Backchannelmedia

Sunday Business; London (UK)

By Tony Glover Technology Editor

COMING soon to a TV

screen near your: a virtually infinite selection of films from the past 100 years, millions of episodes of archived shows from all over the world, and just about every possible sports event you can imagine, all available at the touch of a button. Welcome to the bright new world of internet television, the wonder cure on which once stodgy phone companies are now betting the bank and which is set to destroy todays television networks and revolutionise advertising.

By harnessing the power of the internet to the TV screen, internet television (IPTV) will create a brand-new medium that will have a far greater appeal to consumers and businesses than either the TV or the PC.

Most people still think that the internet poses the biggest threat to paper media; but in reality it is broadcasters that will suffer the most as the web moves from the computer screen to the television screen, and the internet, television, radio and text all merge into a powerful new medium.

IPTV will bring TV viewers the breadth of choice offered by the internet; it will also make todays text-based web pages look like old-fashioned teletext.

High-speed internet access will mean that IPTV viewers will be able to watch digital-TV quality video when and where they choose, without having to bother with video rental shops or the restrictive schedules of digital television companies current pay-per-view offerings, which involve watching films that start at fixed times.

It will also be easier than ever to launch new channels, though these are likely to be for live events, shopping or news rather than traditional networked channels such as BBC1 or ITV1, which will lose much of their rationale.

The film industry and traditional TV broadcasters will find their dominance challenged in the same way their arrival killed the music halls and repertory theatres.

Advertisers may also find that viewers respond best to interactive ads and that IPTV will increasingly become a direct sales channel with successful product placement and advertising resulting in immediate internet sales. Telecoms operators around the world, whose reliance on traditional voice revenues until recently cast them in the role of plain utilities, are now determined to reinvent themselves as internet broadcasters.

The unlikely trailblazers of this new medium include the UKs BT, which is planning to launch a full IPTV service in the autumn and Germanys Deutsche Telekom, which last week began a gradual rollout of its IPTV service. Others include AT & T, Telecom Italia and Korea Telecom are betting the farm is IPTV. Behind the scenes, software giant Microsoft is providing the software.

In the UK, regulator Ofcoms lifting of price controls from BTs voice line rental service last week prompted it to slash voice tariffs by as much as a third. But the price cuts were merely the latest step in a much wider and irreversible trend: a downward spiral for the operators voice revenues.

In private, the senior executives of the big national telecoms operators admit that in the age of the internet, and the advent of companies such as eBays Skype providing free or extremely cheap calls or video-conferencing, voice calling is just another routine web-based service alongside e-mail and web-surfing

With all communications services including broadband internet access and voice calling being sent down the same phone wire, and these networks in some cases open to competing companies, the operators have had to come up with a service they hope will differentiate them from ordinary internet service providers (ISPs).

Last week, Deutsche Telekom launched the first phase of its IPTV offering, with additional services scheduled for launch later this year.

Befitting a World Cup year, were launching our new net with football, said Walter Raizner, Deutsche Telekom board member for Broadband/Fixed network.

In co-operation with TV provider Premiere, Deutsche Telekom is featuring the featuring the Bundesliga, Germanys top league, for E9.95 ($12.20, Pounds 6.80) a month. Fans also receive an introductory bonus of watching the first half of the football season for free.

Dedicated football fans can watch individual games or opt for a so-called conference switch which juggles between all the matches being played. The top match of the week will also be broadcast in high definition quality (HDTV).

In addition, there will be a wide range of additional programming on the topic of soccer in the form of interviews, chats and reviews. Customers subscribing to the service will also have access to 100 more TV channels, ranging from mainstream channels to special internet offerings.

But although the service is a landmark for German entertainment, it is really only a taste of things to come; the same is true of other such services being launched globally.

The offer is just the first

step into a new world of TV entertainment, said a DT spokesman, citing additional services such as video on demand, delayed TV reception and other services.

In the US, AT&T intends to make IPTV available to 19m customers by 2008, offering viewers a search function allowing them to look for a programme or film using an actors name or film title. The rollout is reported to be costing AT & T around $4.6bn.

On the other side of the world in India, state-owned Mahanagar Telephone Nigam has begun IPTV trials in New Delhi and Mumbai. According to research company IDC, most of Europes national telecoms operators will provide IPTV services by 2009.

Global IPTV subscriptions are expected to rise from 2m to 34m between 2005 and 2010, reflecting a compound growth rate of 60%, according to research from the Diffusion Group, the digital home research group. North America will see the most rapid rate of growth, 78%, followed by Europe, the Middle East and Africa, with a 61% growth rate and Asia Pacific with a growth rate of 41%.

To have a clearer idea

of what form IPTV will eventually take in Britain at least in its early, embryonic stages consumers will have to wait until BTs rollout of IPTV, scheduled for some time this autumn.

Although BTs new service, BT Vision, is being kept under wraps, recent deals with content providers give some indications as to what will form the basis for the new service.

BT recently signed a deal with Universal Pictures for a film and television download service to be launched in tandem with BT Vision. A new film and television download service was launched on 31 July on its own website.

When BT Vision launches in the autumn, the film and TV download service will offer NBC Universal movies on demand in the UK, including films such as Inside Man, King Kong, Jarhead and American Dreamz, in addition to a range of catalogue films and TV series. BT also has a video-on-demand film agreement with film distributor Momentum Pictures for access to Momentums catalogue, which includes: Lost in Translation, Racing Stripes, Where the Truth Lies, O Brother Where Art Thou?, Vera Drake, Lord of War and Broken Flowers.

BT Vision also has a deal with other content providers including Paramount Pictures and has won the rights to carry 242 Premier League football matches per season. The three-year deal will allow fans to watch full Premiership matches on their TVs on a pay-per- view basis.

But as well as video on demand, BT intends to supply additional services. These will include the kind of localised programming that IPTV can provide before it does not need to broadcast to large numbers of viewers. Other specialised programming will also be included.

The service will be free to BT broadband customers and will come with Freeview channels when they buy a TV set-top box that will connect their television set to the internet.

The box is made by Dutch electronics giant Philips but is powered by software developed by US-based software giant Microsoft.

Microsoft is also providing its IPTV software to telecoms operators such as AT&T, Verizon Communications and Deutsche Telekom to help power their attempts to provide television over the Internet.

But there is no guarantee that consumers will flock to the telecoms operators particular flavour of IPTV, especially the pale imitation of the real thing they will first be launching.

Even though BTs offering will be far wider ranging than that offered by Deutsche Telekom, it will still fall far short of the level of choice web surfers are used to.

BT describes the choice offered by BT Vision as a walled garden. This means that customers will be allowed to access only the content supplied through BT.

BT plans to make its offering as wide as possible. But whatever it does, the eventual capability of its set-top box will have severe restrictions for anyone wanting to use their set-top box to surf the web for video content. The plus side is that BT will be able to make sure that the dark side of the internet such as the horrific paedophile sites that currently proliferate are absent. It will also be able to ensure that the content of companies such as Universal and Paramount is adequately protected from theft.

But many customers used to the freedom of surfing the web may opt for a more open form of access to the growing amount of video material freely available on the internet, which is now set to mushroom over the coming years.

Sites such as mytube.com, where users share video clips, have seen their popularity explode. But operators like BT insist that many of video downloads freely available over the internet will be illegal in the same way that file-swapping music sites have been used to pirate the record companies content.

There is YET ANOTHER

possibility, however, which could destroy the telecoms companies dream.

Just as Apples iTunes has been a huge success, with large numbers of people legally buying music, consumers may soon have access to massive online video shops with millions of items available for purchase for a modest fee or even a subscription.

These portals could even be provided by content owners themselves and easily squeeze out the telecom companies.

It is no wonder, therefore, that some are hedging their bets.

As well as providing the software for telecoms operators set-top boxes, Microsoft has developed two IPTV technologies of its own.

One is its XBox games player, which can be used to download video content. The other is its Media Center software which enables PC users or TV viewers to bypass the telecoms operators IPTV services to go straight to whichever web services they wish.

Regardless of whether the telecoms companies are successful, or whether consumers decide to bypass them to obtain their entertainment and information from other sources, one thing is for sure.

Over the next decade, the media will be hit by the second stage of the internet revolution, and this time it will be the existing television broadcasters that will be hardest hit.

(c) 2006 Sunday Business; London (UK). Provided by ProQuest Information and Learning. All rights Reserved.