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 Television is changing
Over the last decade, the growth of satellite service, the rise of digital cable, and the birth of HDTV have all left their mark on the television landscape. Now, a new delivery method threatens to shake things up even more powerfully. Internet Protocol Television (IPTV) has arrived, and backed by the deep pockets of the telecommunications industry, it's poised to offer more interactivity and bring a hefty dose of competition to the business of selling TV.
IPTV describes a system capable of receiving and displaying a video stream encoded as a series of Internet Protocol packets. If you've ever watched a video clip on your computer, you've used an IPTV system in its broadest sense. When most people discuss IPTV, though, they're talking about watching traditional channels on your television, where people demand a smooth, high-resolution, lag-free picture, and it's the telcos that are jumping headfirst into this market. Once known only as phone companies, the telcos now want to turn a "triple play" of voice, data, and video that will retire the side and put them securely in the batter's box.
In this primer, we'll explain how IPTV works and what the future holds for the technology. Though IP can (and will) be used to deliver video over all sorts of networks, including cable systems, we'll focus in this article on the telcos, which are the most aggressive players in the game. They're pumping billions into new fiber rollouts and backend infrastructure (AT&T alone inked a US$400 million deal for Microsoft's IPTV Edition software last year, for instance, and a US$1.7 billion deal with hardware maker Alcatel). Why the sudden enthusiasm for the TV business? Because the telcos see that the stakes are far higher than just some television: companies that offer the triple play want to become your household's sole communications link, and IPTV is a major part of that strategy.
 What's In it For Me? If IPTV was simply a way for telcos to enter the video delivery game, it would be an attractive service just for the increased competition. A recent FCC study showed that cable rates increased at more than 3.5 times the rate of inflation between 1998 and 2003—but in the few places where cable faces competition from another wireline provider, prices are substantially lower than the average. The increased competition provided by the telcos will no doubt drive prices down further, as has already happened in Texas (where several Telco TV projects are undergoing trials).
Apart from the effect on the competitive landscape, though, IPTV has the potential to deliver more interactivity than cable. An all-IP solution is switched digital by nature, does not depend on shared bandwidth, and uses well-known Internet technology, which should make for some interesting applications. Expect to see caller ID information displayed on the screen when your phone rings, for instance, or alerts when you receive new e-mail. Because IPTV does not require expensive tuners, multiple picture-in-picture applications will become a reality, and DVRs will be able to record multiple shows at once without upping the cost of the unit (the main constraint will be bandwidth). An interactive program guide, pay-per-view functionality, and video on demand will all be standard features, and channel changes should be much quicker. |
How it Works!
First things first: the venerable set-top box, on its way out in the cable world, will make a resurgence in IPTV systems. The box will connect to the home DSL line and is responsible for reassembling the packets into a coherent video stream and then decoding the contents. Your computer could do the same job, but most people still don't have an always-on PC sitting beside the TV, so the box will make a comeback. Where will the box pull its picture from? To answer that question, let's start at the source.
