"Hybrid TV" On the Horizon?

This week, Orange, a key brand of France Telecom Group, announced the launch of an IPTV (over ADSL) service in the Kingdom of Jordan that includes two packages of "satellite channels."

That may be mostly marketing language, but more and more telecommunications companies across the globe are talking both IPTV and direct broadcast satellite (DBS). Orange enlisted Eutelsat earlier this year, for instance, to supply capacity on several satellites and then began marketing DBS services to French consumers in July.

Last week, executives at Bharti Airtel in India were reported to be looking at simultaneous rollout of IPTV in the capital region of Dehli and DBS on a much wider scale this year.

What about the next step of integrating that delivery in one box? According to European consultant company Arthur D. Little, hybrid TV may be on deck.

New box?

What's needed for integrated service delivery is a relatively new breed of customer premises equipment (CPE) - the so-called "hybrid set-top box," which offers the functionality to decode satellite TV as well as provide an IP interface for connecting to the Internet.

According to Arthur D. Little, telecom operators should be prepared to make an initial investment of $113 - $284 per unit in developing and producing the equipment and an additional $1.4 million per year for developing the content and infrastructure necessary to offer on-demand services.

Providers seeking to make a strong triple play might do well to offer IPTV as the "third prong." Hybrid networks allow offer companies "the best of both worlds," said Jürgen Morath, a partner in Arthur D. Little's Telecoms Information Media and Electronics practice.

"By offering linear TV broadcasted via satellite, with on-demand services such as video on demand offered via DSL, providers will finally be able to enter the three-play business nationwide, while significantly lowering capex for the network roll-out," he said.

Like any new business, there is risk and uncertainty surrounding the hybrid TV proposition. Among the questions providers need to ask is whether television programming simply comes over the IP pipe, too. Certainly, that's the classic definition of IPTV.

"(That will) vary by individual provider based on their market conditions and the network strategy," said Morath. But he added that traditional TV programming "is just one content stream that can be delivered via IP, and we can certainly expect to see services like video on demand, download-to-own, and overnight library being transmitted via the IP pipe."

Arthur D. Little estimates a total initial investment (for the headend and CRM system) in the range of a high single-digit to a low two-digit million (Euro) figure. According to the U.S. consulting firm Accenture, network operators and other players are gaining confidence in new set-top box and other technology's ability to support IPTV, and the hybrid technology shows great promise.

- Eric Glick