BT Has Hopes to Replicate European IPTV Success

By Kathryn Stobs-Stobart

On December 4, BT launched its next generation TV service, BT Vision, taking it into the somewhat unknown territory of IPTV. BT Vision is the first nationwide TV service of its kind to be launched in the UK. IPTV has established itself in France, Spain and Italy and many commentators have said that the launch of this IP-based video service has been long overdue in the UK.

It is believed by some commentators that BT is extending its offering from merely telephone and broadband into television in the form of IPTV in order to compete with TV providers such as the cable operator NTL and more recently the satellite giant, BSkyB, which have moved into telephony and broadband.

IPTV has started to make an impression on the European Pay TV market. France Telecom has been running its IPTV service:  Orange TV (formerly MaLigne TV) for almost three years and today has around 300,000 subscribers. Telefonica’s Imagenio TV (in Spain) has around 200,000 subscribers, followed by FASTWEB, which claims to have reached 45% of the Italian population with its IPTV service and possesses around 160,000 subscribers. Belgacom has recently announced that it has hit its growth target earlier than anticipated, with over 100,000 subscribers, giving Belgians a viable alternative to cable with its television and VOD service. These telcos have all launched successfully into markets with established cable and satellite Pay TV offers and now BT wants to join them.

Although IPTV has been relatively successful on a small scale around the Greater London area with Homechoice, it is still unclear whether the UK is ready for the nationwide deployment that BT Vision is implementing. Therefore it is important that BT proceeds with caution and takes note of the successes and pitfalls that other telcos around Europe and indeed the rest of the world have experienced when rolling out IP-based video services.

BT Vision is going to be rolled out nationwide. According to BT, the fact that it is not limited by geography holds it in good stead against cable operators, which face such limitations. Although BT claims to have Freeview coverage of 90% of the population, there are still 10% that are unreachable. This will impact the success of BT Vision.

To begin with, BT will be targeting its existing broadband customers. It claims to have over 10,000 pre-registered customers interested in BT Vision. A full above-the-line marketing campaign will be launched next year in order to bring in new BT Vision customers.

BT’s existing customers will be able to view a range of film, music and television programming on-demand via their broadband connection, along with the existing Freeview channels. According to BT, this service puts the viewer in control by combining the appeal of TV with the interactivity of broadband. Customers will be able to watch what they want, when they want and not be tied to TV schedules. What will make BT Vision more attractive to customers is that the service does not require a regular monthly subscription.

BT Vision is delivered on a software platform powered by Microsoft TV and through a set-top box made by Philips. This new set-top box, the V-box, contains a personal video recorder (PVR) able to store up to 80 hours of content, pause or rewind live TV and record programmes at the touch of a button. The box is also HD ready. BT Vision also features a 'Replay TV' service, allowing customers to catch up with some of the broadcast TV programmes they may have missed during the previous week. The V-box will be made available to existing and new BT Total Broadband customers free; however there is an installation fee of £60 and a connection charge of £30. BT will be introducing a self-install version of BT Vision sometime next year.

Ian Livingston, BT Retail chief executive states, 'BT Vision is all about giving control to the viewer – control over what they watch, when they watch it and how they pay for it. We believe that broadband can transform television and take it into a new era. BT Vision is ideal for people who want more choice than Freeview delivers but who want that extra choice without being tied to a pricey, long-term subscription.'

BT is still in the early stages of IPTV but will be developing and extending its service during 2007 with ideas such as sport-on-demand, aiming to have 200,000 subscribers by the end of next year. BT Vision aims to have two to three million customers in the medium term, which will be between three to five years.

BT has been preparing for the launch of BT Vision, announcing new content deals and partnerships almost every month. BT Vision is creating a diverse IPTV offering by covering all bases: video-on-demand in the form of movies and television programmes, music-on-demand in the form of music videos and playlist capabilities, along with gaming.

Some of the content providers include: DreamWorks, Momentum Pictures, Universal Pictures UK, NBC, Future Plus, i-concerts, Eagle Rock, BBC Worldwide, Paramount, Warner Music Group, National Geographic Channel, HIT Entertainment, Nelvana, Lionsgate Entertainment Corp, The History Channel UK and Turner Broadcasting. There are also independents including Entertainment Rights plc, NBD Television, and Wall to Wall Television. MTV, Paramount Comedy, Nickelodeon, The Walt Disney Company, Channel 4 and Warner Bros are also behind BT Vision, with Emap set to provide music services.

As IPTV is relatively unknown in the UK, it is not clear how successful the take up of BT Vision will be. Some commentators have even said that BT Vision is being rolled out merely in order to extend customers for BT Broadband. Market research firm Infonetics predicts that the number of IPTV subscribers worldwide will more than double each year from now until 2009, when the total number of subscribers will reach 68.9 million. These figures are promising and signify a positive future for telcos wishing to extend their offerings onto IPTV.

The challenges surrounding IPTV still remain, such as content acquisition. Microsoft TV, which will be the middleware provider for BT Vision, has had to face questions about its part in the apparent delays in launching some IPTV services. However Microsoft TV has been part of many recent IPTV launches around Europe, including Deutche Telekom, signifying that the major telecom operators are willing to put their trust in the company to get them to market.