The long-awaited convergence of television and the internet is being pushed by the major regional US phone companies SBC Communications and Verizon, which plan to roll out their first systems later this year in the US market.
BellSouth, another major phone carrier, is also testing Internet protocol television (IPTV), and trials are underway in Britain, Switzerland and elsewhere.
Delivering television via internet technology would give viewers access to virtually unlimited channels and programmes, because instead of “pushing” video through a cable with limited capacity, the viewer would access servers that store the content.
IPTV would also make the TV set and computer interchangeable and allow consumers to schedule or record programmes via other devices, such as mobile phones.
“While cable companies are constrained by the size of their pipe, we have virtually unlimited content potential,” said SBC spokesman Larry Solomon.
That means a local high school lacrosse match or cricket game on the other side of the world might be available to viewers.
Video on demand
Using IPTV, viewers would have a much wider option of so-called video on demand, which would allow consumers to watch programmes or films at their convenience instead of at the time of broadcast.
“We think, because we’ll have more programming choices, it would be of great appeal to people,” said Solomon. “People have become accustomed to searching the Internet and watching streaming video.
Surfing the web for news may
So if you want to watch movies or documentaries on the Civil War, you could do that. It would put more control in the hands of customers.”
Globally, about 15 million households will have IPTV services by the end of 2007, up from the current level of 600,000 homes, according to a report from the consulting firm Research and Markets.
Global revenues from the sector will exceed $7.5 billion in 2007, it said.
SBC and Verizon plan to launch their first pilot programme late this year in the regions where they are the dominant phone providers, with wider rollout expected in 2006. BellSouth has only announced it is testing the Microsoft IPTV platform.
SBC chief executive Edward Whitacre has said this could help transform his firm from a traditional phone company into a TV-oriented communications competitor.
He said earlier this year he hopes to offer a package of video, Internet, voice and wireless for about $100 a month, although no prices have been set.
“In addition to the channels you would expect to see, there will be a lot of channels that speak to specific interests, perhaps for certain ethnic groups.”
Solomon said the service will be “competitive” with cable and added that “people are tired of annual rate increases from their cable company.”
Verizon, meanwhile, is pitching its service as closer to the current type of cable TV offering, with additional capabilities, and also sees potential in a “bundle” of telecommunications services, giving customers a choice of phone, video and Internet.
“When we go to market, we’ll be offering a digital broadband TV service, which will mean hundreds of channels and include video on demand,” said Verizon spokeswoman Sharon Cohen-Hagar.
“In addition to the channels you would expect to see, there will be a lot of channels that speak to specific interests, perhaps for certain ethnic groups. Everyone will have video on demand, and it will be easy to navigate.”
Yankee Group analyst Adi Kishore said phone companies are pushing for this because their traditional services like phone and Internet are now open to competition.
“They realise they are taking a beating on the broadband side and they need to make investment in video, because there are no other substantial growth opportunities,” he said.
Kishore said the new technology may not mean growth in television but simply more competition between the cable and telecom firms.
“SBC is saying this is a different service, that it is not like cable,” he said. “They have a rich, full-featured offering, but it is also more risky.”
The telecom firms, however, face considerable regulatory hurdles, including the daunting task of getting approval in thousands of municipalities. But they are pressing for measures to get statewide or nationwide approval to deliver the service.
“If you have to go hamlet by hamlet, city by city, to negotiate hundreds or thousands of franchises, it clearly would take an inordinate amount of time and deny the benefits of competition and investment,” said SBC’s Dave Pacholczyk.
“We’re optimistic that policymakers recognise that competition leads to benefits and more investment.”