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Telephone Companies Set to Offer TV Services Using Internet Protocol

Posted on: Wednesday, 6 July 2005, 00:00 CDT

Jul. 3--Cable and satellite television companies: Watch out. A new competitor is coming to offer television service. It's the telephone company.

Using the same high-speed connection that brings customers broadband Internet access, telephone companies such as SBC and Verizon want to add television to their product offerings to achieve the oft-cited "triple play" of bundled services.

The television service, dubbed IPTV because it travels over Internet Protocol wiring, has quickly become a hot topic, even if a widespread rollout of the technology could be several years away.

IPTV is one of several new technologies that are changing traditional television viewing. Transmitting television shows over Internet Protocol infrastructure was the "it" technology at the Supercomm telecommunications convention held last month in Chicago. Many exhibitors, including Agere Systems of Hanover Township, Lehigh County, demonstrated IPTV at their booths. Agere makes network processor chips that will be used in networks delivering IPTV.

"This is the year of IPTV," said Adi Kishore, a media and entertainment analyst with the Yankee Group in Boston.

Competition may bring lower price, add channels IPTV technology is still evolving. There is even debate within the telecommunications industry about what it is and is not. The major players are still a long way from offering an actual IPTV product for sale. Microsoft has made headlines with new software that would serve as the platform for IPTV much as Windows has become the gateway for personal computing. But the company recently admitted it's behind schedule.

In some places in the U.S. and overseas, there is a precursor technology from telephone companies that is challenging cable providers. The first IPTV services available may not offer much more than cable companies provide. But it will provide another TV choice for consumers.

"The difference now is it's a new provider," said Kishore. "In the past, you could only get video programming from the cable company or a satellite provider. Now, there will be a telco in town that can offer it."

Kishore said the arrival of a new player in TV could provide consumers with lower prices and different choices for programming packages.

Ultimately, IPTV providers hope to converge television, telephone and Internet access so that all services would be accessible from one device.

Promoters say the technology will boast such a large amount of bandwidth that hundreds more television channels will be available compared to traditional cable services. Eventually, consumers will be able to surf the Internet on their television sets using IPTV. Providers also say the interface will be more interactive, allowing subscribers to customize their programming menus.

"The possible technologies are mind-boggling because you could have everything on demand, which sounds like Nirvana to a consumer," said Laura Behrens, a media industry analyst for Gartner.

Overseas, IPTV is already making strides, particularly in Europe and some parts of Asia where broadband penetration is widespread and highly concentrated population densities give companies an economic incentive to provide the service. Companies can have access to hundreds of subscribers by providing, say, high-speed broadband directly to a single apartment building in Hong Kong, for example.

At the end of 2004 there were about 1.5 million people worldwide, mostly in Europe, who subscribed to a form of Internet Protocol or telephone-based TV, according to research firm In-Stat. Between 130 and 150 independent companies in the U.S. -- many rural telephone carriers -- are offering a form of television that some call TelcoTV, In-Stat said.

Some of the places where U.S. telephone companies are providing TV to customers are not known for being ahead of the curve on technology. A forerunner of IPTV is available in small towns in Iowa, South Dakota and Utah, and in Lewisburg, Union County.

D&E Communications, a 94-year-old telephone company in Ephrata, Lancaster County, offers digital television to its customers in Lewisburg using a proprietary technology that it says is a forerunner to IPTV. The service runs through a customer's high-speed DSL connection. Like digital cable, D&E offers multiple music channels and a crisp picture.

"Down the road, it is going to be hard to tell the difference between a phone company and a cable company," said Scott Sandall, marketing director of D&E Communications, which also runs a cable operation.

D&E's service allows subscribers to view their telephone's caller ID function on their television screens. Some subscribers, Sandall said, turn on their television now when they return from work to check phone messages.

"When you're watching 'Seinfield,' up pops on the TV screen the caller ID box and you can choose to accept the call or keep watching and send it to voicemail," Sandall said.

The blurring of lines between devices is part of the promise of IPTV and the digital home.

The question remains whether the technology behind these small systems can be used on a wider scale. Even the big players have been stumbling in this new TV world. Microsoft made a big splash in January at the Consumer Electronics Show with its IPTV software but several of its first telephone carrier clients have said they will delay launch of the service.

"In the lab, sure it works," said Behrens of Gartner. "In a test they set up on a conference floor, sure it works."

There is some debate within the telecommunications industry over what constitutes IPTV. This new form of video is alternatively referred to as TelcoTV, Telcovideo and IPTV.

Verizon officials, for example, say what's offered now as IP television is not the real McCoy because the video content is not always sent in packetized form as data is sent over the Internet. They also say "real" IPTV cannot be accomplished by sending video over copper or coaxial cables because neither transmission method can provide enough bandwidth.

"You have to change the pipe that goes into people's homes to make this reality," said spokesman Mark Marchand, speaking from Verizon's labs outside of Boston where the company is researching IPTV.

Verizon is expanding its fiber-optic network and has begun to offer superfast Internet service over it. This year, it plans to offer a television video service using the same technology that cable companies use to send their programming. It is also developing a genuine IPTV offering, but its rollout is anywhere from one year to three years away, Marchand said.

Others disagree with Verizon, saying IPTV can be transmitted over the traditional copper cables that make up the telephone network.

For consumers, the technology issue is irrelevant. The key is subscribing to a triple play of telephone, Internet and TV services over one connection from one provider. Consumers are increasingly interested in receiving one bill for all of these services, experts say. So are telephone companies, if for no other reason than to play catchup. Cable companies have already been offering this service in some areas for a while.

"It's all about making sure you have a bundle of services to offer to each household to maximize the dollars you get from each household," said Michelle Abraham, principal analyst for In-Stat's convergence group.

The telephone companies' push for the new offering is a bit of a payback for cable companies offering voice service. IPTV would effectively convert the telephone company into the cable guy. That does not sit well with cable companies, whose officials would like to see telephone companies pursue the same onerous franchise agreements they strike with municipalities.

D&E Communications pays a franchise fee in Lewisburg to offer television services, but national companies such as SBC are balking at having to receive municipal approval for every town and city it wants to serve. Congress may hold hearings this summer on the issue.

As they say in TV land, stay tuned.

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Source: The Morning Call, Allentown, Pennsylvania

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