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Next year Telstra will launch iPTV in Australia a move first tipped by SmartHouse 6 months ago. The But what does it all mean.move could revolutionise the way we watch movies.

 Internet Protocol Television (IPTV) either heralds a revolution in the way we’ll watch TV or it’s been outrageously over-hyped and could be a big flop. However I am tipping that it will be slow to kick off and when Telstra launch their new 3G Network the service will really take off.

To put things in perspective, USA Today has called IPTV an ‘infant, unproven technology with a geeky name’. But the ability to pipe TV content over broadband has the potential to turn the broadcasting world upside-down.

IPTV shouldn’t be confused with Internet video. It has nothing to do with P2P file-sharing or watching a downloaded DivX rip of Lost on your PC. Nor does it describe watching a low-resolution QuickTime or Windows Media clip in a tiny web-window. Instead, IPTV is all about providing high-quality multi-channel television and streamed/downloadable video, all delivered via the web’s IP protocols and displayed on the TV set in your living room. IPTV is happening now. France Telecom’s MaLigne TV has been providing live TV and Video on Demand (VoD) since 2004 and FastWeb is doing the same in Italy. There are big plans for IPTV in the US, where SBC is betting $4 billion on the hope that the technology will bigger than big.

SBC hopes to have 18 million homes hooked up to its service (project ‘Lightspeed’) by 2007. Motorola and Scientific Atlanta which was purchased by Cisco last week will build the set-top boxes, while Microsoft will provide the IPTV Edition software. SBC’s rival, Verizon, hopes to have around three million homes connected to its own service by the end of 2005.

In the UK, Video Networks has been running its HomeChoice service in London for the past five years, offering a quadruple-play package of broadband internet access, a basic package of IPTV channels, video on demand and telephony. The technology works. But HomeChoice has been slow to gather followers. Despite a five-year head start in the UK, the service only has 25,000-30,000 subscribers and is restricted to the capital. Telstra could well offer the service to it’s 2.3 million Foxtel pay-TV subscribers. What is interesting is that 75 per cent of Foxtel’s and Austar’s subscribers have already ditched the analogue system, electing to take up digital technology, which delivers more than double the number of channels and interactive services. They also have a broadband connection and are a perfect audience for iPTV. The move to launch iPTV comes as the Federal government starts to crank up the move to digital TV. (See seperate story on digital TV) Only about 13 per cent of the 15.2 million televisions in Australian homes are now tuned to digital services, prompting free-to-air networks to push to delay switching over their audiences for several more years. Foxtel has said that almost 6 per cent of subscribers now had Foxtel’s iQ interactive service, which enables them to rewind live TV and record two programs at once. A portable viewing service, called iQ to Go, would be released within 18 months. This is Foxtels version of iPTV.

Foxtel has also announced that it will be converting all of its subscribers to digital and switching off its analogue service by March 2007. Foxtel CEO Kim Williams and Austar CEO John Porter also say they hope to launch at least two 24-hour-a-day, seven-day-a-week composite high-definition channels by 2008. Free-to-air channels already broadcast many programs in HD. Foxtel’s commitment to two HD channels will be made possible by extra bandwidth available on the Optus D2 satellite. Its next generation of digital set-top boxes will also have MPEG-4 chips to handle the higher-resolution video signal.

“There’s nothing new about the concept of Internet Protocol Television” explains media analyst Graham Lovelace. “But early examples have been a poor experience and downloading content has just taken too long. Bandwidth and the cost of servers conspired to limit the growth of IPTV. That’s now no longer the case, thanks to rising broadband speeds and more efficient compression.” Faster broadband is key and this is why Telstra are spending $3.5 billion dollars building a bew 3G wireless network.
Telstra are confident that they can deliver a 12Mbps services which is ample for an iPTV service. As for compression, MPEG-2 is the most widely supported video codec in the TV industry, but it isn’t the most efficient for IPTV. The services running today have proved that MPEG-2 can be delivered over broadband. But providers like Telstra will deliver the service over MPEG-4 AVC (H.264) or Microsoft’s Windows Media Video 9 codec. These dramatically reduce the bandwidth requirements, enabling IPTV systems to carry more standard definition channels or potentially HDTV programming in the future.

“IPTV is entering a crucial stage in its development,” says Adam Thomas, author of the report ‘IPTV: A Global Analysis’ for Informa Telecoms and Media. “It is moving away from a technology under trial, into full commercial deployment.”

Thomas’ research suggests that although there are barely 2.5 million IPTV subscribers globally today, there will be around 25 million by 2010. The report highlights China as the leading candidate for IPTV growth (4.9 million subscribers), followed by the US (3.4 million), France (2.5 million), Germany (2 million), Italy (1.6 million), the UK (1.5 million) and Spain (777,000). But considering that broadband penetration in Europe and the US is expected to rocket to 290 million homes by 2008, these numbers are still small.

IPTV is inevitable, but companies will approach it in different ways. Big ISPs such as Telstra and Optus when they launch there service will see it as an additional revenue stream, especially as this year’s broadband war has seen prices fall but broadband speeds double. Foxtel will be able to offer the true on-demand and interactive applications that satellite technology lacks. Foxtel already has a broadband TV application in the works, and because of there 50% ownership by Telstra they are in a perfect position to capatalise on the iPTV service.

In Australia free to air broadcasters are watching what is happening in the UK where broadcasters have also been quick to spot the new opportunities that broadband TV can deliver. The BBC has been running the second of its Interactive Media Player trials (iMP), enabling users to download TV and radio shows after broadcast; ITV too has taken the broadband TV plunge – its pilot service includes local news and weather, an entertainment guide and community video.

Telstra has found their businesses threatened by mobile telephony and VoIP, but now with the new network they have an opportunity to reinvent themselves as media giant while also delivering communication and entertainment services.

Ultimately, while there’s a great deal of excitement about IPTV, services are likely to complement rather than replace today’s delivery mechanisms. What it will do is cause TV viewing to fragment even further. In an IPTV world, your TV screen acts as a web browser and programmes are searched by customised guides containing video search abilities. It’s no wonder that Google and Yahoo! see video as a big part of our online future.

We may find that streaming services take a back seat to the sort of video download service that’s being pioneered by people like Telstra. The recent launch of Apple’s video-capable iPod and, more importantly, the availability of five TV shows via iTunes, is an indication that the TV landscape across the world is about to change. We could be on the verge of a revolution that sees video on demand (VOD) truly take off.

This is what the digital SmartHouse is all about.

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