IP-Prime's fall raises further questions

Does the upcoming demise of IP-Prime cast a negative light across an entire market, or is it just a reflection of one company's inability to realize adequate returns from that market's opportunity? Is it an indictment of a business model, or an indication of how much competition has developed among companies with similar business models? And, does the planned end of IP-Prime in a way illustrate how healthy a business opportunity over-the-top video could be for small telcos?

The answers to all of the above may be "yes."

Question 1, Part 1: SES Americom's plan to end the much-touted IP-Prime wholesale service, coming just a month after the U.S. IPTV industry sought re-assurance at TelcoTV 2008, does cast a negative light on the small telco TV market amid a very challenging economy. It may take a few months to sort out whether or not any telcos will need to shut down IPTV services or kill launch plans because of IP-Prime's closure. SES Americom is giving those customers plenty of time to look for other options, but satellite may have been the best or only option for some. The company's statement that end user adoption was slow could convince some telcos that a branded, separate TV service just isn't worth it.

Question 1, Part 2: Still, SES Americom's announcement that it will end IP-Prime pretty clearly communicated that IP-Prime didn't meet the company's own ROI goals for that particular offering. It said it still believes in IPTV over satellite. Perhaps some small telcos still will use satellite, but will have different partners for content or systems integration purposes.

Question 2, Part 1: Wholesale IPTV offerings have looked especially attractive in recent months as telcos have become more threatened by landline losses, but also more cautious about the costs of investing in a new service. TV seemed to be both a customer loyalty and revenue answer, but maybe the failure of IP-Prime to collect enough usage illustrates that there are just not enough customers in this particular part of the market to support wholesale operational costs.

Question 2, Part 2: But, don't dismiss wholesale on a, well, wholesale basis. Avail Media and Falcon in particular have pressed into the market with an array of technology partners, many of whom are the biggest names globally in IPTV and video capabilities. On a related note, major network equipment suppliers also are expanding their outsourcing capabilities for the telco market. These companies certainly are armed to make wholesale IPTV work, and the fact remains that IPTV is still too expensive for many telcos to build out on their own. Yet, they must do something to offset voice revenue losses. At another level, there are locally-focused firms like Midwest Video Solutions looking to helped the smallest telco avoid the high costs and complications of providing TV service.

Question 3: If you don't think the rest of the debate is compelling, then fast-forward to the notion that IP-Prime's demise is just another reference point highlighting the increasing and somewhat surprising viability of OTT video as a component of telco broadband offerings. A Vudu executive may have been the interloper during last month's TelcoTV opening keynote session, especially sandwiched between telco TV mac-daddies AT&T and Verizon Communications, but he pointed to a business model that seems to make a lot of sense as OTT video continues to explode: Why create a cable TV-like service and then figure out how to integrate OTT video when you can skip the build-out costs and partner with a device company that can bring very un-cable-like content and additional value to your existing broadband connection. If voice is moving to broadband connections and more video is traveling over those connections, maybe the market is trying to tell you something.

For now, it is safe to say that TV and video continue to be an opportunities for small telcos, but that questions remain about the best ways to deliver and maximize those opportunities.


Related articles
SES Americon said this week it would end the IP-Prime program
Midwest Video Solutions launched in May of this year
Avail Media emerged in 2006 after a merger
Falcon is a former Fierce 15 Emerging IPTV Player