Television Internet-based television has a future and the potential to become a mass phenomenon. Denis Gaumondie has it good. The 26-year-old Frenchman is a customer of the French telecommunications provider Free and has subscribed to the Freebox TV service. Not only does he have a fast ADSL2+ Internet flat rate with 28 MBit per second, but he can also make free calls to the French landline network and numerous international networks. But that's not all. He simply connects the free set-top box to his TV and receives more than 100 TV channels. If they want to watch more TV channels, they can pay an additional fee to use pay TV or a video-on-demand service to watch the latest Hollywood films. The interesting thing about Free is the price: Denis Gaumondie pays 29.99 euros a month for the complete package. - A comparable offer in many European countries usually costs twice as much.Triple Play, the combined offer of telephone, Internet and TV connection from a single source and via a single line, is the most important driving force for many telecommunications companies today when marketing their multimedia services. The bandwidths now available (via ADSL2+/VDSL) and efficient compression standards make it possible to transmit high-quality TV signals in addition to voice and data services. Such triple offers should help to compensate for the sometimes severe losses suffered by the major telcos in the area of traditional telephony.
However, it is primarily the end customers who can benefit from this: They receive a huge selection of TV programs, including small and very small special-interest channels. Even Real Madrid, Denis Gaumondie's favorite club, has its own TV channel on Free. Interactive TV services such as video on demand, shopping, user-generated content and multiplayer games are also becoming a reality. Some of them are already included in some offers today.
IPTV - the transmission of television via the Internet protocol# - therefore has the potential to become a serious alternative to existing TV infrastructure channels. IPTV is by no means just a new distribution channel for existing TV programs, but is expanding traditional television on a large scale. IPTV is also independent of the distribution channel: Whether DSL, cable, satellite, terrestrial or mobile: IPTV can be distributed via all channels.
IPTV gets off to a flying start in Europe in 2007 If 2006 already provided important impetus for the development of IPTV, it will really take off throughout Europe this year. The forecasts are very promising: by the end of 2007, there will be 5.6 million subscribers in Europe, twice as many IPTV customers as in 2006. The revenue figures from IPTV subscriptions will also rise from EUR 470 million in 2006 to over EUR 1 billion by the end of 2007.
More than 50 IPTV offerings are already on the market in Europe today. There are 19 in the five largest European IPTV markets of France, Spain, Italy, Germany and the UK alone. In France, Europe's leading IPTV market, telecommunications companies now offer 8 IPTV services and already supply more than 1.3 million customers.
The business models of the individual IPTV providers are different. The service offered by KPN in the Netherlands, for example, is similarly inexpensive to Free in France. For a monthly fee of EUR 19.95, customers can receive an IPTV package with as many as 70 channels in addition to their telephone and DSL connection. British Telecom, on the other hand, is pursuing a hybrid model in which free TV programs are transmitted via DVB-T and additional programs and interactive services can be accessed via IPTV. For CHF 29, Swisscom offers a TV package with 120 channels in addition to the existing broadband connection. Its IPTV package Bluewin TV also offers national ice hockey and football matches at a competitive price of just one franc per match for individual viewing. Comparable offers from other pay-TV providers are considerably higher at between five and ten euros.
This year's development trends on the European IPTV market also include the tendency towards globalization. Many providers are already present with IPTV services beyond their national borders. Telecom Italia, for example, is also represented in Germany (HanseNet/Alice and AOL) and France (Alice) and Swisscom AG is in the process of completing the takeover of the Italian provider Fastweb.
Will IPTV become a mass market in the future? IPTV is still a long way from becoming a real mass market in most European countries. Nevertheless, a platform is growing that will seriously compete with the existing TV distribution channels of cable, satellite and terrestrial. IPTV is also attractive for all program providers, as they suddenly have alternative distribution channels for their content.
The extent to which IPTV will become part of everyday media life in the future depends on various factors. These include not only the attractiveness of the content and competitive prices. There are other hurdles on the way to the customer. On the one hand, there are technical issues, such as stable transmission quality or standardized set-top boxes. On the other hand, there are convenient operating functions. Even if the various interactive services alone make it almost impossible to achieve the same ease of use as in the analog TV world, intuitive user guidance - in addition to the price - will certainly be decisive for success. However, communication with end users will be even more important: What added value and what advantages does IPTV offer over traditional television? If all this succeeds, IPTV will have a lasting impact on the future development of television and, above all, the telecommunications industry.
Until recently, the infrastructures for television and the Internet were clearly divided. While TV was transmitted via antenna, satellite or the cable network, the home computer communicated with the Internet via broadband ISDN or DSL. This situation has changed fundamentally with IPTV. A matter of course for satisfied Free customer Denis Gaumondie.
Klaus Goldhammer (1967) has been a visiting professor of economics and mass communication at the Free University of Berlin since 2004. In 1998, he founded Goldmedia GmbH in Berlin, which focuses on management consulting in the TIME market, which includes telecommunications, IT, media and entertainment applications. Goldhammer will outline the trends for the advertising industry with eight other speakers at the Mediarena industry event on May 10.