IPTV and Triple Play

My explanations of IPTV are sometimes met with blank stares or looks of confusion, at which point I just revert to "You’ll be able to watch television on your computer."

But this isn’t really what IPTV is. An important distinction should be made between Internet television (YouTube, Google Video, CNN Pipeline, etc.) and IPTV — sometimes referred to as "Telco TV."

Both are of interest to us because of the targeted advertising opportunities that could allow local and small businesses to play a part — in the same way that targeting and increased ad inventory has allowed them to do so with text ads on the Web. Bring in companies like Spot Runner that will give small businesses the means to affordably produce video ads and it gets interesting. More on those dynamics here.

Here is another helpful description of IPTV, as it will be served by telcos that are currently laying down massive investments in fiber and labor to wire up homes with the necessary pipes to make it all work. This was also discussed in-depth in our recent IPTV White Paper.

There are many skeptics (I'm on the fence) who believe telcos won’t be able to recoup these costs because the initial service packages they offer will be on par with current cable and satellite offerings. The network investment they are making, however, will allow for eventual service packages that will be far superior to cable. The biggest reason they won’t be in place at the onset is the content arrangements that must be worked out (telcos have no experience in this area).

It’s also all about bundling. Telcos see this as their future, as they lose voice customers to wireless and cable VoIP packages. Offering a triple-play solution that includes voice, video and data will be a key to retention. So far, cable has the first-run advantage in the bundling race, simply because it is easier to start and enter a voice business than a video business. Data suggest as much.

But given that telcos are better positioned to add a fourth dimension to the bundle with wireless (quad play), they could have the long-run advantage. Add to that the capabilities of the IPTV networks they are currently installing that will serve as a foundation for some intriguing service bundles (once content, licensing and other things are worked out) and it gets interesting. More on triple and quad play in an upcoming Advisory.