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 THE STAT 26Percentage of wireless customers who use their cell phones to take picturesMore Vitals
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NOVEMBER 23, 2004
Next: TV Meets IP Internet technologies promise to soon take couch potatoes to worlds far beyond TiVo. Even phone companies could benefit big-time Just a few years ago, the fine art of watching TV seemed unlikely to change much. You watched programs when the networks told you to watch them. Maybe you taped them on a videocassette recorder. Either way, your choices were limited. Then along came the TiVo (TIVO ) digital video recorder, which as its 2 million loyal customers will tell you, added more than a little convenience to the coach potato's world. Turns out, TiVo was just the start. A new wave of TV-related innovation called IP-TV is just starting to reach consumers. Just as the service known as voice over Internet protocol is poised to revolutionize the phone business by offering a low-cost Internet alternative to traditional phone service, IP-TV could bring Internet-style interactivity and flexibility to your TV set. It won't happen overnight, of course. But over the next decade, the long-hyped notion of "video-on-demand" could become commonplace, allowing consumers to watch what they want, when they want to. They'll be able to control their IP-TV service remotely through a PC or a cell phone. And they'll be able to personalize their content, whether they want to watch the local high school football game or home movies. "IT'S TIME." Certainly, reason for skepticism abounds. Over the years, a number of Internet-TV efforts such as Microsoft's (MSFT ) WebTV have come up short. But skeptics can take heart. IP-TV projects are already under way, courtesy of big phone companies in Canada, Europe, Asia, and some rural small fry in the U.S. Customers of All West Communications in Kamas, Utah, Prairie Wave Communications in Sioux Falls, S.D., and Ringgold Telephone Co. in Ringgold, Ga., already receive IP-TV services most city folks have never even heard of. "The big guys in other parts of the world are doing it, and the small guys here are doing it," says Mark Gray, CEO of Kasenna Networks, a Silicon Valley company that sells IP-TV technology to carriers. "It's time for the big guys here to do it, too." STOP THE BLEEDING? Bit by bit, they are. On Oct. 20, massive SBC Communications (SBC ) inked a $1.7 billion contract with telecommunications gear maker Alcatel (ALA ) to turbocharge its network to bring 20 megabits-per-second of digital bandwidth to 18 million homes within two years. That's enough to simultaneously serve a TV show shown in high-definition format and a standard-definition program, with enough left over for high-speed Net access and Net-based phone service. SBC followed up that deal on Nov. 17 by announcing plans to spend $400 million on IP-TV software from Microsoft. If IP-TV takes off, it will provide much-needed new opportunities to traditional phone companies that have built their businesses around wire lines. Besides losing customers to cell carriers in recent years, they've been losing out to cable-TV companies that are producing their own phone and Internet services. In many regions, cable providers have grabbed 30% of the traditional phone customers, say analysts. IP-TV gives the phone companies a way to stop the bleeding. Take Ringgold. The 90-year-old carrier is offering IP-TV to 25% of its subscribers, about 1,200 so far. Executives see it as a way to ward off cable invaders. "What choice did I have?" says Executive Vice-President Phil Erly. "I'm not making any money yet, but it's a survival play."
BW MALL
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