General

IPTVComplete

Don't want to build your own cable head end? Don't bother. You can outsource the whole IPTV thing.

by Gerry Blackwell [March 4, 2005]

Delivering pay TV services over a broadband network, as readers following our series on IPTV will have gleaned by now, is not for the faint of heart, or the slim of wallet. It's a complex, capital intensive business that involves a steep learning curve. Most ISPs will decide that discretion is the better part of valor and choose not to play. And who can blame them?

But IPTVComplete™, a new managed IPTV service from broadband services company Eagle Broadband Inc. and GlobeCast, a satellite services subsidiary of France Telecom, could give ISPs new courage. IPTVComplete eliminates most of the complexity and the capital costs. The partners say it will save $1 to $2 million in capex and allow service providers to reduce their time to market from 12 to 18 months to less than 60 days.

Customers pay a flat monthly fee, plus a per-subscriber fee. The price covers infrastructure, including a headend, installation, ongoing management, and content—200-plus TV channels, and video on demand and pay-per-view programs, all in a high-quality, encrypted stream ready for distribution on any broadband last-mile network of sufficient capacity and controllable quality of service.

The price doesn't cover the cost of the set top boxes subscribers need to decode IPTV signals, which is significant, but recoverable from subscribers through purchase or lease options. And it doesn't cover the cost of some of the special integration applications—on-screen call display, for example—that will make IPTV more attractive in a triple play (voice, Internet, TV) offering. Still, the service takes much of the uncertainty and pain out of IPTV.

"What we offer is truly a one stop shop," says Jonathan Feldman, senior vice president of business development at Globecast. "We're able to give broadband providers an additional value added service that will help them reduce churn and add new revenue streams, and the whole thing is managed by Eagle and GlobeCast—so a single point of delivery and accountability."

The partners won't discuss pricing, saying it's too competitive a market and that prices will in any case vary widely depending on the services to be offered and the size of serving area. Whatever the cost, though, most of it is not capital expenditure, it's ongoing operational expenditure, and that should make IPTVComplete very interesting to a lot of people.

Eagle and GlobeCast's first marketing focus is not ISPs. It's small independent telephone companies, because they own facilities-based broadband networks and they have a need. There are 1,200 to 1,400 of them in the U.S., notes Eagle vice president of marketing Randy Shapiro.

"The most immediate demand is from those telephone companies," Shapiro says. "They're really under the gun to provide competitive triple-play services because they're losing subscribers to cable companies offering VoIP. Wireline phones are also being uninstalled by customers who are taking wireless instead. So they're under pressure to replace lost revenues."

Offering an IPTV service won't just replace lost revenues, he adds. It will add net new revenues. He cites research from The Yankee Group showing that offering a video service can more than double a telephone company's average revenue per user (ARPU).

Eagle and GlobeCast had been talking to several telcos and other broadband providers for several weeks before they officially announced the IPTVComplete offering. According to Shapiro some of them were ready to sign, but the partners had to put them off until they had finalized their agreement and the offering. They expect to announce the first signed customers "in a matter of weeks, if not sooner."

In the first few days after the announcement, the number of companies expressing interest increased five fold to about 100. "The biggest challenge right now is just fielding all the inquiries," he says.

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