(21 June 2007 4:10 pm)

SINGAPORE: IPTV operators should look at increasing their ARPU (average revenue per user) over time and an improvement in positive cash flow.

Also key is to look at the competitors, which include cable, terrestrial, satellite, new entrants (internet) and retail as in DVD sales both pirated and legal. One then has to identify differentiated content like on-demand movies as well as whether all the rights for the most popular content have already been allocated.

These points were made by NDS chief marketing officer Nigel Smith. According to him, the obstacles to IPTV are entrenched, mature competition, health of networks and DSLAMs, Long loops, patchworks of legacy networks, non-multicast Dslams.

Also, while broadband penetration has been growing fast, it is still barely mass-market phenomenon. There is adverse or unclear regulation.

The difficulties do not end there. Access to content is an issue along with protecting copyright. High startup costs have to be incurred. There is a lack of IPTV standards and interoperability. Each deployment requires considerable R&D and integration. This process, Smith notes, could hamper business. There is no accepted model. Each operator is on its own. Then there is the matter of corporate cultures. Telecom firms tend to be faceless and conservative while most media companies are entrepreneurial and have one dominant figure.

He says that access to content along with new methods of distribution and new consumer patterns equals Broadcast 2.0. This will happen. Eventually horizontal delivery platforms mean that operators will become multi-service. The service will likely be differentiated on customer service and facilities.

Content is likely to stay with the existing operators. A consumer will be only marginally interested in how the content gets to him - but very interested in what content is available and how they use it. One will also see more partnerships between platform and service operators.

High-quality content will mostly reside with pay-TV operators while clips, older and user-generated content will likely also be on advertising supported platforms. The first step for an IPTV firm to succeed is to identify content suppliers.

IPTV firms should work directly with content owners and aggregators. On the technical front, a service solution needs to be defined. A technical solution should include rights management and reporting as well as customer support/billing. Then there are marketing activities that need to be done.

• The European Scene: Here 43 Commercial IPTV ventures exist in over 19 Countries.
  
  
• 27 operators have tiered Pay-TV models
  Four operators have a free tier
  
  
• 13 companies offer reduced pay-TV schemes (less than 2 or fewer packages) In the top 5 TV markets in Europe (France, Germany, Italy, Spain UK) 73% do not have full Pay-TV packages In France, four operators have free tiers, while Orange has a reduced offering.

Lines, Smith notes, are getting blurred. There is a situation where the customer gets his phone from the cable firm and vice versa. Operators are moving to Multiplatform. For instance, telecom firms British Telecom, DT, Telefonica, AT&T have all announced TV services. Existing satellite/cable operators see IP as the way to deliver 'on demand' content. A case in point is BskyB's purchase of Easynet in UK. This way they access customers unwilling or unable to receive satellite. They also respond to competitive threat from Cable and broadband operators. They can now offer an enriching interactive experience to raise Arpu.

As far as piracy is concerned, one is on the slippery slope of hack, patch, hack. According to the Australian researcher who cracked the authentication used by Apple's iTunes software, current-generation Digital Rights Management (DRM) will never work.

It was the second time that David Hammerton had managed to crack the authentication. However, this time it took him just eight hours to break the brand-new iTunes 4.5, which had been patched against his previous research.

Smith says that NDS' DRM Gateway offers a single interface for all content types and a single interface for all transmission methods. It enables a unified service package across TV, PC, wireless devices.