Monday, October 8, 2007

Challenges for IPTV in United States

According to a report pubished by DSL Forum, the number of people using IPTV (Internet Protocol TV) services has increased by 179% in the 12 months to June, 2007 worldwide. The number grew from 2.9 million to 8.2 million subscribers. Europe added over three million subscribers in the 12 months to 30 June 2007, making it the strongest market both in terms of growth (231 per cent in 12 months) and total subscriber numbers (1.5 million to 5 million), while in USA, the number grew from 0.4 million to 1 million subscribers.

Interestingly, the number of broadband subscribers increased by only 25% in the 12 months to June, 2007 worldwide. The number increased from 250 million to 313 million broadband users and North America continues to dominate global broadband market with 16% of world subscribers.

As the facts state, IPTV has been able to convert broadband subscribers to opt for IPTV services. The maximum of this growth was observed in top markets like France (2,550,000 customers) and Hong Kong (938,000 customers), which show that IPTV can be deployed rapidly to large numbers of subscribers, if the market conditions are right.

While in Europe, the market conditions may have helped IPTV to expand at a much higher rate, in North America the conditions do not seem so right, a recent study published by Garner Inc. suggests. According to the report, the United States Pay T.V. market is fairly saturated with 82 percent of all U.S. households reported having a pay-TV subscription in 2006 and the penetration is expected to increase to merely 84 percent by the end of 2011.

To add to those problems, the market is fairly dominated by the satellite and cable operators such as DIRECTV, Time Warner Cable and comcast. Many telecom providers are still laying cables to develop a network capable of delivering a new generation of IP based products and services. AT&T, which launched a project Uverse to provide such a solution, as of September, 2007 has surpassed 100,000 customers (10% of total IPTV users in United States) and its fiber-rich network passes approximately 5 million living units.

The study observed that as the availability of IPTV offerings from telecom providers increase competition in this market, understanding what consumers currently receive, and what they will want from their pay-TV provider, will be critical to gaining or protecting market share. Such crititcal and differentiating factors can be from the qualitative factors such as quality of service, to intaractive features and pricing.

The study observed that interactivity features with the pay-TV subscription have increased during the past year, rising from 9 percent penetration to 15 percent. Observing the patterns, cable providers are upgrading to digital transmission as well as including either the features and/or equipment as part of the service offering at no additional cost or for a nominal fee.

While it will be difficult for the telecom providers to beatthe offers presented by satellite TV, the bundling of service, interactive features and pricing could be the only differentiating pointers. As of now, ahead of the telecom providers lies a huge challenge to secure a strong market share and convert existing subscribers from cable and satellite to internet protocol based TV.

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