IPTV in Europe

By Steve Hawley

At the outset of 2007, Europe may be considered as the world’s largest and most varied IP video market, giving operators in this region collective bragging rights for industry leadership.

Looking at world’s top ten IPTV deployments today, about half of them (depending upon whose rankings you are reading) are in Europe. Among incumbents, France Telecom’s Orange TV service has 400,000 subscribers in its home country (not to mention additional deployments elsewhere within and outside Europe), while Telefonica has about 300,000 in Spain.  Belgacom quietly broke the 100,000 mark during the second half of 2006 and FastWeb, operator of its own broadband network and a major competitor to Italy’s incumbent, has about 170,000 subscribers.

Unlike other markets, such as in the United States where incumbent operators are no longer required to rent their lines to competitors – and therefore don’t -- many European countries have vibrant competitive IPTV markets.  France alone has at least six operators competing against incumbent France Telecom, with a total of more than 800,000 subscribers among them -- bringing the total number of IPTV subscribers in France to more than 1.2 million.  In the UK, Tiscali’s HomeChoice and France Telecom’s Orange service are on their way.  Deutsche Telekom is launching IPTV services under its T-Com and T-Online brands in France and three Eastern European countries over unbundled local loops.

The closest US operator in terms of subscriber-count is Verizon Communications, with roughly 170,000 subscribers to the FiOS TV service from. But the FiOS live TV offering is a cable-like QAM modulated service that’s coupled with IP-delivered on-demand content.   And despite the fact that the world’s largest single IPTV deployment is in Hong Kong, major European operators should soon exceed it in sheer numbers because Hong Kong’s two IPTV operators, according to recent reports, have already captured more than 50% of that market’s pay TV subscribers.

Because broadband emerged relatively early in Europe, some of Europe’s IPTV deployments are hybrid in nature.  For example, BT and multiple operators on the European mainland have chosen to bundle on-demand content delivered over DSL with live TV programming delivered over the air via digital terrestrial.  It’s because many DSL facilities are in the low multi-megabit range, which is insufficient to carry both live TV and on-demand video and still be able to guarantee multiple simultaneous streams.

The presence of hybrid TV delivery models has had an impact on CPE and other infrastructure elements, such as content protection.  Set-top boxes designed for the European market must be designed in a way that accommodates different combinations of receivers for different operators.  This means modularity.  Accordingly, the major set-top suppliers offer models that allow operators to choose.  The recent and ongoing wave of mergers and acquisitions in the IPTV vendor world has also been felt in Europe.  Two notable examples are Motorola’s acquisition of Kreatel and Cisco’s acquisition of Linksys, which had previously acquired KISS; simultaneously giving these mega-vendors a European presence and giving them product lines specifically tailored for Europe.

European operators are also in the vanguard for video distribution over home networks. Belgacom and Telefonica both offer options for distributing TV over home powerlines, while Ruckus Wireless is reported to be in broadband TV trials with Belgacom and as many as thirty other European operators.  One challenge facing in-home distribution, particularly for wireless, is the ability to sustain speeds in excess of 20 megabits per second, required to route multiple streams of TV and data around the home.  Because wireless is prone to data loss, the ability to guarantee sufficient quality-of-service is of particular concern.  And operators are not stopping with fixed-line and in-home video distribution.  BT’s strategy is to use IPTV as a Trojan horse for promoting its HomeHub, to provide WiFi access, Internet telephony, cordless phone, videophone and eventually home security services.

2007 is sure to be a year of convergence between fixed-line and mobile platforms and again, European operators will be leading the way.  A recent Mobile Tracking Study from Comscore Networks concluded that 29% of Internet users in six Western European countries access the Web via mobile devices.  Accordingly, operators are introducing mobile service plans that add video.  For example, Hutchison’s 3 mobile service sells Sling Media’s Slingbox with a mobile plan that delivers a premium tier of service to its mobile handset users; allowing consumers can reach content from any device.  The operator also offers short-form content that’s tailored to mobile users.  Although operators are still sorting out data issues, mobile video appears to be a big hit and vendors are working with the operators to improve quality of service.

France’s Free offers another flavour of fixed-mobile convergence.  Hundreds of thousands of its Freebox HD set-top boxes are equipped with WiFi, enabling its subscribers to use WiFi-enabled mobile phones to make calls anywhere in France for no calling charge, and at low cost to other destinations.

Some issues remain.  From an infrastructure perspective, no single content protection solution yet exists that can address the entire content lifecycle: from creation through compression, distribution and playout, across the range of consumer devices and networks. DRM interoperability would be a key advance, but multiple advocates each claim superiority.  In addition, experiments with user-generated and community-based content – including content that may be shared across services and platforms -- as well as experiments being conducted by operators and TV programmers to build community (and therefore, subscriber stickiness) around content, raise potentially serious intellectual property and liability issues.

Despite these potential impediments, many observers agree that Europe has the world’s most advanced and varied IPTV marketplace; one that’s vibrant and bursting at the seams with innovation.   TV is transforming from a passive linear medium into one where subscribers are in control, demanding personalized media content delivered to any device in any context and on their own terms.  This week at IPTV World Forum, we’re sure to see and hear about all the forces propelling the European broadband TV market.