Telcos see OTT as growth opportunity: A hot topic gains more speed

Jim O'Neil

2010 TelcoTV, Las Vegas--How hot is over the top video delivery? I haven't had a single conversation this week at the TelcoTV trade show that, at one point or another, hasn't turned to OTT and the speed with which it's accelerating--in both consumer adoption and in the way the telco industry is looking to incorporate it into their offerings.

The exhibition hall is rife with hardware and software OTT solutions for the industry and the workshop and panel lineup makes it even clearer that OTT has arrived in Telcoland.

Dale Merten, COO of tiny Toledo Telephone (about 2,300 customers) in Toledo, Washington, has offered its customers an OTT product since 2008. He said telcos that don't offer their own OTT product to customers are making a mistake because "customers are already doing it on their own."

"Everybody wants to watch what they want when they want," he said. "And customers are already moving into OTT with or without you. I think that a company has to embrace OTT so they can move aggressively to retain those customers.

"The bottom line," he said, "is that it's all about the customer."

Toledo, he says, has tried to make OTT easy for its Internet customers, giving them a Samsung BD-C6500 1080p Blu-ray Disc Player, which they can keep. The break-even point? "About 11 months," Merten said.

The biggest challenge to offering OTT as a free service, meanwhile, hasn't been service issues, or complaints about devices freezing up, he said.

"You have to be ready to deal with overwhelming success," he said.

Andrew Burke, CEO of set-top box maker Amino, which in the U.S. sells to mostly Tier 2 and Tier 3 telephone companies looking to offer an IPTV or Hybrid TV service says his company's big push this year, both here and abroad, is an STB that handles OTT seamlessly.

"It's absolutely critical," Burke said. "If a service provider isn't offering an OTT solution to its customers it's going to lose them."

The growth, and the anticipated acceleration, of Internet-connected TVs are at least a part of the surge in OTT interest. In 2009, only 20 percent of the people who had connected TVs actually activated them; the number this year is closer to 50 percent, and more were sold in 2010 than a year ago, according to Multimedia Research Group data. Those numbers are expected to grow, and with them, OTT.

"2010 has been an exciting year with the introduction of so many new devices, Apple TV, Google TV, the iPad," said Mike Galli, an MRG analyst. "And, cord-cutting and cord-trimming are very real things. The statistics in the U.S. are pretty stark about what's happening in the cable market. It all contributes to the continued growth of OTT; OTT is growing and it's not going away."-Jim

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