Siemens IPTV Home Equipment
May 2006
Siemens offers a line of home gateways that support VoIP and WiFi. Siemens has found that 802.11g WiFi is not sufficiently robust for IP TV video traffic. The company does expect that 802.11n will resolve these issues.
Siemens stated that both power line and polymer optical fiber (POF) will be popular methods for networking homes for IP TV. POF is a very thin fiber strand that can be deployed by the home owner. It is unobtrusive and can be easily hidden under rugs or other places. POF does not have the interference problems found with either wireless or power line systems.
Siemens also demonstrated its Tango customer equipment network element manager. Tango can manage both Siemens and non Siemens customer systems. It provides the ability to log events, gather data, and configure home devices. It does not have heuristic systems that provide intelligent filtering that would facilitate managing large populations of subscribers (several hundreds of thousands or millions).
As we reported previously, Siemens is introducing a line of MPEG-4 AVC IP TV set-top boxes. Its low end box will come as an HD/SD or an SD only. These two units are basically the same, except that the SD only unit has less memory to lower its cost. Siemens expects that the HD/SD unit will be widely used in Europe and North America and the SD only unit will be used in Latin America.
Siemens also offers a somewhat larger unit that may have a hard disk included with it. Both of these units support both SD and HD.
The final pair of units are hybrid devices that support both IP TV and DVB digital terrestrial services. A hard disk is available and both of these units support both SD and HD.
Siemens is still on schedule for a September volume delivery of these units; however, any further schedule slips from its chip suppliers will cause their set-top boxes to slip as well.
Siemens stated that there are several service providers interested in its IP TV set-top boxes, but all orders are awaiting the availability of test units.
Source: MRG, Inc., May 2006 IPTV Bulletin
FASTWEB IPTV Treading Water
May 2006
We met with FASTWEB in Milan this month about a week after it announced its results for the first quarter 2006. It used this meeting to point out to the financial community that it is now a national service provider in Italy.
FASTWEB described its geographic expansion which increased the number of central offices served from 304 in December 2004 to 800 today with the number of metro areas served growing from 14 to 130 at the same time. It now covers 45 percent of the households in Italy and about 70% of the enterprise fixed-line market in Italy.
FASTWEB is now able to serve national enterprises, which makes it a significant factor in this market for the first time. Previously, it served local and regional business applications as well as consumers.
FASTWEB won two large public networking applications in Italy based on its network expansion. The company stated that other large enterprises are starting to consider it to support their network deployments.
The company is continuing to aggressively go after the consumer market in Italy. It is using unbundled ADSL and ADSL-2+ as its primary technology for consumer applications.
FASTWEB’s offers only SD video offerings at this time. It does not plan to introduce HD services in 2006. It expects that Italy will lag behind France and Germany in introducing HD services. Both of these companies are planning to introduce HD services in 2006.
FASTWEB continues to increase its subscriber base, adding 80 thousand new subscribers in the first quarter of 2006. Its residential subscriber base is now about 675 thousand subscribers, with 160 thousand IP TV subscribers.
The number of IP TV subscribers has remained stable for the last couple of years. It had a successful promotion in 2003 based on the availability of football in its offering that generated a significant number of new subscriptions. Many of these new subscribers have cancelled their subscriptions and have been replaced by new subscribers. Increased satellite competition and new competition from digital terrestrial have also made it more difficult for FASTWEB to acquire IP TV subscribers.
FASTWEB’s overall customer spending continues a slow decline, primarily due to competitive pressures and the introduction of new services. FastWeb’s video customer spending is fairly stable with about a 3 percent decline in the first quarter.
FASTWEB finds that there is less demand in the Italian market for higher speed data services. It is currently offering an upgrade from ADSL to ADSL-2+ for a one time charge of €80 and no increase in monthly fees. The demand for this upgrade has been modest.
FASTWEB has no plans to upgrade its network beyond ADSL-2+ at this time. It expects that ADSL-2+ should support subscriber demands for HD services and higher speed data services. Telecom Italia has announced a plan to deploy VDSL, which may put some competitive pressure on FASTWEB.
FASTWEB’s first response to the Telecom Italia VDSL deployment will likely be to further promote its ADSL-2+ offering. This is a low cost approach that can provide an immediate result.
In the long run, it is likely that FASTWEB will expand its FTTH deployment to counter VDSL. FTTH is technically superior to VDSL, which will give FastWeb a significant competitive advantage over Telecom Italia. FASTWEB does not have the wiring cabinets located close to the subscriber that Telecom Italia has. These wiring cabinets provide the infrastructure for a fiber to the node VDSL deployment. A direct FTTH approach should be significantly less costly than trying to duplicate Telecom Italia’s fiber to the node VDSL approach.
The fact that FASTWEB’s IP TV subscriber base has been flat for the last two years shows the difficulties that IP TV service providers are likely to experience as the competitive environment changes.
{Note: analyst comments are italicized}
Source: MRG, Inc., May 2006 IPTV Bulletin
Deutsche Telekom Rollout
May 2006
We had two meetings with groups in Deutsche Telekom (DT) that are involved with its IPTV rollout. It had announced that it would deploy VDSL and IP TV in 10 cities in Germany in time to show the World Cup in HD in June of this year.
In May, it made the HD IPTV service available to several dozen friendly homes in time for the start of the World Cup. This is more of a technical trial than a market rollout. Current plans are to rollout the service commercially in these 10 cities in July.
While the VDSL rollout appears to be on schedule, all is not well with the Microsoft IPTV Edition Software that DT will use. We were told that it still does not operate reliably in the lab.
The public broadcasters in Germany, ARD and ZDF, are threatening to boycott the DT service. These broadcasters are protesting that Microsoft’s software is incompatible with some important European TV standards.
We also heard concerns that the Microsoft software does not provide sufficient opportunities for differentiation to permit DT to make a wholesale IP TV offering. There is some discussion that DT might deploy a second middleware platform for its wholesale customers.
In some good news for DT, the German Cabinet passed a bill that exempts DT’s VDSL network from unbundling, which will give DT a significant advantage over its broadband competitors and will give it a unique ability to provide HD IP TV services.
It does not appear that the DT IP TV network is ready for prime time yet. The technical issues with the Microsoft software clearly must be resolved. DT also has to resolve its content issues. It will clearly need all of the important broadcast channels from the start of the service.
{Note: analyst comments are italicized}
Source: MRG, Inc., May 2006 IPTV Bulletin
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