BT to launch broadband television next summer

The CEO of BT's recently-formed Entertainment division, Andrew Burke, has announced that BT will go ahead with a full consumer launch of its IPTV service in July or August 2006. The service will be delivered via a set-top box, which will contain a Freeview digital terrestrial television (DTT) tuner and deploy Microsoft's IPTV technology. BT's intention is to provide TV and films on demand, and services such as messaging and VoIP.

Comment: The UK IPTV market, so far confined to a limited launch by London-based Homechoice, has finally begun to stir. With some big players such as Wanadoo aggressively moving into the local loop (it's only a question of when the France Telecom-backed ISP moves into TV) and portals such as Yahoo! starting to place their TV bets, it's the turn of BT to throw its rather large hat into the ring. BT's IPTV strategy beautifully demonstrates just how TV and content, more than any other part of a telco's strategy, must resonate with existing TV and media market conditions, which vary so much from country to country. We think BT has been clever in responding to the UK's market conditions in the following ways:

• strong pay TV competition:
BT is not seeking to match Sky, NTL and Telewest's pay TV offers, but to provide differentiated services. It will compete on VoD (it plans to offer a substantial VoD catalogue) and on TV/PVR (there will be a seven-day PVR service on every Freeview channel), but will aggressively push more interactivity via VoIP, messaging and a richer interface
• strong DTT player:
BT is leveraging Freeview's strong market position (5m-plus subscribers) and brand, through a partnership approach rather than competing directly. As broadcast channels remain on the DTV terrestrial network, sophisticated IP-multicasting techniques are not required in the BT core or access network, thereby reducing current costs
• tougher network topology and broadband access limitations:
the UK lags behind in terms of bandwidth availability (late to market, longer loop lengths), which means most households will have only 1 or 2Mbit/s, which is not enough to launch a full-blown broadcast offering
• explicitly seeking to grow the local/niche content market:
the UK pay TV market is not saturated, but is certainly mature. However, there is considerable room for exploiting demand for content that is not yet available. BT is leveraging the ability of IP to exploit this.

BT has been trialling its IPTV service, code-named Nevis, in 170 homes since November 2004, and clearly wants to go to market with a well thought-out proposition. You can find our more detailed assessment of its wider approach in our Broadband@Ovum report The broadband home: BT's vision. It's important not to underestimate the challenge BT faces though: the UK is one of the most (if not the) competitive TV markets in Europe, and BT will certainly face heightened competition from the big TV hitters when HDTV starts to make an impact.

Source: Ovum News.