Monday August 16, 2010 – Antonette Goroch
In the early days of telco-delivered IPTV, the saturated U.S. pay TV market (nearly 90 million households) was viewed as the potential Achilles heel for the new class of pay services. To convince U.S. pay TV subscribers to switch from satellite or cable, telcos would have to entice customers with the lower fees and high-tech extras to elbow their way into a viable business.
With the two largest U.S. IPTV operators now nearing a combined 6 million subscribers, the question is no longer can telco IPTV survive, but just how big can it get? AT&T and Verizon have so far beaten these odds, continuing to gain subscribers, as incumbent pay TV operators, both DTH satellite and cable, struggle to hold on to theirs.
In theory, U.S. IPTV could still have tremendous growth ahead of it, with the potential to reach as many as 15 million to 20 million households. Since DirecTV’s 1994 launch, DTH satellite subscribers have grown to more than 32 million as of 2009, by chipping away at analog cable subscribers and growing the pay TV base overall. While the number of analog cable subscribers is decreasing quickly, especially with cable operators’ recent moves to upgrade networks to all-digital through cheap digital-to-analog converters, there were still nearly 20 million analog cable subscribers as of 2009 that could choose IPTV as their upgrade to digital pay TV. Further, the seamless integration of TV service with voice and Internet offers pay TV services an incentive to switch for packages that can enable advanced, “TV Everywhere” services.
The telcos certainly have the need to push their IPTV services. Both AT&T and Verizon reported declines in their core voice customers for June 2010, but saw gains for both TV subscribers and their average revenue per subscriber. This is strong impetus for the two to continue deploying TV across their voice networks and adding services such as 3D, VOD and mobile access to programming. Only time will tell just how big IPTV in the U.S. will get, but it’s clearly here to stay.
