TV capacity problem for telcos17 September 2013
Today the telcos may not look to be in the best position to deliver high-quality, linear TV, but the falling cost of IPTV delivery, coupled with growing consumer preference for purchasing bundles of TV and telecommunications services, as well as their deep pockets, all work in their favour, according to research by Redshift.
“The cost of delivering a TV channel over IP is predicted to fall 80% over the next 10 years because of new compression technologies and CDN processing improvements,” said Stephen Taylor, director at Redshift. However, he cautioned that telcos aren’t always sure if they are selling telecoms access services like broadband or TV, and that that can prove crippling. “Not only are true quad play offers – phone, mobile, TV and broadband – still small but often the telcos fail to allocate investment in the TV offer,” he said.
To be sure, not all telco TV offers have been successful, but several of the biggest players, including Vodafone, KPN and BT are putting increasing emphasis on their TV offer. “For us, TV is much more than a marketing gimmick,” said Alex Green, head of BT TV. “If it was only about marketing, we’d discount our broadband or invest in a sexier type of home hub. It’s really about the insight that consumers like to buy bundles and the more then buy from us the sticker they are and that is good for us.”
Jaap Postma, VP consumer products at KPN, said that the Dutch telco already has a 24% market share for its TV service and believes that offering a “stable TV service with no glitches and no freezes” is more important than offering exclusive content or channels in 4K, for example. He also says that KPN plans to move its service into the cloud: “We are on IPTV today but we are advocates of moving into the cloud as soon as possible.”
BT’s Green said that in the UK the market is so competitive that investing in exclusive sport and creating its own exclusive programmes out of its own studios is the only way to change the perception of the BT brand. “We don’t regard ourselves as a telco now. We’re a broadcaster,” he said. He admitted that there will be a capacity issue for 4K and other spectrum-hungry services but BT has a massive investment underway in rolling out fibre optic networks and it recently purchased 4G mobile spectrum. “In some ways our roll out of TV services is creating a capacity problem, but we think that is a good problem to have,” he said.