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Broadband Access
Telekom Austria banks on IPTV
Austria's fixed-line incumbent is pinning its hopes on the appeal of IPTV, says Helmut Leopold, the operator's head of platform and technology management and chairman of the Broadband Services Forum
by Iain Morris
The runaway success of mobile broadband could be an
incentive for investing in IPTV. At least it could in Austria,
where competition between providers of HSPA, an enhanced
version of 3G, has sent the price of a monthly subscription
crashing to as little as €15 per month.
"It costs less than fixed broadband service, so everybody is
going for mobile," says Helmut Leopold, head of platform
and technology management for Telekom Austria. "The only
way to overcome this problem is to upgrade the fixed-line
product portfolio."
Essentially, Telekom Austria needs a compelling, bandwidth-
hungry service to justify its investments in fixed-line
infrastructure. At the moment it is offering IPTV over ADSL2+
in Austria's nine biggest cities, passing 1.1 million
households. Leopold will not divulge the customer figures,
saying only they amount to "some thousands", but he
emphasises Telekom Austria has not yet launched a major
marketing campaign to promote the service.
The next step, says Leopold, is transforming IPTV into a
mass-market offer. And that is when the investments could
mount.
Fibre plans
"If we are to provide HDTV and serve households with
multiple TV sets, we will have to shorten our copper lengths,"
says Leopold. "So from a strategic point of view we are
analysing the deployment of fibre."
He sees no business case for a widespread fibre-to-the-home
(FTTH) network, saying FTTH would typically make sense only
in a city bristling with skyscrapers. But he sounds keen on
using fibre in combination with VDSL, as Deutsche Telekom is
doing in Germany. Such technology could sustain
a "reasonable" 20Mbps service to each and every household,
says Leopold.
"The difference between 20Mbps per home and 100Mbps per
home is nothing for the customer," he says. "You cannot sell
the customer anything more, but your cost per household is
so much greater."
The prevalence of low-cost HSPA makes Leopold even warier
of FTTH. Installing a lot of fibre is a huge investment as it is,
he says, but it looks even costlier when customers have grown
unwilling to spend much on broadband.
VDSL, though, is far from being a safe bet. The technology is
currently being subjected to the same regulatory scrutiny as
FTTH by the EU. Commissioner Viviane Reding thinks
operators deploying fibre technologies should be compelled
by law to make their networks available to competitors.
Operators like Deutsche Telekom have fiercely opposed
Reding, holding back on their deployments until they get
the "regulatory protection" they say their investments deserve.
Much is riding on the outcome of the EU's consultation on
fibre regulation, with a formal position to be announced later
this year. Presumably Telekom Austria wants the
same "protection" sought by Deutsche Telekom?
"That's misleading," says Leopold. "We will sell our
infrastructure, but the question is how it should be offered to
our retail competitors."
In short, Telekom Austria would prefer to wholesale capacity
to its rivals than be forced to let those rivals install their own
equipment in its local exchanges – so-called local-loop
unbundling.
As a means of getting a fibre offer to market, Leopold also
welcomes "open access" principles, whereby a network owner
that does not offer services leases capacity to providers.
"Other companies may be investing in fibre in cities for some
other reason," says Leopold. "Why not use them for access?"
Telekom Austria has already partnered with a fibre-owning
power utility in Austria to "speed up time to market"
and "lower cost" in some areas.
New TV
The biggest IPTV challenge, acknowledges Leopold, will be
offering a service that can attract subscribers in what is one of
the most competitive pay-TV markets in Europe. Cable giant
UPC has a formidable lead in terms of content and
customers, and a clutch of satellite providers will prove tough
opponents in some parts of Austria.
"If we offered just a standalone TV service in a TV market
that is 50 years old then the whole IPTV investment would
completely fail," says Leopold. "We have to position it as
something new."
Judged purely on the quantity of channels and the size of its
video-on-demand (VOD) library, Telekom Austria's IPTV
service, branded aonDigital TV, certainly appears to offer
nothing that will trouble its rivals. Today's viewers can choose
from 66 channels, many of which are available through other
providers, and gain access to a VOD library of just 250 titles.
But Leopold would argue such a cursory analysis misses the
point. "The real value is in combining the benefits of internet
services and free communication over the phone with digital
TV and the interactivity this brings," he says. "What's more,
we can play with these parameters independently of the end-
user interface, which could be a handheld device, a large
screen or a PC."
Nevertheless, Telekom Austria is currently exploring new
business models with the content industry. These range from
screening Hollywood blockbusters at the same time they are
first shown in cinemas to producing professional content at
lower cost. With content and marketing costs estimated to
account for as much as 50 percent of all IPTV costs, according
to consulting firm Accenture, the IPTV business case could
hinge on the successful outcome of such initiatives.
Broadband Services Forum
Much of Leopold's work in this area ties in with his other role
as chairman of the Broadband Services Forum (BSF), which
pulls together representatives from different areas of the
industry and includes IPTV operators, content providers and
equipment manufacturers.
"We need better cooperation between players that have so far
been completely separated," says Leopold. "The aim is to
accelerate market deployment and generate new ideas."
Rudolf Fischer, Telekom Austria's deputy CEO, has previously
commented that operators would have more room for
negotiation with studios if they were to work together, and
Leopold says the BSF hopes to encourage such thinking.
In the meantime, Telekom Austria is analysing customer
behaviour to determine which areas of its IPTV business could
flourish after further investment. A mass-market launch could
be in the offing.
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