Not the greatest country for IPTV

HBO's drama "The Newsroom" hinges on the premise that cable news anchor Will McAvoy jumpstarted his career as an opinionated, tell-it-like-it-is "journalist" when presented with a question by a naïve college student who inferred that the United States (although I believe she mistakenly said America) is the "greatest country in the world."

McAvoy experiences an epiphany akin to coming out of a drug-induced coma. He literally freaks out on the poor girl, reeling off statistics that show the United States is behind multiple other nations in all sorts of economic and social ways. He's immediately surrounded by controversy and almost as quickly reinvigorates a career that had been on cruise control.

Among the statistics McAvoy did not reel off--on a television show about a cable television show--is where the United States stands in IPTV. While I have no official statistics, the ongoing stream of information about the IPTV business seems to skew international. The U.S., is might be safely asserted, is not the greatest country in the world when it comes to IPTV.

On the surface this is confounding. After all, the U.S. invented television--despite what anyone else in the world might think. It certainly leads the world in what's come to be known as cable TV--both in networks and service providers and probably in miles of network plant. Cable operators were the first to realize that broadband of IP was a cresting wave that would give shareholders and executives an exhilarating financial ride even in the toughest economic times and the first to drive high-speed broadband onto their hybrid fiber/coax networks.

But today's IPTV news comes from Russia or China or France or England or even Belarus, where innovation and new network ideas are flourishing. The country that recognized the value of speed and the Internet and the value of fat pipes isn't using that speed or those fat pipes and, especially, that Internet for the majority of its pay- TV services.

There's an easy explanation why. Because the U.S. was the greatest country in the world in building out its cable systems it's stuck with all those built-out cable products. While the rest of the world is just getting into the pay-TV business, the U.S. business is long in the tooth. Cable operators, who, despite or maybe because of limited competitive pressure, are not unlikely to tear out generations of working-just-fine RF equipment just because IP does so much more. It's not unreasonable. How many of us have 15-year-old big tube TVs sitting around somewhere--perhaps even still showing our pay-TV lineups--even though digital and HD have been de rigueur for over a decade? Couch potatoes did not take root because they were anxious to go find new ways to watch television; and cable operators feed and nourish couch potatoes.

This week Infonetics Research released details of a new study that named Cisco (Nasdaq: CSCO) the favored IP set-top box maker. What's even more interesting is that "94 percent of service providers participating in Infonetics' survey use IP STBs to deliver video services," according to an Infonetics news release.

No doubt many of those operators are functioning somewhere in the U.S. There is evidence that IPTV is the future of pay-TV in the U.S. There's also some evidence that competition from IPTV players like AT&T's (NYSE: T) U-verse and (take a wait-and-see on this one) Google's (Nasdaq: GOOG) Fiber TV are also forcing cable operators to get off the dime and into the mix. But, just like that 35-inch two-ton Sony (NYSE: SNE) Trinitron in your family room, it's not an easy thing to replace something that works just because something new has come along--especially in an economy that's been bad so long it smells worse that six-month old milk.

Sans more competition--and there really is very limited IPTV competition in the United States--it will be a long process until it happens. And while that's happening, it will be safe, albeit controversial, to say that the U.S. is not the greatest country in the world when it comes to IPTV. --Jim Bartold

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