The Top 10 Myths in IPTV

BitBand dispels IPTV deterrents on the eve of IBC 2008

NETANYA, Israel .– IPTV subscriber numbers are growing steadily, but widespread uptake of services is yet to reach its full promise. As telcos, service providers and content and technology vendors prepare to gather in Amsterdam for one of the industry’s larger events, BitBand refutes some of the most prevalent myths that deter potential players from entering this booming market.

IPTV Myth 1: Content is hard to get. Without premium content, my service will not sell.
Content offering is an important differentiator, and service providers are required to make huge volumes of content accessible, while employing intuitive and simple access methods. As IPTV technology supports a personalized and tailored user experience, service providers do not have to rely solely on premium studio content. Niche and long tail content, as well as local content, are becoming a favorite choice in many areas for many viewers. At the same time, more and more content is made available through content aggregators, local content creation and small production facilities.

IPTV Myth 2: It will take time until IPTV becomes a viable revenue generator.
A few factors come into play for generating revenues from IPTV – choosing the right business model, leveraging existing infrastructure and resources and applying smart content distribution mechanisms – all of which lower initial investment costs, network load and storage cost. When played right, as opposed to a “let’s not invest too much until we see how it goes” approach, IPTV will introduce significant ARPU ramp up and customer base growth, as well as reduce churn and its painful and immediate impact on revenue. With more than 15 million IPTV subscribers by mid 2008, 100 percent year-over-year (y/y) growth for past two years and expected for years to come, plus $50 USD ARPU per month, no service provider CEO should ignore IPTV’s revenue potential.

IPTV Myth 3: Uptake and growth is limited to developed markets, such as Western Europe. It will take many years for emerging markets to catch up.
With quad- and triple-play heavily embraced by new players implementing technology, plus business lessons learned in Western Europe, service providers in emerging markets are actually taking advantage of the industry’s accumulated expertise for fast uptake and growth. Knowing that extensive renovations almost always take longer and are more expensive, they are skipping efforts to modernize legacy equipment or infrastructures and instead building new for IPTV delivery. Prominent among the markets ‘waiting to happen’ are Eastern Europe and former Soviet Republics – areas where the right mix of content, services and pricing is key to successfully introducing a new IPTV service.

IPTV Myth 4: Providing VOD/Pay-TV is good enough. Why do I need complex technologies for offering additional IPTV services?
To succeed in this fragmented and highly competitive market, service providers must take into account the changes in consumption habits of TV audiences. IPTV is less likely to attract new customers with a “me too” service of the same old broadcast channels and VOD functionality. However, as demonstrated by the success of DVRs and the Internet, a shift towards innovative applications and a more personalized TV experience can really exploit the capability of IPTV to create much needed long-term value. This involves changing content licensing models and introducing smart algorithms for content distribution to allow for advanced personal content delivery and user features such as Pause Live TV and Catch-Up TV.

IPTV Myth 5: I will have to invest in costly components for sufficient storage of content.
Any content delivery network requires storage space at various points across the network and at various storage capacities, depending on the unique service requirements and specific network infrastructure. Traditionally, IPTV networks include a Central Content Repository (CCR), which is a large storage system that holds 100 percent of the content available in the network. One solution is to utilize a single component that can act both as CCR and a video streaming server. This solution keeps costs low by performing storage consolidation and avoiding general purpose storage systems which are not optimized for the specific video streaming need.

IPTV Myth 6: Smaller players cannot deploy IPTV. It is too complicated to select and integrate the various components and technologies to create a complete solution.
A comprehensive IPTV solution is composed of various components, including telecommunication equipment, video servers, headend and encoders, CPE and encryption solutions. Even though standardization efforts are well under way, designing and sorting through the available technologies is not easy. Integrating the various building blocks into a comprehensive solution can be simplified via either pre-integrated solutions or a virtual content delivery network (CDN). Virtual CDN enables network owners to support a ’wholesale’ model by offering a managed video content delivery service to multiple service providers. Each service provider gets a virtual CDN with a guaranteed level of service. The service provider can then offer a new range of applications without the costly investment in video delivery equipment and knowledge, resulting in a significant reduction of CAPEX and OPEX.

IPTV Myth 7: When my service grows, I will have to rebuild my network to support additional POPs/subscribers.
A properly designed solution can support service growth from lab trials to multi-national deployments. Service providers can implement an efficient and cost-effective traffic and storage solution which is flexible enough to accommodate changes in the network topology and size, saving vast investments in the network. At some stage, the service provider may be required to add POPs, but as long as the network provides sufficient bandwidth, the growing customer base can be served with the initial number of POPs for a long time.

IPTV Myth 8: Only telcos can deploy and offer IPTV.
Satellite (DTS) and terrestrial (DTT) service providers are already benefiting from the flexibility of the IP infrastructure and are launching triple-play services. Two IPTV options are available to DTS/DTT operators. The first option is a partnership with a network owner for a high quality interactive TV service, possibly in a wholesale network setup. The second option is the use of the Internet and progressive download video delivery technologies for high quality in-home viewing. Additionally, with the advent of DOCSIS 3.0, cable operators will benefit from IPTV as well.

IPTV Myth 9: I can’t gain from advertising revenues as I serve a smaller area.
The flexibility of IPTV networks presents a golden opportunity for service providers. Service provider ownership and knowledge of the subscriber enables them to offer a tailored, personalized service that includes advertising. Smaller deployments can significantly gain from the shift towards a personalized TV experience, as it encourages targeted advertising. This delivers commercial information relevant to the viewer based on location and personal interests, thus creating much higher value for advertisers. The personalized revolution has reached the TV, so providers need to be ready now with the right platforms.

IPTV Myth 10: When delivering content over IP, video and viewing quality is “best effort” level.
Quality of Service (QoS) and Quality of Experience (QoE) have become major criteria to evaluate IPTV products and services. Increasing QoE is one of the most important measures for building subscriber loyalty and securing successful service growth. The majority of content delivery network deployments are designed with highly reliable components and numerous degrees of redundancy, yet it is impossible to completely eliminate all potential network-level failures. A comprehensive end-to-end IPTV solution which enhances quality of viewing experience can be achieved by addressing several video content delivery challenges, such as network congestion effects, packet loss due to errors on access lines and slow channel zapping experience. IPTV service providers can improve their service and increase customer satisfaction by mitigating these IPTV challenges with packet loss recovery and scalable fast channel change.