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Broadband Access
TelcoTV: Giving TV a makeover
Service providers tout converged TV strategies
by Sean Buckley
Set right next to the Disneyland theme park, last week’s TelcoTV show at the Anaheim Convention Center in Anaheim, Calif. did not produce any fantastic news in terms of big carrier wins or acquisitions.
All in all, TelcoTV, an event established in 2001 as a response to smaller IOCs rolling out video over initially copper and some over fiber, was relatively a quiet event.
But one theme that rose loudly through the conference halls during the Wednesday morning keynotes from Verizon and AT&T was that traditional television needs a makeover.
Through the advent of IP technology, a telco can enable the user to interchangeably view their video across multiple domains: the television, the PC and the mobile device. Putting these elements together to beat the cable competition should not just be about simply providing a more affordable communications service bundle, but rather about providing a more integrated experience.
In the U.S., all eyes are on how AT&T and Verizon will generate revenue through their respective U-Verse and FiOS television offerings.
“We're not just talking about a service bundle either, but about integration, making services more valuable by making them work for and around our customers,” said Dan York, executive VP of AT&T during the Wednesday morning keynote at TelcoTV.
John Harrobin, Senior Vice President – Marketing & Digital Media for Verizon, agreed by pointing out that the television industry needs to change the way it thinks about delivering services to viewers.
“Our contention is TV is far from dead,” he said. “The fact remains that one particular model for viewing TV is dying. That’s the old model where customers watch what networks air, when they air it, and on one particular device.”
The three-screen effect, as dubbed by York and Harrobin, reflect the idea that video viewing is no longer just about watching TV on the broadcaster’s time, but about catering to the user’s own individual viewing preferences.
Web and TV: so happy together
Regardless of the challenges telcos face, a key alliance for enhancing the TV experience will be in their ability to integrate it with the Internet.
Already TV manufacturers are developing Internet-enabled TVs and there's of course a bevy of gaming (i.e, Microsoft X box) and video systems (i.e., Roku and Vudu) that can also support Internet-based video.
Consumers obviously will want the ability to not only be able to get Web-based video content quickly, but also port it to a television set or another mobile video device.
Initially, telcos and cable operators believed that the so-called over the top video (OTT) players would degrade their broadband livelihood because they would not get a profit from these operators and be reduced to a bit pipe. However, many are realizing that it’s better to partner with these providers and create new customer experiences and potential revenue streams.
Let’s take Verizon. The operator previously launched a service that hosts YouTube videos directly on the set top box. In addition, Verizon’s FiOS features a customized widgets platform that allows users to access real time statistics on everything from weather to sports scores accessed via the remote control.
On a slightly different turn, EMBARQ — prior to its announced merger with CenturyTel — struck a partnership with online video distributor Cinema Now. Through this relationship, EMBARQ can offer a library of movies and TV shows via its broadband connections and myembarq.com portal.
(see EMBARQ lights up the third screen).
Whatever way OTT video is supported, ABI Research believes service providers and content owners can only gain from the experience. By bundling a video package with broadband offerings, service providers could create a sticky customer. Then, the broadcaster and content owners can boost the number of eyeballs that view their content.
ABI forecasts that the number of viewers who access video via the Web will quadruple in the next few years, reaching at least 1 billion. (see Video goes over the top).
What about the IOCs?
It’s pretty much a given the large telcos can easily drive a three-screen convergence strategy. Not only do they have the deep pockets, but both sizeable wireless and wireline networks in place.
But where does this leave the smaller independent operating companies (IOCs)?
IOCs may lack the buying power and assets of the big boys, but they have also been some of the earliest telco video service adopters.
Options are aplenty for smaller independent phone companies to deploy video service.
Skyline Telephone, a rural North Carolina-based ILEC, whose main video competition is satellite and some cable, bit the bullet and built out its own video service over Fiber to the home. The ILEC’s reasoning to build this network was simple: to keep the competition at bay. (see TelcoTV: Skyline Telephone gets video right the first time).
But for the IOC that can’t stomach the idea of building a video network, another option is to strike a partnership with an online video provider like Cinema Now or Vudu. These partnerships allow the service provider to get a video offering up and running quickly with a minimal investment.
Of course, the other question is how will they be able to extend video service onto wireless?
Given the diversity of the IOC market, the availability of wireless service varies widely. And with the exception of some larger IOCs (CenturyTel) lucky enough to get invited to the 700 MHz spectrum auction dance, many smaller operators were left behind.
That said, IOCs that may lack wireless resources do have other opportunities to create a three-screen experience, argues Steve Pastorkovich, Business Development Director and Senior Policy Analyst for OPATSCO, an organization that supports IOCs.
“It does not have to be a wireless handheld device,” he said. “You can plug in USB and global Wi-Fi and download video and other things onto a handheld.”
Whether it’s an IOC or an RBOC, telcos still have a long way to go before they have a critical mass of the video viewing public.
Not only that ,but they are still the mercy of a fickle consumer public that’s been quick to abandon landline service for wireless and cable’s triple play bundles.
By integrating either an online video or a blended broadcast/Internet-based service into their service arsenal, they will at least have some weapon to keep the wolves of competition at bay.
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