IPTV Generating Big Decisions, but No Big Telco Money Yet

Bells have announced IPTV deployments -- mostly small trials, vendors said. Verizon is among the big movers but has rolled out service only in about half a dozen places. AT&T has placed orders for IPTV set-tops with Scientific- Atlanta and Motorola, but those purchases aren’t believed to be large, officials said.

The rollouts aren’t all hype, some vendors said. “This certainly is the hype stage,” said Todd Waters, S-A dir.- business development. But telcos have been “pretty good” at previous rollouts such as high-speed Internet, paging and VoIP, he said: “They are heavily motivated. They have to do something because cable is coming out strong.”

Bells have spent heavily on core infrastructure that will ease the move to next-generation networks, Dana Rasmussen, Siemens senior vp-gen. mgr., next-generation business unit, said: “This is absolutely a real buildout. A lot of money is being spent on it.” Bells have been the biggest spenders, he said, and “the main driver is IPTV.”

Bells are still “kicking the tires” on IMS, Rasmussen said, “but they recognize they have to do it.” He predicted IMS orders will be “coming on fairly quickly,” likely in 6-12 months. Rasmussen told us the new services will launch first in “pockets,” but “once they work out the kinks it will go mass market.”

N. America is behind Europe in IPTV rollout, and Asia is coming up quickly, Coulombe said. SeaChange has deals with NTT, MTS, Telus and others, and there are IPTV deployments in France, England, Italy and Belgium. A big spur, she said, will be games over IPTV, taking advantage of installation of the technology to deliver video.

S-A, a long-time vendor of cable set tops, is “excited” to have a new market among telcos, Waters said, especially since S-A is “selling expertise we already have.” He said there are about 70 IPTV deployments, though most remain small. But software from Microsoft and others is only now becoming available, he said, calling a ramp-up likely. S-A plans to deliver its first full-production IPTV boxes within days, with output hinging on demand. “Whatever the market demands” in production rate, “we can meet,” Waters said.

Cable eventually may need to switch to IPTV to compete, Waters said, but it will have difficulty figuring out how to deal with its installed base of legacy MPEG-2 QAM RF boxes. Cable likely will begin IPTV trials soon, he said, but “it will be a while before the cable guys embrace and roll out something new on a large scale.”

Cable firms are making a “tremendous investment” in DVRs and HDTV, Rasmussen said: “There’s a bit of a horse race for who can deliver more channels quicker.” He also said cable is very interested in IMS.

A market is emerging for selling IPTV equipment to eBay, Google and EarthLink, Rasmussen said. “They share a lot of cable attributes,” Rasmussen said: “They're aggressive and tend not to analyze a thing to death before they pull the trigger. As a vendor, they're a tremendous opportunity, and an increasing focus for us.”

TelecomNext featured dozens of IPTV product vendors. They included firms from outside traditional telco, like S-A and SeaChange, plus monsters like Microsoft and multiple small vendors offering pieces of the IPTV puzzle. Asked if old-school vendors like Siemens see rising competition offsetting increased opportunities, Rasmussen said he isn’t worried. He said the bursting of the telecom bubble a few years ago got many buyers to focus on vendors with a long record of stability. He also predicted new entrants, including Microsoft, will face new challenges of network reliability telco vendors have long experience with: “When you step into the carrier space, it comes with a lot of big issues.” -- Michael Feazel

TelecomNext Notebook…

USTelecom’s TelecomNext show this week appears to be paying far less attention to regulatory issues than shows did in the past and instead is pushing content and technology during speeches and other events. “We've broken new ground,” USTelecom Pres. Walter McCormick told the audience at the packed morning session Wed. Nowhere else can you find a show that reflects the “end-to-end operations” from equipment manufacture to making arrangements with content providers to selling services to customers, McCormick said. While 3 Bell CEOs gave keynote speeches, so did chief executives of Disney, Alcatel, Lucent, Cisco and Microsoft, among others. Event sponsors seem to be careful not to call “TelecomNext” a “trade show” and “communications” is mentioned far more than “telecommunications” or telephony. The change reflects “a different world” that calls for a different way of doing business, McCormick said: “At no other event will you see this collection of decision-makers across the communications, technology and entertainment industry.” Organizers won’t reveal the attendance figure yet, other than to say it’s at least 10,000, a number USTelecom promised vendors last year. Some say the number could be as high as 15,000. TelecomNext is USTelecom’s first show since splitting with TIA as joint sponsor of Supercomm. TIA plans a separate show later this year.

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Debate on whether Bells’ IPTV services should meet buildout requirements in cable franchises heated up in a panel late Tues. NCTA Gen. Counsel Dan Brenner offered to “put my hand out in friendship” to work with Bells on a resolution, saying he hopes the Bells would “put your hand out in friendship and say there shouldn’t have to be different rules.” The problem is that buildout is “code for the ugly word ‘redlining,'” Verizon executive John Raposa said: Discussions start, “the slur comes and then off we go.” “Buildout is a federal requirement” to ensure service to all, said Elizabeth Beatty of NATOA. Raposa said no federal law requires buildout to fit boundaries set by local franchising authorities. Verizon’s obligation is to serve first the customers in its current service area, he said.

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The proposed AT&T merger with BellSouth is “the right opportunity for our country,” BellSouth CEO Duane Ackerman said Wed. at the TelecomNext show in Las Vegas. Integrating the 2 companies provides a lot of added benefits, for example for the U.S. govt., which will be able to draw on a “U.S.-based provider of integrated services anywhere in the world,” he told the audience. The combined companies can add benefits as technology moves to seamless wireless-wireline integration, he said, and can offer each other’s skills to meet the important task of “managing the complexity of technology so the user doesn’t have to.” The communications industry “is finally at the tipping point of enabling true convergence” but even so the “appetite for bandwidth” continually grows and “today’s Internet will not meet tomorrow’s demand,” Ackerman warned. The challenge for the communications industry is to keep up with ever-changing services and products, all with relatively short life-spans, and still make a return on investment. That’s another reason “why we believe our merger with AT&T is a critical next step for the communications industry,” he said. It can combine AT&T'S innovative products and BellSouth’s state-of-the-art networks to economically bring new technologies.

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IPv6 is “a bad solution to a nonproblem,” Todd Underwood, chief operating and security officer of Renesys, said at a session here. Lack of deployments, despite “massive hype,” means “the market has spoken: This is the wrong technology at the wrong time,” he said. IPv6 was arose from a belief that IPv4 addresses were running out, but the problem was solved by technology and address allocation policies, Underwood said. Now IPv4 addresses won’t run out before 2013, he said. IPv6 was also said to be more secure, but Underwood said that’s “demonstrably untrue.” As a result, he said, the only ones pushing IPv6 are vendors trying to sell replacement gear.

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Siemens made several equipment announcements, including: (1) An IMS fixed-mobile convergence solution allowing sharing of multimedia applications across mobile, broadband and fixed networks. (2) Next Generation Exchange Plus technology that allows termination of trunk lines into next-generation networks. (3) Introduction of its Surpass carrier Ethernet products, already in Europe, in the U.S. market.

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Motorola demonstrated its ability to deliver HDTV over a WiMAX-like technology, sending it across the show floor. The signal was sent using Motorola’s 5-year-old Canopy wireless broadband technology, but officials said it mimics WiMAX since it’s also OFDM. Boxes for WiMAX are ready for market as soon as spectrum for WiMAX is selected for the U.S., though they could be deployed by midsummer outside the U.S.

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Thomson introduced its IP2000 series of MPEG-4 IP set- top boxes. IP2000 uses system-on-a-chip technology, and members of the family will be able to carry either standard definition or high-definition programming, it said.