OECD: Changing television markets - IPTV in OECD countries
Posted in: Research at 23/01/2008 05:37
This paper examines current market trends and regulations for IPTV and also provides information on developments in the provision of IPTV service in a number of OECD countries. IPTV is difficult to define. For the purposes of this paper, in order to capture some of the most interesting market developments in OECD member countries, IPTV is defined as video and ancillary services such as audio/text/data delivered over the Internet Protocol and offered as a channels of linear and/or non-linear programming of broadcast quality designed to be viewed on a television.
Current market trends in the IPTV area include:
- Fixed-line telecommunications operators - competitive outlook: Market data indicate that telecommunications operators1 are likely to become competitive in the market for video programming distribution as one of the services offered with their IPTV services. These predictions take into account the multiple services that IPTV providers offer, also called multipleplay. Despite successful entry into the market, however, it is unlikely that these new entrants will attain revenues in IPTV markets commensurate with the revenues of their more entrenched competitors, at least at the outset.
- IPTV markets - At an early stage. Fixed-line telecommunication operators need to upgrade their DSL networks to provide competitive IPTV service offerings. This is one of the reasons why IPTV markets are at an early stage except in a few countries such as France, Italy, and Spain where IPTV services are starting to become a mass market service.
- Upgrading networks to support IPTV: Fixed-line telecommunications operators are upgrading their existing DSL networks or replacing them with fibre optic cable to support IPTV and other multimedia services. However, the timing and exact technology to be adopted vary depending on a number of complex factors including the level of competition in the market, the state of the existing network, population density, and the structure of the housing market.
- Differentiation of services by IPTV operators: Though the competitive process results in various competitors offering very similar products or bundles of products, IPTV operators may be more innovative than their traditional counterparts, and may try harder to differentiate their service offerings.
- On-demand content is increasing: Consumers are increasingly attracted to time/place-shifted viewing and the video-on-demand (VoD) market is already showing strong growth. In addition to consumer demand, other factors driving the VoD market include the growing availability of VoD video content with more favorable access conditions, the emergence of High Definition DVD recorders, a growing market for mobile video/TV, and the increasing use of personal video recorders (PVRs).
- Access to Premium Content: IPTV operators need to purchase premium content demanded by viewers. However, premium content owners are concerned that their content will be freely available through peer-to-peer distribution over the Internet. The success of the legal online music download market, however, may be changing the perceptions of premium content owners. As a result, IPTV operators are increasingly obtaining premium content because they are applying digital rights management (DRM) technologies to the content, to assure premium content owners that the content they provide will be adequately protected.
Current regulatory treatments of IPTV services include:
- Reviewing regulations: The development of IP based networks for transmitting video content, as well as the development of different types of video content and availability of a wide range of different distribution models used to distribute video content requires a review of existing regulatory frameworks in order not to stifle innovation and the diffusion of new services. A number of OECD countries have begun to take steps in this direction.
- Importance of regulatory framework for IPTV: The development of IPTV services has benefited from a regulatory framework in most countries which has facilitated access to broadband networks by new entrants through local loop unbundling (LLU), as well as by light touch regulation which has prevailed with respect to abstaining from imposing any onerous requirements for the provision of IPTV. There has been increasing policy recognition of technological convergence and this has facilitated the development of IPTV.
- Access to local loops: Local loop unbundling allows ISPs to replicate local loops of incumbent operators on a cost basis while allowing service differentiation from the service offerings by the incumbents, and thus can stimulate new entry into the IPTV market. While in most OECD countries cable TV operators are not subject to unbundling, some countries have decided to apply LLU to cable networks also.