As BT promotes its new digital TV service BT Vision and the Telecoms industry increasingly moves in to the media space, Clare Patterson, Senior Manager within KPMG’s Information, Communication and Entertainment practice, comments on the challenges of Internet Protocol Television (IPTV):
“Efficient IPTV requires an infrastructure that can deliver a lot of data – very quickly and reliably. New compression and faster broadband are helping to achieve this, but the gains are counteracted with high-definition content and increasing interaction. Without laying fibre optic cables to every home, companies need to balance using multi-cast technology (simultaneously delivering content to a group of users) and uni-cast which allows individually tailored content and interaction.
“Implementing IPTV requires enormous investment, not just in the network but in the infrastructure to distribute content, provide conditional access, video-on-demand, electronic programme guides and manage advertising. Companies will need to analyse the business case carefully to ensure the potential revenue justifies the investment.
“Content will be key to success. Telcos need to develop a portfolio of content that their customers want to watch and are willing to pay for. They will also need to be skilled at negotiating contracts with media companies, managing digital rights and generating income from advertising, if they choose advertising as a revenue stream. All of these are new territory for telcos and will impact their core processes.
“Essentially they will need to transform into digital media distributors. The people, functions and processes that are key to their current performance will be superseded by new core activities that will be critical to their future success.
“People view digital content very differently to the traditional schedules and distribution. Sites such as YouTube have demonstrated the popularity of user-generated content and the value of clips. A key element to the success of YouTube has been the ability to search for content and select related items. How content is stored and categorised, and ease of access will be crucial to the appeal of particular IPTV offerings.
“For telcos the challenges of IPTV lie in making content available to customers, whilst managing and tracking the process, to ensure correct payment reaches the content owners, and so far, the way in which rights are calculated has not kept pace with the new technology.”