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Wed 2 Nov 2005 04:00 AM

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Selling IPTV to the World

While Alcatel prides itself with having one of the widest portfolios of telecoms equipment, spanning satellite, mobile and fixed communications, it is within the realms of fixed-line broadband that the supplier has been expending much of its effort recently.

|~|Alan-Mottram2001.jpg|~|Mottram, Alcatel's chief marketing officer describes France Telecom's exposure to competition as the "coldest shower" of any incumbent on the continent.|~|In recent case studies, Alcatel has estimated that the addition of video to service providers' communications offering can double and in some cases triple overall average revenue per user, making it a worthwhile proposition for investment.

“Broadband gives telcos globally ARPU of around US$36,” estimates Jay Fausch, senior director, strategic marketing at Alcatel's fixed communications group. “Triple play offers the opportunity to double and even triple this revenue stream,” he states.

Alcatel has been building its competence in the triple play space for some of years, starting with its pioneering role in the deployment of digital subscriber lines (DSL) as the transport layer of broadband services, primarily to the residential market. The French vendor was the first company in the world to offer TV over DSL back in the middle of 2001.

The equipment supplier recently announced it has cumulatively shipped more than 70 million digital subscriber lines to customers worldwide, representing a 40% increase over the 50 million lines the vendor announced in October last year.

Alcatel's Intelligent Services Access Manager (ISAM) family of products has been driving the vendor's success in the broadband space and is a triple play platform that offers the flexibility to deploy a range of access technologies in various equipment practices and supports a wide variety of services.

In less than a year, over 35 customers worldwide have committed to deploy Alcatel's ISAM products, including China Telecom, China Netcom and Chunghwa Telecom. So far this year Alcatel has delivered 3 million ISAM products, and has recently introduced voice on ISAM.

Last month, Alcatel announced the launch of two new IPTV applications — the Alcatel 5900 AmigoTV and MyOwnTV application. AmigoTV offers a number of interactive services to TV viewers while MyOwnTV provides a set of tools that service providers can deliver to consumers interested in creating their own TV channel. End users can then invite groups to tune into their own channel and share personalised content.

“There is a trend that younger viewers are watching less regular television,” says Michel Rahier, president of the fixed communications group at Alcatel. “People have become willing to pay for personalised services…and we believe triple play is the vision of the future. We believe it is a big opportunity and forecast there will be 70-100 million triple play users by 2010.”
||**|||~|Missault200.jpg|~|Missault believes IPTV gives end-users the control they seek in terms of what content they view.|~|Alcatel is betting heavily on telecoms operators being convinced of the opportunities that triple play offers and developing a completely new business to the one in which they have historically inhabited. In order to help operators bridge the knowledge gap that exists in evolving their networks and business models to the delivery of TV content, Alcatel is active at all layers of the service delivery platform, from transport through to integration and the development of end-user applications.

“Telcos are having to change the rules of their own game,” says Alan Mottram, chief marketing officer of Alcatel. “The dog has to learn some very new tricks.”

Given that cable companies are often rivals to telcos in terms of offering TV content, they are not the obvious partner to the service provider community. Instead, telcos are partnering with companies such as satellite providers and are being aided to a large degree by vendors such as Alcatel in terms of navigating their way through the new business model.

“We do not see a role for ourselves in content or content aggregation,” comments Mottram. “There is a significant amount of education involved and it is a much better relationship built between service operators and studios. There's no need for another middleman,” he adds.

Alcatel estimates that there will be 72 million IPTV subscribers by 2010 with much of the early activity taking place in North America, Western Europe and Asia Pacific. Operators including SBC, BellSouth and Bell Canada in North America have all embarked on triple play programmes that they expect to produce differentiated services and help resuscitate flagging fixed-line revenues.

“There's nothing like fear to cause action,” Mottram states. “What Alcatel is offering in terms of triple play today has a market and a value, but it will change over time. One of these changes will be the addition of mobility to the triple play offering, and underlying all of this will be connectivity,” he adds.

IPTV is very much an emerging technology, which is set to carve out its place amongst established video delivery alternatives, including over-the-air broadcast, cable television and direct broadcast satellite (DBS).

“IPTV is the new technology, which is a little disruptive to the video delivery alternatives,” explains Rik Missault, Alcatel's vice president, marketing and communications, fixed solutions division. “The important thing about IPTV is that it is independent of the medium carrying the content,” he adds.

The French vendor is yet to score an IPTV win in the Middle East region, but is confident of the prospects of doing so given its entrenchment in the region and operators' desire to drive value added services as much as possible.
||**|||~||~||~|“There is now a demand from users and as the Middle East telecoms market becomes more competitive operators will have to use things like IPTV to either retain customers, or attract new ones,” says Steve Hope, technology centre director for the fixed communication group at Alcatel. “It is all about making the end user the master of his or her communication.”

In February, Alcatel and Microsoft signed a collaboration agreement designed to rapidly accelerate the availability of IPTV services for broadband operators worldwide. Alcatel and Microsoft expect the agreement to help expand the quickly-growing ecosystem of IPTV industry partners and enable telcos to take advantage of global economies of scale fuelled by large-scale IPTV deployments planned across many parts of the globe.

“The success of IPTV is all about partnerships. There has to be a relationship between the content providers and the infrastructure providers, and between the infrastructure providers and Alcatel,” Hope says.

Microsoft is charged with bringing the IPTV platform and all the accompanying software to the agreement, while Alcatel brings its experience in infrastructure and applications. Alcatel boasts more than 30 triple play projects worldwide, with a further 25 operators in the process of transforming their networks to offer triple play.

“While we have (triple play) relationships with 30 providers around the world, we do not have one in the Middle East as yet. But we are hopeful that this will happen,” Hope says. “There are good synergies in the region as many operators have relationships with content providers,” he adds.

Alcatel forecasts that by the end of the year there will be 3.2 million triple play subscribers globally, of which 2.5 million will have been supplied by Alcatel, underlining its dominance of the business.

While much of the vendor's efforts are being channelled towards evolving the triple play market, Alcatel also has two other strategic priorities it is actively pursuing. The first is managed communication services, which extend well beyond just the provision of virtual private networks. Alcatel's chief marketing officer Mottram believes that two markets that have been abandoned in the enterprise space are large corporates and small and medium size enterprises (SME), and it is these two types of entities that Alcatel is trying to appeal to most with its managed services products and solutions.

“After the telecoms bust, telcos could not afford the intimacy with SMEs,” Mottram explains. “What Alcatel offers is convenience and cost advantages — we help reconnect the telco with SMEs and optimise costs of doing business for the enterprise,” he adds.
Alcatel has many enterprise solution references in the Middle East, ranging from a memorandum of understanding with the College of Technology in the UAE to provide IP solutions for the enterprise, to offering communications services for the third terminal at Dubai's international airport.

“Our core competence is in terms of integration of solutions. Globally we provide a total solution,” says Pierre-Alain Cadillon, country senior officer for the UAE, Oman, Qatar and Kuwait. “That includes access solutions, backbone, IPTV and systems integration in the broadband space,” he adds.

The other one of Alcatel's strategic priorities aside from triple play and managed communication services is convergence and the development of mobility at large.
“In developing markets, our priority is connecting the next wave of mobile users,” says Mottram. The convergence that he is referring to is principally at the network layer where Alcatel charges itself with abstracting the complexity of connecting one application to another.

“There is a proliferation of databases, a silo of databases and there is a requirement to open up these databases and underlying services,” explains Mottram. “We do not have anything within Alcatel that is not (technically) savvy. We are IMS (IP Multimedia Subsystem) fanatics,” he adds.

In developing markets, Alcatel is looking very much at improving the prospects of mobility, with a focus on connectivity followed by the delivery of services. Mottram also sees a large demand for convergence over broadband.

“France Telecom has had the coldest shower of all the telcos in Europe in terms of the entry of competition,” Mottram states. “The most appealing way to add value today is triple play.”

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