4.5.1 What is IPTV?

Distinguishing IPTV from other video offerings

The term IPTV can cause some confusion.  In narrow terms, IPTV is defined as the provision of video services (for example, live television channels, near video-on-demand (VOD) or pay-per-view) through an IP platform.  However, some define IPTV services to encompass all the possible functionalities that can be provided over an IP platform.  For example, some equate IPTV services with multimedia services, a category that can include television, video, audio, text, graphics, and data.[1]

This encompasses not only one-way video broadcasting services but also ancillary interactive video and data services, such as VOD, web browsing, advanced email, and messaging services.  The interactive services associated with IPTV allow the viewer to determine what and when to watch, and also allow the user to “teleshop” or order movie tickets.  IPTV providers now commonly include in their commercial packages a personal video recorder (PVR) through a hard disk in the set-top-box (STB) or on the network, allowing “time-shifted” or “catch-up” viewing of TV broadcasts.[2]  With an IP-based managed network, the service provider is able to offer a high quality of service (QoS) level and high “Quality of Experience” (QoE), as well as security, interactivity and reliability. 

IPTV providers are signing content agreements and developing innovative applications in order to compete with cable and satellite television.  This includes striking deals for special viewing packages such as sports.  Several IPTV providers have also launched High Definition (HD) television services.  In Hong Kong, China PCCW recently introduced stock trading on its “Now” IPTV service.  In France, Iliad’s “TV Perso Freebox” lets subscribers post their own videos for view by others.

IPTV can be confused with Internet video or Internet TV, but those services are quite different.  Internet video and Internet TV are both offered over the public Internet.  Internet video is an unmanaged service that offers the streaming of video through the public Internet.  Internet video companies include user-generated video websites like YouTube or Metacafe where users can upload and view others’ videos.  Today, these services tend to lack a QoS standard and are without any real control over production quality.[3]

Internet TV companies, like Joost, Babelgum, and Zattoo, tend to operate on peer-to-peer networks rather than on managed networks, and they typically offer free, ad-based services.  However, their offerings are similar or identical to IPTV in several key areas.  First, like IPTV, Internet TV provides professionally produced and copyright-protected video.  Internet TV companies also tend to use MPEG 4, the same encoding technology used by IPTV providers, for high video quality and offer near-TV quality picture resolution.  While IPTV allows subscribers to more easily switch from television to computer mode, users are increasingly able to view all kinds of video on their television sets with Internet TV.[4]

For Internet TV providers like Joost that offer VOD, users can rewind and fast-forward videos, much like IPTV users that rewind and fast forward with PVR.  However, Internet TV providers that stream live television, such as Zattoo, do not yet have this capability.  Although limited in their service areas, both the U.S.-based Joost and European-based Zattoo have negotiated digital rights management (DRM) agreements, requiring operators to prevent end users from copying or converting copyrighted materials.  DRM deals are considered a necessary component of offering IPTV.

A comparison of IPTV, Internet TV, and Internet Video

IPTV Internet TV Internet Video Examples of Operators U-verse (AT&T) Opzioni TV (Fastweb) Orange TV (France Telecom) Imagenio (Telefonica) Now TV (PCCW) Joost Zattoo Babelgum Youtube Metacafe Users Subscribers only; closed network Free, ad-based service Free, ad-based service Services Live TV VOD Interactive services VOD and/or live TV and Internet in multi-task environment Video clips only Network IP-based platform; Managed network Public Internet; Peer-to-Peer Public Internet Video Production Professional video only Professional video only Amateur/user-generated video only Video Quality Managed QoS MPEG 2 to MPEG 4, MSVCI Managed QoS High – MPEG 4 Unmanaged QoS Low, but improving Receiver device STB with TV or PC PC PC Resolution Full TV display Near full TV display QCIF/CIF Copyright Content is protected through DRM Content is protected through DRM No copyright protections Status of roll-out Deployed in limited geographic areas in various countries Trial stages only Fully accessible Source: Based on IPTV – Market Regulatory Trends and Policy Option in Europe, Background Material, ITU-T IPTV Global Technical Workshop: Driving The Future Of IPTV, Document: IPTV/01, 1 November 2006, Seoul, 12-13 October 2006, at p. 7 and Telecommunications Management Group, Inc. research

Technical aspects of IPTV

An IPTV operation has four components:  the content source, the core network, the access network, and the end user (see figure below).[4]  The content source is the video provider that owns or is licensed to sell live television programming, VOD, or other downloaded content.  Live television is typically received via satellite or through fiber networks, while VOD content is stored by the network operator.  Content passes through an encoder, or headend, which prepares the content for transmission on the network.  The core network encodes the video streams using MPEG-2, although the use of MPEG-4 (H.264 AVC[5], Windows Media VC-1) is on the rise.  Once encoded, the content is encapsulated into IP packets, and is then ready for delivery to subscribers.  

An Operational Diagram of IPTV
Source: Telecommunications Management Group, Inc.

Live television is delivered via multicast, which allows many end users to receive content from one packet through efficient use of the IP network.  Channels are essentially IP multicast group addresses that subscribers request to join.  Unlike a cable system or an over-the-air television that “tunes” to a channel, the IPTV set-top box (STB) acts only as an IP receiver.  The STB changes channels by using the protocol to join a new multicast group.  When the local switch office obtains the channel change request, it confirms that the subscriber is authorized to view the content and adds the user to the channel distribution list.  Therefore, only signals being watched are sent from the local office, through a digital subscriber line access multiplexer (DSLAM), if necessary, and finally to the user. 

Rather than a “one-to-many” transmission like multicast, VOD is unicast, or “one-to-one.”  When an end user requests a VOD product, the servers pull pre-compressed video streams and transmit them as IP packets.  Typically, the local switch office uses a VOD server to stream from the server to a particular subscriber’s location.  The stream is generally controlled by real time streaming protocol (RTSP), which allows the user to play, pause, and stop the program.

If the video stream is delivered over a copper local loop, the IPTV provider must use DSLAM equipment to deliver IP packets to the subscriber after the content is encoded.  DSLAMs are located either along the core network or access network. 

At the customer premises, the STB allows subscribers to select the content they want to watch and provides user control over functionalities such as rewind, fast-forward, and pause over non-live programs.  The two-way functionality of IPTV services not only allows subscribers to choose their services with the press of a button, it also offers interactive capabilities, which allow a user to easily manage multimedia sessions and personalize preferences. 

Who provides IPTV services?

The main providers of IPTV services tend to be telecommunication service providers, but cable and satellite operators are also starting to get into the game.  There are two types of telecommunication providers offering IPTV: incumbent operators and newcomers.  The former category includes operators such as France Telecom, PCCW in Hong Kong, China, Telefónica in Spain and AT&T and Verizon in the United States.  Incumbents are offering the service over their copper ADSL (asymmetric digital subscriber line) networks or increasingly over fiber access networks.

Newcomers include Iliad in France, Fastweb in Italy and Hanaro in the Republic of Korea.  These new market players have often been successful by offering IPTV as part of a basic ADSL subscription.  IPTV service typically offers from 40 up to 300 TV channels, as well as VOD, High Definition (HD), and PVRs.  Coverage and deployment vary widely.  For instance, AT&T currently only offers their “U-verse” service in select cities in a dozen U.S. states.  However some deployments are having an impact.  In Hong Kong, China, PCCW’s “Now” IPTV service had 560,000 subscribers in June 2007 and accounted for almost 40 per cent of all television subscribers.  IPTV has also been successful in Italy and France, where conventional subscription television penetration is not as developed as in other Western European nations.

Equipment manufacturers are increasingly introducing an element of IP into their STBs.[6]  It is estimated that by 2010, about half of the 30 million IPTV STBs deployed in the world will be hybrid (IPTV combined with some form of digital cable, terrestrial, or satellite front end). In addition, some established subscription TV operators are combining IPTV technology and services with their existing channel packages to offer enhanced functionality, such as on-demand content.[7]  For example, Premiere in Germany is planning to offer a combined satellite and IPTV service in partnership with Deutsche Telekom (DT), allowing access to DT’s IPTV offering and to its own satellite subscription service.  In Japan, subscription television satellite operator Sky PerfecTV has rolled out an IPTV offering.  In the UK, BT has launched a combined IPTV/DTT service (“BT Vision”) that provides traditional broadcast-based channels over DTT, alongside additional content over an IP connection.

Market potential

According to the DSL Forum, there were some 8.2 million IPTV subscribers worldwide in June 2007.[8]  This marked an increase of 127 per cent from a year earlier.  Europe leads in deployment, accounting for more than half of the world’s IPTV subscribers (see figure below).  Indeed, measuring IPTV penetration as a percentage of total pay TV subscribers, four out of the top five countries are European.  But IPTV has been most successful in Hong Kong, China, where it accounts for about two out of every five pay television subscriptions. 

Several forecasts of IPTV evolution predict subscribership ranging from 41 million to 73 million by 2011.[9]  Given that IPTV is at an initial stage of market development, however, these figures should be treated with caution.  Some jurisdictions such as France and Hong Kong, China have been extremely successful with IPTV, and if these experiences can be replicated elsewhere, then the figures could be much higher.  Also, most major deployments have so far been limited to developed economies.  The potential for IPTV in developing nations could be significant in markets lacking traditional subscription television access through cable or satellite systems.  However, the attraction of IPTV has to be balanced against the high investment costs of installing broadband infrastructure. 

IPTV presents an opportunity for traditional telecommunication providers to offer triple play services.  In addition, unlike new entrants, most major operators launching IPTV operations have the financial resources available to upgrade their networks and an existing customer base for marketing purposes.  But they do face some bottlenecks that impact IPTV strategy.  First, coverage is far from ubiquitous.  In order to receive IPTV, high-speed broadband access is required.  While many operators have launched broadband network rollouts, they have not reached nationwide coverage in most markets.  Meanwhile, even some broadband systems operate at speeds too slow to support IPTV, which requires a downstream connection of at least 4 megabits per second (Mbit/s).  A second issue is that some telecommunication operators already provide television service through cable or satellite ownership or partnership agreements.  So they are reluctant to “cannibalize” those services.

Distribution of IPTV subscribers, by region; Leading IPTV countries, by percentage of total subscribers, June 2007
Source: Adapted from DSL Forum and regulator and operator reports.

ENDNOTES

[1] See ITU-T IPTV Focus Group definition.

[2] ITU IPTV Global Technical Workshop, Driving The Future Of IPTV 13 (2006), available at www.itu.int/osg/spu/stn/digitalcontent/4.9.pdf.

[3] Mark Rooney, Pace Micro Technology: IPTV White Paper 3 (2006), available at http://www.iptv-news.com/__data/assets/word_doc/0016/51145/2006_IPTV_White_Paper_Pace.doc.

[4] Wei Li, Hong Liu, and Yiyan Wu, Communications Research Centre Canada, IEEE: Introduction to IPTV, available at www.ieee.org/organizations/society/bt/iptv1.pdf.

[5] H.264 generally provides a 40 percent saving in bandwidth over MPEG-2 encoded content, allowing IPTV providers to offer high definition (HD) television to the home.

[6] Rooney, supra note 3, at 4.

[7] Off. of Comms. (Ofcom), The International Communications Market 2006 99 (2006), available at www.ofcom.org.uk/research/cm/icmr06/icmr.pdf.

[8] Press Release, DSL Forum, “IPTV Deployments More Than Double in a Year as Broadband Continues to Achieve Strong” (Oct. 8, 2007) www.dslforum.org/dslnews/pdfs/pr_bwfeurope100807.pdf.

[9] Martin Olausson, Strategy Analytics, Strategy Analytics Forecast 41 Million IPTV Subscribers by 2011, available at www.strategyanalytics.net/default.aspx?mod=ReportAbstractViewer&a0=3259, Press Release, Gartner, Gartner Projects 49 Million by 2010, available at www.gartner.com/it/page.jsp?id=496291, and Press Release, Multimedia Research Group, MRG 73 Million by 2011, available at www.mrgco.com/press_releases.html#GF1007.