Convergence Spurs Unforeseen Competitors

As we inch closer to real deployment of IPTV, telcos are looking forward to providing a true converged suite of services delivered on IP. Aside from shoring up customer retention and adding television subscription to the ARPU, service providers can take advantage of IP convergence to allow whiz-bang features like video voice mail or pizza-ordering via interactive television remote. They also can improve revenue with content.

But when carriers strive to become entertainment companies, they invite competition from more than the usual suspects. TELECOM 05s conference program intends to address what happens beyond the triple play.

Thanks to convergence, when it comes to competition, its no longer just cable, wireless and Vonage, says Ken Pyle, co-founder of Viodi LLC, a provider of information, marketing materials and content acquisition services for the iTV and VoD efforts of independent telcos. Telcos are up against unforeseen competitors those taking 2, 3 or 4 percent chunks of business away. You get 10 of them and you have a problem.

New threats include companies looking for news channels to get to audiences, like Walt Disney Co., which is looking to provide direct-to-home downloads, or the eBay + Skype merged company, which may provide content directly to ethnic communities via the Internet. More threats could be Microsoft Corp.s X-Box, Apple iPods and even broadcasters like Fox Television looking to integrate ads within voice mail.

Things are moving faster all the time, says Pyle. There is a big transition in this industry and independent telcos need to keep pace with it. And IPTV has got to get to the retail level sooner rather than later.

One major hurdle is a lack of standards. Its been a mess for telcos getting into TV, says Pyle, who crafted several sessions for TELECOM 05 on IP video. Its IP, it should already be standard, since thats the beauty of Ethernet. But its not that easy there are standards only for transport. We need a way to ensure equipment interoperability.

Once broadband television is up and available, other issues arise. If telecom companies are going to get into this business, they have to understand the business development angles within the technology, says Michael Stroud, a journalist and co-founder of the iHollywood Forum Inc., which produces conferences that emphasize the viability of new business models in the converged space. iHollywood ran a conference Monday at TELECOM 05 on how to win the race to deploy pay television services, successful business models for building a pay television infrastructure, how telcos can enable content distribution in home networks and other topics.

Content differentiation is a looming concern within the converged service portfolio.

Consumers will have more choice than ever before, says Stroud. And its interesting for Hollywood. There will be a multiplicity of pipes to choose from, and if a Verizon wants to succeed, theyre going to need big names like Disney. But its a different situation from 10 years ago when broadcasters were worried about terms of carriage and getting access to the home. Now they have many ways to the consumer, and they get to choose.

Peer-to-peer technology also will revolutionize the competitive landscape in the converged world. What happens when the television becomes a computer screen, essentially?

Consumer-to-consumer production and delivery of content, video blogging, video on demand these are all concepts that Internet companies have had for years, says Pyle. They will be positioned going forward to take a chunk of business.

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