update SINGAPORE--Telcos are failing to understand what is needed to succeed as content providers, and should focus instead on building out their network infrastructures for the future, says Frost & Sullivan partner, Manoj Menon.
Speaking at an AmCham-hosted ICT analyst debate here Tuesday, Menon said very few telcos that have entered the IPTV space are profitable because the business of content is changing rapidly, with factors such as the Internet allowing consumers to choose what they want to watch.
As such, telcos are chasing the content gold and are taking a long time to understand the IPTV business", he said.
Participants in the debate were requested to assume "sides" and make arguments based on their observations of the industry.
Menon noted that the online content space is a red ocean market, with other content players already in the game.
In India, for example, few IPTV operators make money from the service because subscription cost has been suppressed to a minimum, due to the fierce competition, said Menon.
Instead, large media players the likes of Apple and Google, are poised to dominate the space, as more users globally get online.
These companies have demonstrated the ability to provide content platforms that cater to consumers' tastes, he said, noting the success of the Apple App Store and Google's YouTube site. "A telco, no matter how big, remains small compared to these over-the-top players," he added.
An executive from digital content management provider, Irdeto, last year said telcos have missed the IPTV "window of opportunity". Broadcasters were more suitable candidates to win in the digital TV space, not telcos, Thierry Raymaekers, Irdeto's Asia-Pacific managing director of business development, had said.
Raymaekers had pointed to Singapore telco, SingTel, as an example of a telco that had failed to topple broadcaster incumbent, StarHub, which provides a cable TV service.
Menon, too, said SingTel had rushed for the English Premier League (EPL) broadcast rights, in a move to enter more homes in the country with its mio IPTV service. However, as a result of the bidding war--with StarHub--that had ensued, Singapore's Media Development Authority (MDA) later stepped in regulate the market, he pointed out. "Telcos are really poor at understanding the IPTV business," he added.
Frost & Sullivan's analyst, Adeel Najam, said in an October report last year that SingTel's costly winning EPL bid would prevent the carrier from turning a profit on the series, but would help boost subscriber numbers for its mio service.
However, Bertrand Bidaud, managing vice president of CSP strategy at Gartner Research, noted that some telcos have been successful in the IPTV space.
France Telecom, for one, has seen success in the space with its IPTV service the dominant pay TV offering in the country, said Bidaud, who also participated in today's debate.
He added that telcos can differentiate from the competition by taking advantage of their core competencies, such as personalized customer service and their billing backends.
Menon agreed, noting that the process of billing for content services is complicated, and telcos have an opportunity here to stand out from the crowd.
But, he emphasized that the opportunity for telcos would be in building out their network infrastructures, as services get increasingly bandwidth-hungry.
"Telcos have plenty of opportunity in enabling content flow, just not in IPTV itself," he said.