2/2014 | 1:44:37 PM
Timescales are getting squeezed all the time The issue may have stemmed from a lack of development at Microsoft on the Mediaroom multiscreen and network DVR capabilities but from what I understand Swisscom lost patience (and got very irate) with the lack of information about what was being developed and by when, so it went solo.

It doesn't take much to lose a customer's attention these days -- everyone's got to be on their game all the time, esp as cloud experts move into every field that was previoulsy the sole domain of the telco vendors. 
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