IPTV business models are changing ...

What is IPTV? Is it just TV on IP?
The answer is YES, TV over IP. But what "kind" of IP? Which companies can provide such service? What are the business models behind it? What is the Return-On-Investment (ROI)?

IPTV can be delivered under two different platforms, "managed IPTV" and "non-managed IPTV".
Is short, "managed IPTV" means that the service provider own the land line infrastructure and therefore, can provide "clean line" to customer premises, meaning that the service provider controls end-to-end the video stream and can guarantee flawless and advances services.
Such service provider can offer Multi-Channel TV (MCTV) with a big variety if TV channels (both High-Def and Standard-Def) along with many other services such as Video-On-demand (VoD), rating system, advanced ads system and many more. The downside is the huge cost the service provider needs to invest in order the build its own land line infrastructure and to maintain operational costs.

On the other hand, "non-managed IPTV" is a new term that describe a new method to deliver IPTV service over the open Internet (also called "Over-The-Top"). In short, it means that there's no need for a dedicated infrastructure (which dramatically decreases the costs), nevertheless, the services provider is limited with the type of services it can provide and their Quality-Of-Service (QoS).

Up until recently, we have witnessed many deployments from the first kind, "managed IPTV" of those who either already have land line infrastructure or willing to spend a lot of money in order to sustain competition in the TV market. British Telecom has BTVision, Verizon has FiosTV, AT&T has U-Verse, France Telecom has also it's IPTV offering.
So, what's common for all those companies? Money ! But not earning it... loosing it ...

Verizon : " ... the company said it expects to invest $18.0 billion in net capital from 2004 through 2010". Other suggest the investment is looking into a $ 22 billion. Nice amount of money.
I did not look closely into those figures but it looks too risky and too much money.

AT&T: "U-verse will cost $1.4B more than planned".

Billions of dollars were and will be spent over those IPTV platform and the big question is: does it worth it? Will those companies be able to really profit from those huge expenses?

Those question were asked several times in each company that wanted to provided IPTV services while for most of those companies that answer was strictly NO ! Why? The cost is too heavy for medium and even large size providers (unless there's a Local-Loop-Unbundeling (LLU) which enables using the incumbent infrastructure as it was their own). Only giants companies can invest such amount of money. So, that can those companies do if they want to enter the TV market? Right now, the only possible answer is to use the open Internet. Yes is limits service provider's offering but it enables to provide appealing offering for the customers when combining then with other services which will be discussed in the next post.