Interview with Robert Payne, General Manager and Vice President of Sales, Verimatrix

IPTV news caught up with Robert Payne at this year's IPTV World Forum, part of the IPTV World Series Events, in March to talk about the global IPTV market

Firstly, Verimatrix won the IPTV World Series award for the Best IPTV Content Protection/Rights Management Solution at the IPTV World Forum this month, what does this mean for you?
The award was very welcome, it is an acknowledgement of the work and the effort that particularly our engineering team has been putting in and its acknowledgment from a panel of our peers, so for that reason it is very welcome. I hope what it acknowledges is that we have got innovative software.

Looking at the IPTV market in general, which markets, in your opinion, are the most promising for IPTV?
I can tell you where the most dynamic markets are. France is more or less without exception, the most dynamic market so far, they have a couple of major operators in IPTV. Lately Sweden, TeliaSonera for example have announced a free IPTV package for the first year, and there subscriber base is expanding rapidly.

In general, any market where competition between the incumbent and the new entrants, where new entrants can come in and actually make a business and threaten the incumbent, is a good IPTV market. They have to have a good infrastructure and they have to be competitive. So there are countries where there is a very good infrastructure but there is not much in the way of competition. The UK is an example; the only real competition is Sky versus NTL at the moment. BT has announced a service and eventually they are going to roll it out and now lately Tiscali is going to launch in the UK in the next couple of months.

Competition within the marketplace is the fuel for growth in IPTV. Places where the competition is the greatest include France, Spain, and Italy, lately Sweden, Holland is a very competitive market and Verimatrix is experiencing huge success in Russia. Russia has got this reputation of being a backward market and in some regards that was true once, but what they did is as the regime changed in Russia, instead of trying to catch up, they simply jumped over. They looked at other markets into ADSL and broadband on copper and decided that they were not going to do that, deciding to go with broadband on fiber instead. They completely skipped a generation and over-stepped the existing technologies that were being used in the West. So, for us, Russia is a huge market, we have got eight operators there and their penetration of broadband is going up. Most of the people in Russia live in apartment buildings and it is very easy to drive a fiber into the building and then run a cable up, then everybody in the building gets to benefit from the fiber, no copper and they don’t waste time with telephone lines. So all they have to do is out fiber to the building and you have got IPTV. It is IPTV heaven and consequently it is doing very well.

Are there any particularly problematic markets?
Anywhere where the regulatory system doesn’t encourage or doesn’t allow competition is essentially problematic. I won’t say that one market is necessarily worse than another. China does have those regulatory concerns, although they are relaxing them.
‘Content is king’ that is always going to be the real deciding factor. If an IPTV operator is successful, it is because they have got good content. India and China are the two largest markets in the world and both have got challenges, china because of the regulation, India is very price driven. In the Middle East we see there is still governmental control and censorship etc, even the internet is censored in some countries in the Middle East so it is hard to sell IPTV in those markets. In Sub-Saharan Africa they don’t have the infrastructure to support it. But everywhere else is potential IPTV heaven. In Europe, some countries are a little slow, UK being one of the slowest, as there is this legacy of infrastructure and you cannot fault the operators because they have spent so much money in building the network that they have got, to find the money to change it and make it video friendly and support IPTV is very expensive and frankly getting the investment is difficult. Paradoxally in Europe, some of the advanced telecommunications markets are slow in uptake for IPTV. Some of the others, for example, who would have guessed that Portugal would be one of the flag carriers for IPTV, along with France and Italy, with competition brewing in Greece.

When, if ever, will IPTV be able to be one of the main competitors for Cable and Satellite?
I wish I knew. You will be aware of the statistics of course that IPTV is probably equal to or less than 4% of the so-called PayTV market worldwide. What is significant in the actual market share at the moment is the rate of growth. Broadcast markets in cable and satellite are all saturated. The way an operator makes a new business in those markets, is through churn and it is pretty much the only way that they can make business. But the problem is they are susceptible to churn themselves as their competitors are, so what they gain on the left hand they are inclined to lose on the right hand. So making growth in those markets is very difficult, but what IPTV does is come along with a completely different paradigm, which says; here I am offering you the chance of unlimited growth and that’s what is appealing about it and why it is exciting and ultimately why it will be successful. If you are a satellite operator and you have got 90% of the market, where do you go? New operators are coming in with a new innovative service, cheaper, quicker, and more exciting. What we find a lot in the cable and satellite market is that customer service is not very good, IPTV brings new, fresh, competitive offerings. So the growth in IPTV is the exciting thing, not how big it is today. Now that MPEG-4 boxes are here now things are ready to go, the IPTV World Forum has come at the right time because the industry is ready. Now, everything; Set top boxes are becoming available, chipsets are available to the manufacturers of the set top boxes is going ahead and they can be made in the volume to bring the price down and make them competitive. The operators can buy the boxes because they are now efficient to be able to carry multiple channels on the copper wires. The middleware, all the integrations are done and all the wrinkles are being ironed out. All of the relationships and the ecosystems are in place. IPTV is growing and there is no question about it, it is exciting.

It has become apparent that the personalisation of the offering and the customer care related to IPTV holds it in good stead, do you agree?
Absolutely. I think it is fair to say that the cable industry does not look after their customers and when the better choice comes along (in the form of IPTV), consumers will take it.