Circa Pict. & Prod. Co. Intnl Inc. (fka CPPD)

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IPTV Background.........Interesting...

2004 Nov 27
SPECIAL REPORT: TV, TODAY AND TOMORROW

Next: TV Meets IP

Internet technologies promise to soon take couch potatoes to worlds far beyond TiVo. Even phone companies could benefit big-time.

Just a few years ago, the fine art of watching TV seemed unlikely to change much. You watched programs when the networks told you to watch them. Maybe you taped them on a videocassette recorder. Either way, your choices were limited. Then along came the TiVo (TIVO ) digital video recorder, which as its 2 million loyal customers will tell you, added more than a little convenience to the coach potato's world.

Turns out, TiVo was just the start. A new wave of TV-related innovation called IP-TV is just starting to reach consumers. Just as the service known as voice over Internet protocol is poised to revolutionize the phone business by offering a low-cost Internet alternative to traditional phone service, IP-TV could bring Internet-style interactivity and flexibility to your TV set.

It won't happen overnight, of course. But over the next decade, the long-hyped notion of "video-on-demand" could become commonplace, allowing consumers to watch what they want, when they want to. They'll be able to control their IP-TV service remotely through a PC or a cell phone. And they'll be able to personalize their content, whether they want to watch the local high school football game or home movies.

"IT'S TIME." Certainly, reason for skepticism abounds. Over the years, a number of Internet-TV efforts such as Microsoft's (MSFT ) WebTV have come up short.

But skeptics can take heart. IP-TV projects are already under way, courtesy of big phone companies in Canada, Europe, Asia, and some rural small fry in the U.S. Customers of All West Communications in Kamas, Utah, Prairie Wave Communications in Sioux Falls, S.D., and Ringgold Telephone Co. in Ringgold, Ga., already receive IP-TV services most city folks have never even heard of.

"The big guys in other parts of the world are doing it, and the small guys here are doing it," says Mark Gray, CEO of Kasenna Networks, a Silicon Valley company that sells IP-TV technology to carriers. "It's time for the big guys here to do it, too."

STOP THE BLEEDING? Bit by bit, they are. On Oct. 20, massive SBC Communications (SBC ) inked a $1.7 billion contract with telecommunications gear maker Alcatel (ALA ) to turbocharge its network to bring 20 megabits-per-second of digital bandwidth to 18 million homes within two years. That's enough to simultaneously serve a TV show shown in high-definition format and a standard-definition program, with enough left over for high-speed Net access and Net-based phone service. SBC followed up that deal on Nov. 17 by announcing plans to spend $400 million on IP-TV software from Microsoft.

If IP-TV takes off, it will provide much-needed new opportunities to traditional phone companies that have built their businesses around wire lines. Besides losing customers to cell carriers in recent years, they've been losing out to cable-TV companies that are producing their own phone and Internet services. In many regions, cable providers have grabbed 30% of the traditional phone customers, say analysts.

IP-TV gives the phone companies a way to stop the bleeding. Take Ringgold. The 90-year-old carrier is offering IP-TV to 25% of its subscribers, about 1,200 so far. Executives see it as a way to ward off cable invaders. "What choice did I have?" says Executive Vice-President Phil Erly. "I'm not making any money yet, but it's a survival play.
Next: TV Meets IP

PERSONAL CHANNELS. Over time, IP-TV could put the phone companies back on the offensive. Cable outfits have spent billions of dollars in recent decades to build their high-capacity networks, which can deliver hundreds of channels to each household. But for the most part, everyone gets the same offerings, with few variations.

IP-TV can match that basic model, despite the fact that you actually receive only the program you choose -- not the other 200-plus channels that the cable system sends to your set-top box. With the right networking gear, it takes just milliseconds for a viewer to call up a program while channel surfing -- so fast most viewers won't notice the lag.

On top of that, the Net's inherent ability to be interactive could give IP-TV providers an edge. Using Microsoft's software, SBC plans to allow customers to set up their personal channels for things like slideshows of digital pictures.

"IN THE ICE AGE." Certainly, big questions remain. Microsoft's software isn't yet battle-hardened. A number of carriers, including Bell Canada, Swisscom, and Telecom Italia, have signed on to do limited pilot programs. But only Swisscom has gotten to the point of doing a trial run with the general public. SBC's plan is to start a test by the middle of 2005 with commercial deployment by yearend.

Smaller phone companies, which have far less complex operations, are moving faster. Ringgold has created a production studio that produces local political debates and a pregame show with a local high school coach. Early next year, it plans to offer a TiVo-like service that will let customers record shows and store them on Ringgold's servers, without having to own their own TiVo-style machine.

Still, even the little guys know they're only scratching the surface. "We're in the Ice Age," says Ringgold's Erli. He still needs to boost his current bandwidth to be able to offer HDTV-quality shows. He needs to get his hand on more content, because many shows and movies haven't yet been licensed for distribution by phone companies. And he has had to invest heavily in encryption technology to ensure that what he offers doesn't get pirated. "It's a significant amount we have to spend," he says.

ONE-STOP SHOP. Truth is, companies that have spent decades hawking phone lines have a lot to learn about the entertainment business. They have to rely on a growing market of IP-TV suppliers like Kasenna. After an 11-year effort, the company, which is a spin-off from struggling computer maker Silicon Graphics (SGI ), now offers everything a carrier would need to quickly deploy IP-TV.

Kasenna recently purchased a company that licenses programming, and it has developed its own software and hardware to handle intricacies, such as encryption. "Operators love this," says Gray. "They don't have to buy a $200,000 encryption system, and it saves them from the liability of employee [piracy]." Kasenna even offers marketing programs, from ads in Sunday circulars to TV spots, and tools to help operators figure out which programs or movies to advertise.

As a result, Kasenna expects to triple its sales this year to $30 million. Interestingly, much of that is coming from cable companies, including Charter Communications (CHTR ) and Adelphia (ADELQ ), that want IP-TV's extra flexibility.

BIG CHANGES. Now, the Mountain View (Calif.) company is trying to garner interest in a groundbreaking new service called Total TV. It allows carriers to continually record everything they've aired for the last two weeks. It's truly on-demand TV.

Skeptics say the people who create TV shows will likely demand sky-high licensing rates for such convenience. But it's one more sign that IP-TV could mean big changes for the coach potatoes of tomorrow.
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September 23, 2005 04:05 AM US Eastern Timezone

The Expansion of IPTV Market Size Will Yield a Revenues Increase, from 0.3 Billion RMB in 2005 to 16.7 Billion RMB in 2009

DUBLIN, Ireland--(BUSINESS WIRE)--Sept. 23, 2005--Research and Markets ( http://www.researchandmarkets.com/reports/c24671 ) has announced the addition of Internet VAS--Focus Report on IPTV 2005 to their offering.

This report is based on our solid understanding of the Chinese telecommunication and media markets, with a focus on telecom and VAS. We combined in-depth interviews with professionals in relevant industries with our broad collection of second-hand materials.

With the rapid growth of the broadband market, user demand for video services experienced rapid growth. Based on their core competencies, telecom operators, media players and various kinds of institutions with solid industry background have entered the IPTV market and begun small-scale promotion. However, strict regulations on content resources in the media industry and rampant piracy of domestic content make it difficult to predict the nature of the IPTV market. The questions explored in this report are:

How to create innovative business models that meet customer demands?

How to create demand for unique IPTV applications? Those problems pose significant challenges for the whole IPTV industry chain.

Due to slow progress of Digital TV in China, IPTV industry can develop with fairly wide window of opportunity. In the next 3-5 years, we predict that IPTV will face intense competition from traditional analog TV. With the progress of Digital TV and the demise of analog TV, IPTV will have to confront challenges brought by Digital-TV, but those two industries will compliment each other rather than compete for the same market

The increase of distribution platforms creates more opportunities to content generation segment. On the one hand, multi-platform distribution will definitely lead to a shortage of content resources and add bargaining power to content owners; On the other hand, there are more chances for repeated use of content recourses, second-time development and diversified VAS TV has the potential to change the user experience significantly.

The evolution from "passive reception" to "Video on Demand" until "Real-time Interactive experiences" represents a paradigm shift. However, considering ingrained consumption habits, willingness to pay and economical elements, we predict that traditional television programs will continue to take a dominant market position, while VoD and interactive television programs will gradually increase their market shares.

IPTV can help realize the convergence between traditional media and Internet VASs. Content from single television programs could be commercialized in online gaming, online music, e-commerce etc.
The key to innovative IPTV business models lies in taking advantage of its interactive characteristics. Utilizing features like time shifting and terminal diversity could satisfy users personalized demand for differentiated content.