IPTV comes of age

With operators across the Middle East investing in fibre networks, Simon McGrath, chief marketing officer, SeaChange, explains why operators should consider offering a carefully managed IPTV service.

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IPTV comes of age MCGRATH: The major advantage of IPTV for operators is reduced churn.
By  Roger Field Published  December 1, 2009 Communications Middle East & Africa Logo

What are the main concerns for telecom operators in the region when it comes to IPTV?

The implications for the telcos, whether that be Du, Qtel or STC, of buying a television platform is that they have already got voice, data and possibly mobile, so TV may be the fourth thing coming into the mix.

What operators tend to do is buy one big system from one big vendor whereas cable services started off with TV and they were used to buying equipment from different vendors and putting it together themselves, because they understood video, but telcos traditionally don’t.

Tell me about SeaChange. What exactly does the company do?

Whether IPTV is via DSL to an IP set top box or down HFC to a cable IP set top box, most of what we do is at the backend, so traditionally we have been all about video-on-demand and we have the largest installations of VOD in the world. Our customers include Comcast Cable in the US, Cox Cable, Virgin Media, Verizon, and AT&T, and we are now speaking to most operators in the Middle East.

What are the main trends in IPTV that operators should be aware of?

The trend for IPTV and cable is that people invest a lot of money in getting a network in place that can carry television signals, so if you are a telco you are putting a lot of money into having ADSL, VDSL whatever it may be, or you could be rolling out a next generation network that could be worth hundreds of millions of dollars.

All of these operators are investing in a future where IP offers everything and is instantaneous, so one of the big services to offer is video. The important question to ask is: what are the services that telcos are going to offer to leverage that infrastructure capital expenditure, and what are the services that telcos are going to offer?

I like to think of there being ITPV 1.0 and IPTV 2.0. IPTV 1.0 was all about delivering linear TV with some value-added-services and a bit of interactivity, and you could buy that from all sorts of small companies. With IPTV 2.0 operators are thinking about how IPTV is part of their entire service mix, how it relates to their broadband presence and mobile presence.

Operators should be considering how can they cross between their mobile service, their broadband and IPTV platform so that they can offer their customers programmes of their choice on mobile, PC and TV.

The operators can also send text messages that inform users about the release of new series’ and films, and even allow the user to click on a link to start watching and change seamlessly to watch on a PC or TV.

That is all about back end management, identity management, authentication, authorisation, and content delivery, which is very important going forward.

How is growth of IPTV in the Middle East?

It is massive in terms of ambition and available funds to invest in platforms, but subscriber numbers are going to be a challenge.

We also offer content aggregation services through our subsidiary, The On-Demand Group. We are in advanced discussions with one of the operators in the region and we will be managing all of its VOD platform, providing all of its content and managing their service.

The operator wanted a third party to do the heavy lifting of acquiring movie content, TV content, music content, children’s content, packaging it up, doing the encoding, regulatory compliance and so on.

How is SeaChange growing in the region?

In the first quarter of next year we will see some announcements in relation to the opening of a branch office, as well as the appointment of a well known local manager who will take on responsibilities both for content service delivery and platform technology sales.

What is the main driver of IPTV GROWTH at the moment?

It is a fundamental belief that anyone who is in the business of providing retail bandwidth services feels that they have to own the customer completely, and to own the customer they have got to offer the customer something that is better than anyone else. Currently the marketing play is around speed, and then it will move to service and products.

What are the main ways that operators can benefit from VOD and IPTV?

Customer acquisition and customer churn reduction. The challenge when offering these services is the age old challenge of retail marketing – the need to allow people to be able to find what they are looking for with recommendations. In terms of customer retention, it has been massively valuable.

What important considerations are there for operators looking to offer IPTV and VOD services?

I think there is a need to raise awareness of some of the challenges associated with rolling out some of these services on a large scale and that relates back to the need to have a good back office logistics platform, making sure you stick to licencing agreements and have good quality encoding. There is a lot to learn about video retailing and video marketing.

The other problem with IPTV is it comes after operators have already rolled out voice and data, and if the main source of revenue is broadband subscriptions, and if an operator has invested heavily to lift it from two megabits to 20 megabits, that capacity effectively opens the door to outside, over-the-top content providers.

If you don’t have your own video service, someone else will provide one to your customers over your own network, and you are not going to make another dollar from that. Furthermore, your network is going to get congested and quality of service will inevitably go down.

If you don’t do IPTV on your own network and manage it well and give the customer something great, someone else will.

Market challenges

For Alan Delaney, business development director of IPTV at Tandberg Television, the main challenges for operators entering the IPTV space are about differentiation, marketing and content.

“It is about getting to market with a standard composition, making sure that you have something that differentiates you, looking at the content angle, where you spend your money, and not trying to do too much too soon. “People need to move away from this mentality of it being IPTV – it is TV, it is content and you happen to deliver it over a particular network or infrastructure, whether that is mobile or fixed line.

Obstacles to IPTV

Senior industry executives debated the IPTV issue at the Arab Advisors 6th annual media and telecoms convergence conference held in Amman in mid-2009. Delegates pointed to the massive supply of FTA channels and the widespread piracy of DVDs and Pay TV as obstacles facing IPTV providers.

They also noted that ongoing FTTH projects in some countries should enhance the fortunes of future IPTV uptake as media broadcasters leverage its interactivity.

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