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IP and Your TV?

Internet protocol and TV: a union that should only get better with time.
December 1, 2006
URL: http://www.entrepreneur.com/article/170466

I don't know about you, but I can't wait for one of our nation's last great monopolies to be subjected to free market competition. Internet protocol TV is what will finally give cable TV a real race for your money, and 2007 is the year it begins in earnest.

I want my FiOS TV or DAVE.TV! I want multiple PCs connected to multiple TVs at Chez Hogan simultaneously playing news and different HBO content on my PCs, as well as PC videos, spread-sheets and e-mail on my TVs. I want to pause, play back or skip ahead in live TV programs. And before business trips, I want to use Google to fetch Gilligan's Island episodes for my laptop.

Unfortunately, this vision hasn't come into sharp focus yet, and IPTV hasn't reached my neighborhood. But triple-play IPTV bundles (broadband, voice and video) are available to millions of folks in communities large and small, from Boston to Pottawatomie, Oklahoma, to Beaumont, California. A potentially fruitful aspect of these deployments is a new connection between your PC network and entertainment constellation. For example, subscribe to Verizon's FiOS triple play, and the tech installs a wireless router connected to a TV set-top box/digital video recorder that's actually a 160GB server. It can save 120 hours of video and let you view different videos, live programming, or photos from a PC on three separate TVs.

That's just a first wobbly step toward converged PC/entertainment networks, which Parks Associates predicts will be found in 30 million American homes by 2010. Not all will include IPTV. There are thorny digital rights and regulatory issues to work out before IP becomes the lingua franca between PCs and TVs. But we've passed some important milestones, including super-fast internet access for a critical mass of consumers; PCs and handhelds with enough graphics and computing power to deliver quality video and audio; and big, high-resolution TV/PC flat panels available at commodity prices.

More than 5 million people worldwide already subscribe to IPTV version 1.0, reports iSuppli. That number will triple in 2007. By 2010, there should be 63 million IPTV subscribers worldwide, says iSuppli vice president Mark Kirstein, about 13 million of them in the U.S.

That's not most of the viewing public by any means. But IPTV doesn't have to supplant cable to dampen subscription rates and up the TV ante. It just has to be a viable alternative.

Telecom Tuning In
Ironically, the main proponents of IPTV are the same telcos who've had their own monopolies undermined by cable competitors. AT&T and Verizon are committing billions to a last-mile fiber-optic build-out-in part to defend their best markets against cable phone offerings. But video is also the richest vein in the triple play and a brand-new way for even century-old ruraltelcos to serve less populated areas.

"It's amazing how quickly Verizon picked up 25 percent to 30 percent market share in some communities," muses Kirstein, considering those customers were wrested from cable. Initially, IPTV providers will break in by highlighting multiscreen viewing, expanded DVR and more interactivity for prices comparable to cable. But eight separate studies have found double-digit cuts in cable rates when IPTV comes to town.The speed of deployment will depend on the outcome of a regulatory tug-o-war being fought in state houses and city councils nationwide. TV isn't just any old free market where technology will win out. As many as 30,000 separate regulatory bodies have to give their blessing and receive their tribute.

Besides expanded functionality, New TV ushers in expanded video on demand. Initially, it will be mostly the same content traditional cable pro-viders offer, says Kirstein. But cable is contractually bound to an Old TV establishment that's conflicted about its digital rights and how many copies of what should be allowed on what platforms. The growth opportunity is not in the same mass-market content--it's in channels narrowly focused on a particular sport, hobby, music genre or religion, says Kirstein, or foreign-language channels direct from overseas.

The BBQ channel on DAVE.TV might not be your cup of sauce. But, as the MySpace/YouTube phenomenon demonstrates, there are millions of wannabe moviemakers out there. They'll need hardware, software and services that iSuppli projects will constitute a $4.5 billion TV spinoff by 2010. And like blogs or podcasts, VOD offers a low-budget way for entrepreneurs to reach self-selecting, highly motivated customer sets.

Imagine marketing to a very defined audience and supporting them with click-to-call URLs and how-to videos. The hallmarks of New TV will be more choice, more flexibility and much more interactivity between you and your customers.
It won't be your father's TV.

IPTV Guide
A sampling of nationwide IPTV services:

Mike Hoganis Entrepreneur's technology editor.