IDC's latest research into Australia's digital TV landscape found that consumers are increasingly turning to the Internet for video sources – though initially this is through P2P file sharing networks, other legitimate sources such as ReelTime or th Australian iTunes store in the future.

"Today, quite a significant portion of Internet video users watch full movies and TV shows, and almost 30% obtain sports content over the Internet, which is one of the major drivers to pay-TV service adoption. Those who do not watch Internet videos have indicated that they do not want to watch videos on the PC screen and this immediate advantage FTA TV and pay-TV operators have over current online offerings will soon diminish. This is due to broadband service providers (BSPs) introducing IP set-top boxes to deliver online video content directly to the TV, along with the adoption of multimedia networks that stream content from the PC to the TV," said IDC Analyst, Sophie Lo.

However, IDC also has a warning for local BSPs to watch out for "innovative players like Apple", who are trying to break down the digital home adoption barriers. In Apple's case, this could be by way of its upcoming "iTV" which will be a media adaptor / set-top box-like product that will access content from computers on the network for display on a TV.

"By adding connectivity to their current service-device integration model, Apple is providing consumers with a complete end-to-end solution. Going forward, the iTV could possibly disrupt BSPs' strategy in establishing the home gateway as the media hub," said Ms Lo.

IDC said it does not envisage another IPTV entrant until late 2007 or early 2008 "as Telstra remains reluctant to enter the IPTV arena due to its equity in FOXTEL. Tier 2 and tier 3 BSPs lack a large broadband subscriber base, financial resources as well as experience in content acquisition and distribution."

IDC predicts local telcos'initial IPTV offerings to be fairly advanced and reliable as IPTV business models have already been implemented by overseas telcos, such as France Telecom.