Within a triple play bundle, the actual IPTV usage may be limited. If IPTV is relegated to a secondary TV service, what implications does that have for the industry?
The telecommunications market is very price sensitive and subscribers generally migrate to the operator who can give them best value for their spend. Service providers have realized they can increase subscriber stickiness with bundles. In some cases, their bundles are on such 
favourable terms that a household ends up with 2 TV services. The reality, though, is that as the introductory bundle pricing expires, customers are likely to settle for a single service. In the long term, the economics have to work both ways – the consumer will migrate to the best value and the operator has to offer profitable services. The consumer may end up with a combination of IP-only or IP plus cable or terrestrial. From their perspective, the delivery infrastructure is less a concern than the level of service and the richness of the TV service.
With consumers in France getting IPTV from the likes of Free and Neuf, there is no way of knowing how many are actually using the service. In the UK, BT customers do not rely on its IPTV service as their main TV source. This is something additional on top of the Sky service they have. A bit like using VoIP as a secondary line.
From what we’re seeing, this is likely geography specific. For example, the UK has a Freeview service which has about 3 to 4 million subscribers. It is a terrestrial service which you do not find in, say, North America because North America relies on cable as the distribution network of choice. Freeview provides around 50 digital channels. BT is piggybacking on Freeview for linear TV and they are using IPTV for on-demand TV. In this case, these services co-exist since the TV economics in the UK allow this.
What sort of value added IPTV applications are being implemented these days?
Most of the applications we’re seeing so far are around gaming and information services. On the games front for example, we have a few partners that have deployed around half a dozen type games. A couple of our carrier customers have deployed information services – news highlights, weather forecast and so on – which they developed by themselves or through an outsourcing partner. Of course, another interesting other category of services is t- or e-commerce. A lot of service providers want to enable purchases from the TV – for example,order food and a video-on-demand movie. A final category of services that carriers are themselves developing are apartment-type services like laundry, maintenance reports, billing and other apartment services.
So there have not been deployments of things like integration of IM and social networking on IPTV yet?
Over the next 6 to 12 months the applications that I mentioned are the ones that are likely to be implemented. As a vendor we do have features like IM or social networking, mobile integration, PC integration and so on. We have plenty of other applications we’ve developed in the our labs. We use them as tools in our kitbag to demonstrate our product capabilities and to share our vision when we’re meeting with customers. But the reality is that no one is paying for those today. It is perhaps 24 months away I would guess. And then it will also depend upon regional tastes and the deployment cycles of carriers.
Any instances of convergence of VoIP and IPTV? Things like caller ID being flashed on TV when you receive a call?
Yes, I would say that is a reality today. We are seeing telcos implementing that right now.
What is your overall developer relationship strategy?
We have a few developers who are implementing applications on top of our platform but our developer strategy is driven by the carrier needs at this point. Once the subscriber base reaches a critical number, we will start seeing more application options come alive.
Could Over-the-Top be a threat to telco TV? You have something similar in VoIP where companies like Vonage are going over the top and have had an impact on the telco market?
We have several of those in pipeline. It is probably not so different from MVNOs and Vonage type models. It is easier to do on-demand over the internet because it is unicast and there is some control because you can either buffer or download and manage it somehow. It is much more difficult to do live TV because for live TV you need to a network capability that can delivery QoS.
These Over-the-Top ASPs typically come with their own proprietary middleware. That would not be good for your business.
It is no different from the telco marketplace. They could certainly build their own middleware or source from us. You certainly see facilities based carriers using their proprietary middleware so it is no different. The whole video market is going to go through a dramatic change over the next five years. There are going to be several players in the market and over-the-top players could be the new kids on the block.
Have you talked to any white label service providers and what are the prospects of that model?
Our solution enables private label IPTV. We are able to partition the backend and also customize the look and feel at the front end. In a couple of scenarios with large players that feature has been a requirement and a big differentiator for us. White labelling is useful where local content is important. It also plays well in enterprise IPTV applications where, for instance, a customer such as a hotel might want to private label some of its TV content for the hotel guests.