December 22, 2008

IPTV: One Outfit Dies, Another Thrives

By Linda Hardesty

Last week, SES Americom announced it was closing down IP-Prime, its company that offers IPTV services to small domestic telcos. A few days later, Avail Media, which plays in the same rural IPTV space, announced it had experienced unprecedented growth in 2008.

Although IP-Prime was a competitor of Avail, the folks at Avail aren't dancing on its grave.

"In an emerging market, the exit of IP-Prime from the business is not good for the overall industry," said Brian Matthews, Avail's chief strategy officer. Both IP-Prime and Avail offer turnkey IPTV products to smaller telcos.

According to SES' announcement, IP-Prime had contracted IPTV signal delivery agreements with 70 small telecom operators, of which 37 had so far reached commercial stage. However, it had a subscriber base of less than 10,000 at the end of November.

"After more than two years of service, the consumer uptake is insufficient to justify continuing operations," Rob Bednarek, president and CEO of SES Americom-New Skies, said in the statement. The company will continue operations through July 2009 to give its customers time to transfer their services. For more background, click here.

Avail, on the other hand, announced that its linear content affiliate base grew more than 100 percent year on year, and its VOD business grew by more than 300 percent to more than 1 million subscribers.

"Our differentiator is we provide an integrated linear and VOD service," said Matthews. "IP-Prime offers only linear."

Another difference between the two companies is market segment. "Our technology architecture was a lower cost for a similar set of features that allowed us to attract smaller, more emerging telcos, where the IP-Prime offering appealed more to larger tier 2s," said Matthews.

Cost is certainly one of the big challenges for IPTV. Cable and DBS operators have been investing in set-top boxes for decades and are now enjoying the return on that investment. Telcos wanting to offer IPTV are having to make that major capital investment. For more IPTV analysis, click here.

The downside for cable companies is that most of their set-top box inventory is MPEG-2. Telcos are rolling out MPEG-4. And MPEG-4 is becoming increasingly important because of the consumer demand for more high-definition (HD) programming.

- Linda Hardesty

Read more news and analysis on Communications Technology's Web site at www.cable360.net/ct/news/.