Trender Research™

Technology meets people.

As you know I spent this past week shuttling from Boston to Orlando to San Francisco. Two days at TelcoTV, then on to the one-day NewTeeVee event (and then the red-eye flight back to Boston from which I write this blog). Below are my thoughts on the TelcoTV event (I will post a summary of NewTeeVee separately).

Overall the event was OK. More or less as I expected. The show was well organized, with a good conference schedule, and a fairly robust exhibit floor. All the major middleware, set-top box, and access technology vendors were there, as well as a range of companies selling various implementation and management services. Since the show is skewed towards Telcos, especially Tier 2/3 and independent operators, it had a bit of an old school, folksy feel to it. Some people complained that exhibitors and foot traffic was down, but the show seemed to be the same mid-size event it has always been. I was actually surprised to see some new faces, including some new middleware vendors I had not heard of before (Nordija A/S “widget-based middleware”?).

With a few notable exceptions, there did not seem be a lot of excitement or innovation at the show. Perhaps it is a sign of the maturity of the TelcoTV/IPTV market and the success (or market saturation?) of triple play bundles becoming the dominant competitive force in the industry. Perhaps it is the lay-offs and consolidation (e.g. Espial/Kasenna) that have hit many vendors in the past couple of years. Perhaps it is a sense of foreboding about the disruptive force coming from over-the-top video technologies. Whatever the reason, and I was not quite able to put my finger on it, I got the sense that many vendors were just going through the motions at the show.

That’s not to say that TelcoTV was not a good show, because it was and I learned a lot. It is just this strong sense that innovation in television and video entertainment is going to come from outside the TelcoTV/IPTV industry rather than driven by it. My gut feeling was confirmed at NewTeeVee, but more on that later.

No Lethal Killer Apps

One possible reason for this malaise is that when you come right down to it, deploying TelcoTV/IPTV is just plain hard. It requires millions of dollars of investment in network and access technologies before you ever make a dime from subscribers. It requires expensive and sophisticated headends, middleware, and set-top boxes, with many complex decisions about how basic or advanced you want your applications to be. After months and sometimes years of planning and deployment, you are still not guaranteed that 100% of your customers will subscribe to your services, and you only hope it is above the threshold (20%, 30%?) that gives you sufficient return on investment. Even after you get a basic triple play service up and running, you look forward to “advanced” user-interfaces and applications that seem downright pedestrian compared to what’s happening in the larger TV market. Sure you can do whole-house DVR, Caller ID on the screen, and catch-up VoD, but these are not exactly killer applications anymore. Meanwhile traffic is exploding for sites like Hulu and Netflix and a multitude of simple devices like Roku are making it even easier for consumers to bring this content to the living room.

This is not say that TelcoTV/IPTV deployments are not necessary, or will be completely replaced by OTT video services any time soon, only that this is not where all the excitement is. The big problem I see is that IPTV infrastructure is biased towards carrier-grade reliability and not innovation. IPTV middleware development environments are fairly closed compared to the open service creation that happens with web-based tools. The industry has long been frustrated with how long it takes to develop, test, and launch new services on IPTV platforms. IPTV STBs are closed and bloated compared to Internet video STBs such as the Roku player for example. Until IPTV comes closer to fostering a development community similar to the iPhone’s App Store, it will largely fail to live up to the true promise of IPTV—interactivity, openness, and innovation.

This was largely the theme of TelcoTV keynoter Brook Longdon, Nokia Siemens Networks Head of Home Entertainment. Longdon should know too since he used to be an executive at Myrio, one of the pioneers in IPTV. Longdon decried the lack of developers, tools, and open standards that have fostered super-novas of innovation such as the iPhone.

So while it was nice to see my many friends at TelcoTV and hear about some new deployments, I guess I was looking for all those killer applications we have been talking about for years. If we leave it up to the IPTV status quo, and the growing OTT monster, the only thing being killed will be the profitable growth of the industry.

Next up we’ll take a look at what we learned on the show floor and during the conference sessions. Click here

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Comment by Robert A. Clark on November 16, 2009 at 2:43pm
Brian: Good stuff. Your comment initially on Orca caught my eye. When they presented to me over a year ago, I thought then they had a very sound message and articulation of what everyone talks about but may not be delivering on. I also have thought for some time that Europe and Asia are just much more advanced where interactive apps and innovation's concerned. And while innovation does not always translate to revenues, kudos to the more penetrating IPTV markets elsewhere in the world.

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