Telcos Face Tough Road Deploying IPTV: Report

After the false starts of the late 1990s, North American telecommunications carriers are salivating at the prospect of delivering television to consumers over their IP networks. However, a new report from Forrester research notes that, for all their excitement, "it is a long road from today's flashy Consumer Electronics Show (CES) demos to mass adoption of telco IPTV."

Both SBC and Verizon have already invested substantial capital to deploy IPTV-capable networks. According to the report, "Telcos' IPTV Reality Check," Verizon expects to pass three million subscribers with 5 to 30 Mbps fiber to the home by the end of this year. By late 2007, SBC plans to pass 18 million subscribers with its 5 to 20 Mbps fiber to the neighborhood network.

Nevertheless, report author Maribel Lopez notes that the carriers' success in IPTV will depend on a lot more than pulling broadband connections to subscribers' living rooms. "Listening to telco pitches, you would think that it was simply a matter of flipping a switch to deliver TV to any consumer anywhere," she writes. "But before telcos can launch a widespread TV offering, they must replace part of the copper plant with fiber, update the billing and provisioning system to support video, and bulletproof the equipment that will go into the home."

The carriers are far behind cable providers, their main competition in television delivery, and it's going to cost a lot for them to catch up. The price tag on SBC's network upgrade plans is a cool $4 billion, and Verizon will add 3,000 to 5,000 outside plant engineers at considerable cost to upgrade 2 million copper lines to fiber by the end of 2005.

To make matters worse, much of the technology on which the success of IPTV depends, like advanced set-top devices, is still in development. Microsoft TV will only enter advanced trials this year. Moreover, Lopez notes that, because IPTV can connect devices like PCs as well as televisions, carriers will have to implement copy protection on the set-top devices. She writes, "until content owners believe that telcos can secure their content from illegal use, telcos must add digital rightsmanagement security to their set-top boxes and limit distribution to PCs."Will it all happen, or will Verizon's and SBC's forays into IPTV fail like Americast and TeleTV before them? Lopez believes that, this time, they're playing for keeps. "Despite these challenges, telcos won't pull the plug on TV," she writes. "SBC and Verizon have committed billions to upgrade networks for broadband tiering, and TV services will ease the pain by offering a new revenue opportunity of $35 to $65 per month for each subscriber."