Wednesday, July 02, 2008

IPTV discussed

Over at isp-clec.com we are having a discussion about CLEC's getting into IPTV. (I know I touched on TV this week already). Fred Goldstein says that the opportunity lies in providing access to other video besides cable TV. Fred also talks about trying to do something to capitalize on the huge demand for downloaded video that costs ISP's money and choke their network. Fred makes good points, but I argue that TV is a waste of effort for ISP's. If you have to do it, resell a satellite service (and stop whining about single billing).

From what my cable clients tell me, the high ARPU clients are being poached by DirecTV's HDTV offering. Hard to out-perform that on scale and win them to your service.

Fred also talks about storing video, but the cableco's have already lost the Network DVR fight with Hollywood. No one was able to refute the high expense of just the set-top box. Then there is the copper plant. ADSL2+ is good to about 8000 feet from the CO. These folks probably already have cable, which makes the marketing expensive.

Now let's look at the numbers:

There are NOT that many CLEC's that have 5000 customers in one CO, the magic number to prevent the TV service from being a money pit. VZ only gets 15% penetration on FiOS. So to get 1000 TV subs you would have to have 6667 broadband subs. Since no CLEC has ever gotten as much as 15% of the market, you would need a CO with about 65,000 lines within 8000 feet. There are very few of those. Very few.

So how would TV work for ISP's?

Go the PCO route. Private Cable Operator. Chase the MDU, where you are the dominant provider. Cluster 4 or more 4 MDU projects of 250 or more units per MDU in the same city (preferably off the same CO). Now you have about 1000 subs and the DTV Head-end solution will make some sense and you can now look at the Business case.

Why everyone has to follow the Bell-heads like Lemmings is beyond me. Folks, you don't have their budget, their marketing muscle, their brand, or their captured customer base -- you have to capitalize on High Touch (high profit) services that they will never be good at.

1 comment:

Alex Balashov said...

I turned the thoughts I had to share in that discussion into an article of my own, here. Would be eager for your thoughts.