USA IPTV Market

Market Structure

Subscribers ('000)					Estimated
Pay TV	CATV	DTH	DTT	IPTV	Pay TV ARPU
96000	65294	34000	0	72	Euro 20-35

Competitive Landscape

Current Operators: Several small rural telcos are pioneering IPTV services in the US – examples include SureWest (California), All West (Utah, Wyoming) and Consolidate (illinois). SBC launched the ‘Dish’ service in 2004, re-broadcasting satellite TV programming from Echostar. There has bee aggressive launches of VoD from cable operators consisting of a mixture of paid-for premium content and free TV on-demand functionality in some cases.

Incumbent: Major network upgrade projects are on with a focus on fiber in a number of cases for example, Verizon’s launch of fiber broadband. However, no actual TV/VoD launches as at Q3 2005. SBC Communications has a partnership with Direct TV. SBC has set a budget of $4bn for IPTV deployment with a target pricing of $90 for triple play and it is targeting 6.8 mn subscribers by 2008

Competition: Cable multi-service operators (MSOs) are developing both VoD and IP telephony services. None of the non-telco DSL providers are known to be developing IPTV at present.

Market Analysis

Pay TV in the US is a highly developed market. Cable has been the main driving force of market growth and many households now have multiple TV sets. The US is also home to many of the premium content channels and content distributed to other markets around the world.

Major Telcos have recognized the urgency in entering the TV market to compete against strong triple-play offerings from cable operators. However, DSL bandwidth is generally constrained by long line lengths. TV/video-capable DSL will probably not go much higher than 50%, because high-speed access investment will increasingly be concentrated on fiber.

So it is very obvious that fiber will connect a significant number of video subscribers. Normally fiber to the node (FTTN) is included in the DSL broadband numbers, and SBC’s ‘Project Lightspeed’ is based on FTTN (unlike Verizon’s FiOS, which is based on FTTP i.e. fiber to the premise) – so this will boost the DSL availability figures.

Time Warner has indicated that cable operators will adopt a follower strategy on IPTV and VoD. The company is evaluating the technology, and accepts that IP delivery will be inevitable in the long term. However, it does not believe that a rapid move to IPTV is either necessary or feasible. It will therefore monitor progress of telco IPTV services, and if they take off quickly will step up the pace.

IPTV availability over cable will lag DSL at first, but will start to catch up in the mid period, and will be on course to exceed DSL by the end of the period – in other words cable operators will be upgrading their TV & video delivery systems to IP as a matter of general strategy by then.

Research report from TDG has indicated a higher and more rapid rise in penetration for FTTH subscribers, since FTTH providers are likely to market IPTV and VoD as the principal benefit of FTTH based Internet access. Main US ISPs are unlikely to offer VoD as a standalone service; it will only be available as an add-on to IPTV, at least in the near future. There is a possibility of some standalone VoD in 2008 and 2009.