March 8, 2007

The Yanks Are Coming - Eventually

By Jim Barthold

CableLabs, as everyone knows, is cable's research and development consortium nestled in the outskirts of Denver. It's becoming apparent that the telco industry's IPTV R&D is taking place in Europe and Asia.

Infrastructure vendor Nortel and middleware provider NDS confirmed that this week with the announcement of IPTV collaboration that will, of course, focus on the European market.

"It's a global reseller agreement, but the activity where we expect the first movement to be is in the European market ... because it's developing faster than the U.S.," said David Holt, leader of IPTV in Europe, Middle East and Asia (EMEA) for Nortel.

There's a reason Europe's ahead of the Yanks, said Ken Lowe, vice president of marketing for Sigma Designs, a company that, according to Lowe, makes the chip that represents 80 percent of the logic that goes in an IPTV box and has about 75 percent of the IPTV market. You do the math.

"Europe has a much cleaner market to go after. They don't have the built-in cable and satellite infrastructure like we do in the U.S. The market space is not dominated with people consuming premium video services; it's dominated by people consuming largely free (there's that word again) TV provided by antenna," Lowe said.

Sigma, which tracks such things, sees IPTV growing in three stages.

Europe, Asia, North America

"Europe took off first, and it took off in earnest in the middle of last year," Lowe said. "The Asian market has started to take off, and we're starting to ship real volumes to some of the Asian carriers. Then, by the middle of this year, we expect the North American market to take off in earnest."

It may be picking nits, but that market will be dominated by one carrier - AT&T - since Verizon, even according to Lowe, "is one of the only telcos that's non-IPTV." The two big telcos, he said, are just using different approaches to reach the same middle point.

"Five years from now, they'll be in exactly the same place. AT&T said it's going to invest in the most sophisticated feature-rich TV solution it can provide – which is IPTV – but they're gong to use their existing infrastructure to deliver that and make it work as well as possible. Verizon said it's going to use proven, existing, me-too TV service, but it's going to invest into going all-fiber and go after bandwidth first and improved TV second. They're coming from opposite directions and headed towards the same place," Lowe said.

Interestingly, in five years, they'll probably arrive and find a third party – cable - waiting for them "because the advantages of IPTV from an architecture standpoint are just too attractive to ignore long term," he said.

And that, digital tuners or not, should make for some interesting competition.

- Jim Barthold