• Great articles on other sites
  • RSS Great articles on other sites

  • Analysis, Opinion, Telecommunications - Written by on Wednesday, May 9, 2012 12:29 - 34 Comments

    Reality check: ISPs do not understand content

    opinion Australian ISPs, regulators and the Government need to take a step back and stop fooling themselves that future telecommunications competition will rest on ISPs’ ability to provide bundled video content services to users. The reality is that ISPs aren’t good at this task and customers don’t want them to do it.

    Over the past few weeks, an old dream has begun to resurface strongly in the ongoing conversation around the future of Australia’s telecommunications industry. In this dream, ISPs and telcos are able to diversity beyond their roots providing telecommunications services such as broadband and telephony to customers. Under this so-called ‘triple-play’ vision, ISPs would add services further up the networking stack, providing video services such as films and television episodes on top of their network infrastructure.

    The desire to realise this dream has become very evident in a number of comments made by industry figures over the past year or so.

    In a briefing in Sydney yesterday, ACCC telecommunications commissioner Ed Willett said the nature of telecommunications competition could change as the powerful National Broadband Network rolled out, with ISPs competing with content providers for access to video streaming rights. This new world could see ISPs forced to compete with an emerging class of rivals such as Apple and Google for “the primary customer relationship”, Willett said, according to this article published by iTNews. The Australian also has more on this. One can’t help but feel the regulator already has its eye strongly on this new market opportunity, given the provisions it forced on Foxtel in its $1.9 billion buyout of Austar, which ensured some of the pair’s key content holdings would be unlocked for competitive use by ISPs.

    Across town, the nation’s biggest telco Telstra was reportedly discussing its “media strategy” with the aid of ex-Television NZ chief Rick Ellis, with the idea raised that the company could make a bid to buy pay TV ConsMedia, which, along with Telstra, part-owns Foxtel and also has interests in Fox Sports Australia.

    Meanwhile, at an investment conference held by Macquarie Bank, top-tier ISP iiNet was spruiking its growth strategy. In a broadband market which is experiencing negligible amounts of growth, a core plank of iiNet’s strategy — as with every other ISP — is getting its customers to buy more from it. This means, according to the company’s presentation, getting more people to sign up for its “TV Bundle” — the FetchTV set-top box through which iiNet can get its customers to pay for TV and movies delivered over their broadband connection.

    And the nation’s number two telco Optus is also certainly taking the content opportunity seriously.

    Like iiNet, the company is pitching the FetchTV offering to its customer. Its chief executive has publicly called for the Australian Competition and Consumer Commission to regulate content as it does telecommunications access, citing this area as the next major regulatory battleground. And of course the telco has over the past year taken the fight directly to the TV networks with its TV Now cloud-based personal video recorder, which the Federal Court unfortunately shut down last month.

    Yes, yes, for Australian telcos at the moment, you can’t escape the feeling that the future is very much about content. Lovely, juicy, value-adding content, streamed on their networks, delivering extra profit margins and locking customers into triple-play or even quad-play (with mobile) bundles. It sure sounds like a lovely vision. But there’s just one problem: If you dig a bit beneath the surface a bit, it’s hard not to escape the conclusion that it’s a false hope.

    For starters, it’s important to realise that the ISPs’ forays into content provision over their networks over the past decade have broadly failed.

    In total, iiNet has approximately 860,000 broadband customers. But in the almost two years since it launched FetchTV, it has succeeded in converting only 20,000 (two percent) of those customers into FetchTV customers as well. With that abysmal run rate, it’s hard not to make a case right now that iiNet should simply abandon its FetchTV efforts altogether. The project certainly isn’t making iiNet any money. Optus, which launched its own FetchTV offering in Octover 2011, is no doubt doing no better than iiNet on that front right now.

    Telstra, which has many millions more broadband customers than iiNet, has fared a little better; in late March this year, the company revealed that it had sold more than 300,000 units of its T-Box Internet video set-top box. Given that the company has some 2.5 million broadband connections using its network, that’s a much better sign-up rate than iiNet’s FetchTV service enjoys — about 12 percent. But it’s not enough to call the platform a success just yet.

    But wait, there’s more.

    The recent wave of Internet video services launched by the telcos are only their most recent foray into the area of content provided over their telecommunications networks. Before there was content on fixed broadband, there was content on mobile.

    A July 2007 article published by the ABC chronicles how Telstra had then launched a service which would allow customers to watch television programs on their mobile phones — for a charge. At the time, then-Telstra executive Justin Milne, who was then in charge of Telstra’s BigPond ISP unit, hyped the device up as a revolution.

    “We are inventing a new medium here and what I earnestly hope is that by giving them some slots and making them available to Australian producers to help us invent this whole short form of TV, that the folks will vote with their feet and they’ll buy those shows, and those will become the most popular shows and so we’ll produce more of them,” he reportedly said.

    At the time, mobile television was all the rage. Telstra was doing it, Optus was doing it, Vodafone was doing it, and the then-separate Hutchison Telecommunications, developer of the ’3′ network in Australia, was doing it. You could buy individual ‘packs’ through the various companies which would give you access to various slices of content. The only problem was, these types of services never took off. For a time, Australians were interested, but after a while the interest dropped off and the various telco’s efforts to pump content through their mobile networks slowly failed and were largely abandoned.

    It wasn’t the first time that this had been tried in Australia, either.

    Those of you with slightly longer memories might recall that in late 204, Telstra launched what was then described as an ‘i-mode’ service (imported from Japan, where it was quite popular) through its mobile devices. At the time, the idea was that content providers like eBay, Citibank, CNN, Fox Sports, Whereis, Flight Centre and The Weather Channel would provide portals through Telstra’s mobile devices that would allow customers to buy content directly on their mobile.

    But, just like the mobile content wave which would follow it a few years, later, i-mode bombed in Australia and is now remembered as one of Telstra’s greatest mobile-related failures locally.
    Now, I don’t want to imply that every attempt by an Australian telco to diversify into content services has failed.

    Probably the most high-profile success in Australia in this area — and, by now, you’re wondering why I haven’t noted this elephant in the room — is Telstra’s 50 percent investment in pay TV company Foxtel, and the provision of extremely profitable Foxtel services over Telstra’s HFC cable network. Formed in 1995 through a joint venture between Telstra and News Corporation, Foxtel has historically made a stack of money for both, and you can only get access to it if you have Telstra’s HFC cable running to your door.

    Now, it’s true that Foxtel has been a success. But what’s important to realise is that Telstra has had very little to do with that.

    Telstra’s role in Foxtel is essentially limited to two areas. Firstly, Telstra is a 50 percent investor in Foxtel, so it has put in a stack of money into the company. And secondly, Telstra maintains the HFC cable network over which the Foxtel services are provided. This is simplifying things a bit, given the complex relationship between Foxtel and Telstra, but when you break it down, you quickly realise that all of the content-related work that goes into Foxtel is done in a separate company to Telstra — one focused on content. The success of Foxtel is based on the fact that Telstra kept its nose out of the content and focused on what it does best — providing telecommunications carriage services to get that content to users.

    And every other area where Telstra has attempted to leverage the Foxtel relationship itself, it appears to have broadly failed in.

    Telstra’s attempts to provide access to Foxtel content through its mobile phones; Telstra’s attempts to provide access to Foxtel content through its T-Box platform — in short, Telstra’s attempts to leverage its Foxtel relationship through any other avenue than simply providing the telecommunications network for Foxtel to sell pay TV — have broadly failed. In fact, Foxtel is probably experiencing more success offering its services through Microsoft’s stand-alone XBOX 360 platform right now than it is through Telstra’s competing platforms.

    Now that we’ve established that ISPs don’t do content very well, the key question which needs to be asked is why. On this front, I think it’s appropriate to go to a quote from Walter Isaacson’s Steve Jobs biography. This is vintage Jobs, speaking about the recording industry and why it couldn’t get its own online music store off the ground:

    “When I went to Pixar, I became aware of a great divide. Tech companies don’t understand creativity. They don’t appreciate intuitive thinking, like the ability for an A&R guy at a music label to listen to a hundred artists and have a feeling for which five might be successful. They think that creative people just sit around on couches all day and are undisciplined, because they’ve not seen how driven and disciplined the creative folks at places like Pixar are.

    On the other hand, music companies are completely clueless about technology. They think they can just go out and hire a few tech folks, but that would be like Apple trying to hire people to produce music. We’d get second-rate A&R people, just like the music companies ended up with second-rate tech people. I’m one of the few people who understands how producing technology requires initiation and creativity, and how producing something artistic takes real discipline.”

    What’s happening right now in Australia’s telecommunications sector is that the ISPs and telcos are, as Jobs said about the record-labels, hiring second-rate people to enter industries which they don’t understand. The fundamental business of telcos is to provide telecommunications carriage services; not to provide content services. And consequently, telco people just don’t understand the content industry. Telco people think of everything through the lens of their network infrastructure; cables, routers, datacentres. But they don’t think about the content itself — the content, for a telco person, is just something carried on their network.

    But providing content isn’t about getting a network right and bundling content onto it. It’s about making that content available wherever a customer wants it, in whatever format they want it; no matter what underlying network may deliver that content. The birth of the Internet has ensured that content has become disaggregated from the network layer that delivers it; and very few customers want to go back to the bad old days where the two are tied irrevocably together, as they are with Foxtel.

    Now, I don’t want to argue that the content industry is getting this right either. It has been exhaustively documented right now that Australians are getting a rough deal when it comes to obtaining TV and film content on-line, on-demand and in a timely and affordable manner. But the answer to that problem is not going to come from Australia’s ISP industry.

    As the US and UK have also exhaustively demonstrated with companies like Netflix, Apple and Amazon, the solution to that problem will come from a new category of companies which sit in the middle between content owners and consumers, with their service to be provided on top of telecommunications networks, but with no need for an explicit relationship with the providers of those networks. Quickflix founder Stephen Langsford, whose company sits squarely in the middle of this new industry category, nailed this concept in a speech last week; he’s perhaps one of the first executives in Australia to do so publicly.

    The Quickflix executive said the best option for Australian consumers was a streaming platform which would offer an unlimited “all you can view” movie and TV streaming service for a single monthly price across any device or platform. This, he said, was an important point because currently in Australia, most companies locked customers in to a particular device, which he said limited the number of consumers who would take up such services. This is the model which has driven Netflix to a level in the US where it accounts for 20-30 percent of all Internet traffic in the country. And it is the model which will see paid Internet video succeed in Australia.

    Ironically, Langsford’s speech was given at the same conference where iiNet and Telstra were hyping up their own Internet video options. I wonder if many in the audience appreciated the subtle difference — which will mean the difference between success and failure — between the different philosophies presented.

    I suspect not.

    Update: This article has been updated with correct T-Box figures. We had estimated about 100,000 sales over the past several years; the correct figure is 300,000.

    submit to reddit

    34 Comments

    You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

    1. Tony Brown
      Posted 09/05/2012 at 12:55 pm | Permalink |

      Great blog post Renai, after talking with telcos about this for the last decade I have come to a very similar conclusion and have written similar stuff to this myself.

      Very few telcos have got a very good feel for content, probably the best is PCCW up in Hong Kong, their IPTV is pretty good but most other IPTV services are mediocre.

      I was talking to someone last night who argued that the ISP’s on the NBN should all be offering IPTV because of the cheap multicast rates being offered by NBN Co.

      I could see where the gentleman was coming from but adding IPTV is not like adding VOIP or instant-messaging, its a whole different ball game.

      • Posted 09/05/2012 at 1:22 pm | Permalink |

        Cheers, Tony!

        I agree. The ISPs see content as just another network layer, to be added like VoIP. But the truth is it’s not; and despite commonly cited industry wisdom, these kind of “triple play” services are broadly failing across the industry. I don’t think ISPs understand why at this point, but I do think companies like Quickflix and Netflix do. I am certain that Microsoft and Sony, with their gaming content networks (also overlaid on top of ISP networks) understand this well as well.

        Renai

    2. Withnail
      Posted 09/05/2012 at 12:58 pm | Permalink |

      …well that’s bad news for telco shareholders in a fairly saturated marketplace…….

      • Posted 09/05/2012 at 1:24 pm | Permalink |

        It is bad new for companies which are seeking massively enhanced revenues and profit margins, but it’s not bad news at all if you think about ISPs as infrastructure businesses, with slowly growing revenues and steady margins. The truth is, that unless a whole new category of network transit is opened up, as we’ve seen with 3G and now 4G services, high growth is not really possible in telecommunications.

        If you accept that, these are still good businesses. And, as all the ISPs know, margin can also be improved via taking costs out of the back-end of the business, getting better aggregated backhaul deals and so on.

    3. Posted 09/05/2012 at 1:12 pm | Permalink |

      A similar comparison is the music and smartphones.

      If you have an iPhone, a Zune subscription is and Windows Phone Marketplace purchases are useless, and vice-versa.

      Though I have have a Zune subscription and bought many apps, I’m more inclined to buy services that are platform independent, so if I chose to switch, I won’t lose my purchases, e.g. I buy CDs, not just because I like shiny things, but because it doesn’t tie me in to a particular smartphone platform.

      • Posted 09/05/2012 at 1:25 pm | Permalink |

        +1

        • Holotropik
          Posted 10/05/2012 at 8:32 pm | Permalink |

          You have the wrong device if you can’t get music from anywhere you like and load it onto the device. That’s why I like the iPhone as I can get my music from anywhere I want and load it up and connect it to my house, my car or TV for a seamless experience without wires ;)

          • Posted 10/05/2012 at 11:01 pm | Permalink |

            I have an HTC Desire, soon to become an HTC One XL (hopefully).

            I run Windows 7 on my computer, which I use as an HTPC, running Media Centre for my PVR, although I’m currently looking at building an Ubuntu or XBMC box.

            I will soon be purchasing an ASUS Transformer Infinity.

            Now show me how I can have all my content from iTunes (which, by the way, I would rather slice my tongue on glass than use, because it takes 45 seconds to load on my Core i7, 6GB Ram system….)…..

            Oh wait, I can’t. It’s great if you’re in Apple land- But I, like more than half of ALL Australians using a smartphone, am not. And like more than 80% of ALL Australians using a PC, not a Mac.

            Content MUST be ubiquitous, regardless of the manufacturer of the consumption hardware, if competition is to work. Apple have made it look easy up until now, because they pushed fast into the market with the first real ecosystem. But ecosystems break down once people realise there are other ways, maybe better ways to have their cake and eat it too. Once Quickflix takes off here, Apple will be given a run for its money in Movies, and streaming radio services like Rdio and Grooveshark are already cutting into Apple’s iTunes, slowly yes, but relentlessly.

            Providing good hardware is the domain of manufacturers, like Apple, Samsung, HP etc. Providing good content is the domain of content providers, like Quickflix. And providing the reliable, fast network between them is the domain of ISP’s. All 3 should remain separate, each producing quality products/services in their own categories.

            Show me a company, globally, who’ve combined this successfully? I can’t think of one. There are successful network providers: AT&T, China Mobile, Telstra. There are successful content providers: Netflix, BBC. And there are successful hardware manufacturers: Apple, Samsung etc. The only one who has had any success putting 2 together is Apple and, well, frankly, a monopoly is not a choice, so it prohibits its own growth after a threshold amount.

    4. Posted 09/05/2012 at 1:16 pm | Permalink |

      I’m a bit torn on this subject.

      From a pure technical point of view – (and wearing my propeller hat) – I think it is important that ISPs do tackle the issue of IPTV as a service head on. The propeller hat wearers are obviously interested in such services – (else we wouldn’t be discussing it) – but are the sorts of people who don’t want to be locked into a proprietary set-top box like a T-box.

      We want to be able to connect the stream to Slingboxes, Windows Media Centre, to MythTV solutions, to Ubuntu TV solutions, or directly to IP-capable television sets.

      All we want is the multicast stream we can use anywhere we want. Even on computers with appropriate media player software. The openness and freedom we love and enjoy.

      However, the non-propeller-hat wearers – (which, lets be honest, is most of the population really) – are going to want simple set-top boxes configured and installed by someone else.

      They don’t want the hassle, and don’t have the skills to deal with the hassle.

      It’s an interesting line to walk.

      And then theres the question of the content itself…………..

      • Posted 09/05/2012 at 1:27 pm | Permalink |

        You’re right, Michael, but most of those non-propeller-hat-wearers don’t see ISPs as the providers of these set-top boxes. They see those devices being platform/ISP agnostic and coming ffrom JB Hi-Fi.

        The general population does not believe that ISPs are content providers. They believe that they are … shock! Internet service providers. That is their nature. Content is something completely different — not just another network layer.

        • Posted 09/05/2012 at 1:39 pm | Permalink |

          “…most of those non-propeller-hat-wearers don’t see ISPs as the providers of these set-top boxes…”

          Over time, they will. ISPs are already doing the bundle deals, and as the NBN progresses, we’ll see it more and more.

          Conversely, what we might see is ISPs coming up with a list of supported set-top boxes, and pointing customers towards appropriate retailers to supply/configure the units for the customer’s ISP.

          Many permutations and combinations here, but that’s the beauty of it. The ISP/RSP who gets the package right will reap the rewards.

          Competition. FTW.

          • Posted 09/05/2012 at 1:43 pm | Permalink |

            You see, I don’t believe we will. Do you really think ISPs will be able to compete when Apple launches its Apple television set, whatever that will be? No.

            • Posted 09/05/2012 at 2:08 pm | Permalink |

              Not everyone wants the Apple paradigm, so while I won’t say “yes” or “no”, I’ll say it’s an area in flux :)

            • Brendan
              Posted 09/05/2012 at 2:18 pm | Permalink |

              Whatever Apple has up it’s sleeve, it’s clear it will leverage the Apple iTunes Store.

              Given Netflix, Amazon and other content providers are still going, one has to presume Apple is far from saturating the market place.

              The thing is, you cannot (yet) decouple the ISP from content. Unlike the US, quotas and limits are still the prevalent way to handle capacity. Without something like Multicast, and without ISP involvement, the “non quota impacting” service is a pipe dream.

              This is across a number of technologies, I’m referring to fibre, cable, copper and wireless here.

              ISP’s are still part of the solution; FetchTV is an example of the “plug-and-go” model Michael points to. Because when you put aside the propellor-headed folk, a large percentage of the market is STILL going to want a box.

              This is why Apple is still selling an AppleTV appliance, and not expecting everyone to use an iPad.

              Because you still need a delivery mechanism for a large chunk of the potential consumer; a lot of content distributors still maintain a requirement of content restriction.

              • Posted 09/05/2012 at 2:22 pm | Permalink |

                hi Brendan,

                I watch a stack of StarCraft videos (televised games from the US and Korea). Some of these I pay the provider (GomTV.net) for on a subscription basis. Others come from YouTube and are ad-supported. In no way is my ISP involved in any of this activity, other than I pay it for underlying network transit.

                Why should the ISP be involved in any other kind of video streaming?

                Cheers,

                Renai

                • Brendan
                  Posted 09/05/2012 at 2:44 pm | Permalink |

                  Sure.

                  I watch a bunch of online content as well. Streamed content and a full IPTV service (multiple linear channels, on demand tv and movies, EPG, etc) are not really the same thing. :)

                  Again, when you step aside from being a geek, and look at the bigger picture, the average consumer has advanced that far yet. They still struggle to figure out an EPG, recording stuff is only easy if there’s a single button and ordering stuff online? ooo – people might steal mah credit cards.

                  Remember, it wasn’t that long ago that Blockbuster tried to launch an online content offering. It died.

                  http://support.mytivo.com.au/index.php?action=artikel&cat=39&id=58&artlang=en

                  CASPA seems to be still going, but without ISPs un-metering the content, it’s anyone’s guess how well it have performed.

                  Understand, I am all for open access, but until some of the more structured services get a foot hold in the market and Distributors actually warm to successes, more open, dynamic ways to access content aren’t going to magically happen. :)

                  • Posted 09/05/2012 at 3:03 pm | Permalink |

                    I think you’re underestimating people. The world worked out how to buy music through iTunes, after all ;)

                    As for operating an EPG … I don’t know many people who don’t have a PVR at home these days. It’s not rocket science.

              • Mark Newton
                Posted 09/05/2012 at 5:11 pm | Permalink |

                The thing is, you cannot (yet) decouple the ISP from content. Unlike the US, quotas and limits are still the prevalent way to handle capacity. Without something like Multicast, and without ISP involvement, the “non quota impacting” service is a pipe dream.

                While that’s true today, it’s kinda irrelevant.

                You can go out right now and buy an ISP service with a 300 Gbyte quota. That’s enough to stream 1.5 Mbps/sec day-in day-out for a month. That’s a standard definition TV channel.

                Of course, nobody wants to use 100% of their internet link to supply one TV with bandwidth, but remember that 2 years ago you couldn’t buy that 300 Gbyte quota at all. I reckon quota growth is accelerating quickly, bandwidth prices are dropping precipitously, and it isn’t going to be very long before the typical commodity internet service comes with a quota that’s so big as to be meaningless for any practical purpose.

                How many years will it be before the top-of-the-line 1000 Gbyte quotas that some ISPs offer as a bit of a joke right now (estimated take-up: 0%) are cheap enough to fit the $60 per month bracket? Betcha it happens before the NBN’s build cycle is complete.

                At that point you have enough bandwidth to run high-def 24×7 all month…

                … which you won’t want to do anyway, because content delivery is moving to an “on-demand” model.

                Quotas aren’t the issue here. Licensing is. As soon as a content aggregator like Apple or Netflix makes serious inroads into Australia with proper subscription television services, ISP-supplied IPTV will be ancient history.

                We’re one signature on one contract away from that happening. Who’ll be first?

                – mark

                • Mark S
                  Posted 10/05/2012 at 2:08 pm | Permalink |

                  Agree with Mark N. The best name I’ve heard for conventional TV is “appointment TV’ – and who really ever wants to have to make appointments? I’d much rather see my doctor exactly when it would suit me, and I’d much rather watch my TV programs the same way.

    5. SMEMatt
      Posted 09/05/2012 at 2:18 pm | Permalink |

      What is more likely to happen is the sweetener arrangements with ISPs with content companies. Freezone content like iView is with a number of ISPs, or bundled rates from a number of different ISP with multicast IPTV services like we are seeing with FetchTV.

      • Posted 09/05/2012 at 2:22 pm | Permalink |

        The ISP who does a deal to take the Fox Sports suite of channels or the Showtime Movie suite, etc; to their customers, will do well.

        Will Foxtel allow it? Maybe. Maybe not.

      • Posted 09/05/2012 at 2:24 pm | Permalink |

        I don’t think FetchTV is going to get anywhere. There is no evidence of it gaining any substantial scale yet, after several years of trying.

        • Brendan
          Posted 09/05/2012 at 2:48 pm | Permalink |

          Again, that’s a content problem.

          Foxtel has had a large number of very restrictive agreements. You can’t provide content unless you have rights to it. Rights that can be very very hard to come by.

          If FetchTV was able to licence anything it liked, at will, don’t you think they might have? ;)

          You may not have seen this yet, Renai; it may provide some context: http://whrl.pl/Rda4G3

        • Thomas
          Posted 09/05/2012 at 5:32 pm | Permalink |

          Access to content is the issue – frankly the current FetchTV (English) offering is crap, the release of extra channels from Foxtel’s grip will help but it doesnt solve the problem that it still cannot access a large portion of the movie market and basically has no sport, two major drivers in customer uptake

          If the likes of FetchTV can get access to content, IPTV allows them from to move away from linear channels (which currently the Foxtel solution doesnt) to library on-demand or live on-demand (like the Hulu’s of the world)

        • Daviesh
          Posted 09/05/2012 at 11:10 pm | Permalink |

          I agree with others here that FetchTV has a content problem, the big ticket content that people want to watch is not really available on the platform yet. Part of this is the massive chunks of content locked up in exclusivity deals that are only just starting to expire, part is the fact that it is a brand new platform and serviced where they don’t want to buy off more than they can chew. This problem will go away in the medium term, Simon Hackett gave us a teaser today: http://whrl.pl/Rda75Z . The problem will always be sport, rights to that are hard to get and expensive.

          Another problem is technology, you get the most out of the box on non-Telstra DSLAMS. This will lock out massive chunks of the ISPs customer base until the NBN rolls around. Telstra don’t have this problem with T-Box.

          The last problem that can be easily fixed is marketing, I don’t think many people are aware of what the service is.

          Personally, I have FetchTV ‘Lite’ at home. $10 a month for a pretty awesome PVR I can control with my smartphone from anywhere is incredible. I will grab the full package as soon as iinet turn on the ‘Entertainment’ option in my exchange (‘soon’ apparently) and would happily pay for extra channels Simon mentioned on reasonable terms. I can’t get Austar in my unit, but in the medium to long term Fetch looks great for what I watch.

          I wouldn’t worry too much about the ISPs losing money on the system, the company backing Fetch is using Australia as a test bed to roll out IPTV in their vast non-English territories, so they are probably happy to take some losses here to write off as R&D.

    6. Posted 09/05/2012 at 5:14 pm | Permalink |

      Good post Renai,

      Coupla issues though.

      Not sure that ISP’s ‘fooling themselves’ about triple plays is something that ISp’s actaully carte about. Their business models are being commodified and they need some more income streams – IPTV looks like it might be one of those pure and simple. People aren’t going to pay much for the connection today, they’ll only pay the $80-$100 a month nowadays if they get something more – unlimited calls, IPTV etc… They may not be good at content but they are damn sure they’re going to try and hitch their wagons.

      Also, I don’t think Telcos are as bad as you say they are at content. The past attempt were constrained by handset ability rather than content failures – your examples are all pre-smartphone, pre-large screen, pre-ipad. While iiNet’s Fetch and Telstra’s T-Box are not making huge waves, they are pretty good services for those that use them and are early entrants in a revolutionary change in TV watching behaviour. Content people also understand that tapping into an ISP’s customer base is a good place to use their abilities – so ISPs having sub-standard content approaches may not continue too much longer into the future.

      Anyways, thanks for the thoughts and bring on direct OTT content delivery of everything always.

    7. Michael
      Posted 09/05/2012 at 7:50 pm | Permalink |

      It’s a reasonable argument. I’m surprised you didn’t mention the one standout exception, Free

      http://en.wikipedia.org/wiki/Free_(ISP)

      Those guys do triple play (quad play actually as they do mobile as well) very well and a huge amount of there business is based on IPTV.

      I personally think (and i could be wrong) that it is in an ISP’s interest to have its customers using their IPTV services instead of consuming the same bandwidth for another service. Whether they can do it well is another matter but it is clearly possible in the case of Free.

      • Michael
        Posted 09/05/2012 at 8:02 pm | Permalink |

        as a further point i think quickflix still has a very long way to go.

        There biggest selling point in my opinion- the HBO content is an absolute joke. No game of thrones, only season 1 of true blood. I understand that was maybe the best they could get but if so why even bother.

        If my isp bundled in some sort of iptv service at a subsidized cost and made it super easy to set up i can see myself using it occasionally. Paying monthly for B grade movies and a truly average set of tv shows is never going to be enticing, especially when all that usage still counts towards my download quota.

    8. Matthew
      Posted 09/05/2012 at 10:36 pm | Permalink |

      The major reason why ISPs and (particularly) mobile network operators are so interested in getting into content is because of declining revenues and increasing OPEX in the network. For example: voice revenue, the long-time stronghold of network revenue for operators around the world has been in steady decline for years now, and it’s now beginning to hit where it really hurts. These operators are only doing what they can to try and stem the flow of red-coloured digits in their balance sheets, and while I don’t blame them for making the effort, I agree that it’s the wrong approach for them to take.

      What they need to do is start looking for ways to get data usage to turn more than a few measly bucks. I’m not sure what the decisive answer is on the question of how to do that, but things like removal of free access to social media sites (all three mobile network operators currently offer this) can only work in their favour.

    9. James Usul
      Posted 09/05/2012 at 10:41 pm | Permalink |

      Renai,

      Your agenda to declare success or failure on the basis of scant evidence or without justification is interesting. I suppose thats all about trying to get above the noise floor by making bold statements.

      Lets see…

      First, about that ‘abysmal’ run rate for iiNet with fetchtv. In your piece, above that, you just finished making it clear that major subscription TV channels have been locked up by Foxtel until about ‘now’ – no fault of iiNet.

      You also know the fetchtv platform has developed massively over that time, and right now the service deployed looks way different to the one that was in the market two years back.

      As a result the first two years of their sale of this service aren’t really the point – its the next two years that matters.

      So lets look at the current run rate for Fetchtv with someone who launched only a few months ago, at the pointy end of Fetchtv evolving into a real player in the market. Do some research and dig up the futures for how many MeTV (a.k.a. fetchtv) services Optus are selling every month, and for the trajectory of those sales.

      The word ‘abysmal’ isn’t at all in the frame there. Its going off like a frog in a sock.

      As another perspective: What percentage of the Australian population did Foxtel sell their service to in the first two years of their operation, mate? Ever looked that up?

      Next: Where is your logic in declaring T-Box a failure at ‘only’ 100,000 boxes, let alone when you corrected your own guesses to 300,000 (hence showing that your read of the market is out by a factor of 3x).

      With the foxtel/austar concessions opening up access to previously exclusive channels over the next two years, with the NBN finally starting to turn up in the real world over that same two year period, with Optus and iiNet (two of the four major players in the market) now taking on T-Box with the fetchtv platform, its a bit early to pronounce the death of any of these business models or any of the specific offerings in the Australian market right now. The locks have only just come off of these things in real terms.

      In summary:

      It will take a good ten years to see the true winners and losers here, and the last two years isn’t a good forward indicator of the next two.

    10. CMOTDibbler
      Posted 09/05/2012 at 11:20 pm | Permalink |

      How does all this fit with the NBNCo’s product set?

      Is a multi-cast AVC linked to a particular multi-cast domain or can it be used to access many multi-cast domains? How does an end customer acquire a multi-cast AVC? To a non-techie like me it seems a content provider will set up the multi-cast domain for their content and then sell the multi-cast AVC for the end customer to access that content. If that’s right though the end customer would need a separate multi-cast AVC for each content provider.

      If content is being provided via an internet service, is there a point at which take up of the service causes the CVC cost to become an issue? For example, if 50% of users are streaming HD video at peak times, how much CVC capacity (at $20pm per Mbps) does each user require? afaik Bevan Slattery’s question on WP has never been answered.

      I can see that FTTP is well suited to delivering video content and I can see being able to select from several content providers via a TV set, especially for on demand content, is likely to be appealing. I just can’t understand how it will work on the NBN.

      Any help (pitched at a not to technical level) much appreciated.

    11. Posted 09/05/2012 at 11:43 pm | Permalink |

      I totally agree – telcos should be invisible, like water or power companies. Provide a fat pipe with super reliability at commodity pricing. Stop stuffing around trying to be media players when the real money is in infrastructure and becoming a utility.

    12. Matthew Lyon
      Posted 10/05/2012 at 11:18 am | Permalink |

      Being one of those propeller heads I’m appalled that there is no simple service available in Australia for simple content streaming.

      I torrent the shows that I want to watch but I would much rather stream that content. If I could stream tv shows then my hard drive wouldnt be filled up, I wouldnt have to worry about finding a good quality version and I wouldnt have to wait for the download to finish.
      I dont need any company to decide content for me, I can find that for myself.
      If Joe average needs to have their life dictated to, by all means, set up some channels for them.

      ISP’s would have no trouble setting up a service like this and theres no reason why they cant do it.
      The reason we DONT have something like this is because content providers – ISP’s included – dumb down their services in an effort to make it easier to digest and as you say, do not do a good job.

      There is so much potential for this market and all the providers are doing is trying to limit the way that their content is consumed so that they have a captive audience to make money from.
      I say that they should forget totalitarianism and just make a good freaking service, the rest will follow.

    13. Brad Cann
      Posted 10/05/2012 at 1:01 pm | Permalink |

      they don’t need to become providers, they need to get together and buy one of these companies or start their own, and run it as a seperate business. After all even though you have the like of netflix and all the others they are really little more then resellers of hollywood. It would be in the ISP’s best interest to own the channel from start to finish given how huge the bandwidth it will eventually consume.

      And people are lazy, they want one bill not 3-5 seperate bills for phone/net/vids and whatever else will be onsold on the great internet once/if the nbn comes to fruition.




    Get our 'Best of the Week' newsletter on Fridays

    Just the most important stories, one email a week.

    Email address:


  • Enterprise IT stories

    • Super funds close to dumping $250m IT revamp facepalm2

      If you have even a skin deep awareness of the structure of Australia’s superannuation industry, you’ll be aware that much of the underlying infrastructure used by many of the nation’s major funds is provided by a centralised group, Superpartners. One of the group’s main projects in recent years has been to dramatically update and modernise its IT platform — its version of a core banking platform overhaul. Unfortunately, the $250 million project has not precisely been going well.

    • Qld’s Grant joins analyst firm IBRS peter-grant

      This week it emerged that Peter Grant, the two-time former Queensland Whole of Government CIO (pictured), has joined well-regarded analyst firm Intelligent Business Research Services (IBRS). We’ve long had a high regard for IBRS, and so it’s fantastic to see such an experienced executive join its ranks.

    • Westpac dumps desk phones for Samsung Android mobiles samsung-galaxy-ace-3

      The era of troublesome desk phones tied to physical locations is gradually coming to an end in many workplaces, with mobile phones becoming increasingly popular as organisations’ main method of voice telecommunications. But some groups are more advanced than others when it comes to adoption of the trend. One of those is Westpac.

    • Ministers’ cloud approval lasted just a year reverse

      Remember how twelve months ago, the Federal Government released a new cloud computing security and privacy directive which required departments and agencies to explicitly acquire the approval of the Attorney-General and the relevant portfolio minister before government data containing private information could be stored in offshore facilities? Remember how the policy was strongly criticised by Microsoft, Government CIOs and Delimiter? Well, it looks like the policy is about to be reversed.

    • WA Govt can’t fund school IT upgrades oops key

      In news from The Department of Disturbing Facts, iTNews revealed late last week that Western Australia’s Department of Education has run out of money halfway through the deployment of new fundamental IT infrastructure to the state’s schools.

    • Turnbull outlines Govt ICT vision turnbull-5

      Communications Minister Malcolm Turnbull has published an extensive article arguing that the Federal Government needed to do a better job of connecting with Australians via digital channels and that public sector IT projects needn’t cost the huge amounts that some have in the past.

    • NZ Govt pushes hard into cloud zealand

      New Zealand’s national Government announced a whole of government contract this morning for what it terms ‘Office Productivity as a Service’ services. This includes email and calendaring services, as well as file-sharing, mobility, instant messaging and collaboration services. The contract complements two existing contracts — Desktop as a Service and Enterprise Content Management as a Service.

    • CommBank reveals Harte’s replacement whiteing

      The Commonwealth Bank of Australia has promoted an internal executive who joined the bank in September after a lengthy career at petroleum giant VP and IT services group Accenture to replace its outgoing chief information officer Michael Harte, who announced in early May that he would leave the bank.

    • Jeff Smith quits Suncorp for IBM jeffsmith4

      Second-tier Australian bank and financial services group Suncorp today announced that its long-serving top technology executive Jeff Smith would leave to take up a senior role with IBM in the United States, in an announcement which marks the end of an era for the nation’s banking IT sector.

    • Small business missing the mobile, social, cloud revolution iphone-stock

      Most companies that live and breathe the online revolution are not tech startups, but smart smaller firms that use online tools to run their core business better: to cut costs, reach customers and suppliers, innovate and get more control. Many others, however, are falling behind, according to a new Grattan Institute discussion paper.

  • Blog, Enterprise IT - Jul 5, 2014 13:53 - 0 Comments

    Super funds close to dumping $250m IT revamp

    More In Enterprise IT


    Blog, Telecommunications - Jul 5, 2014 12:12 - 0 Comments

    What should the ACCC’s role be in guiding infrastructure spending?

    More In Telecommunications


    Analysis, Industry, Internet - Jun 23, 2014 10:33 - 0 Comments

    ‘Google Schmoogle’ – how Yellow Pages got it so wrong

    More In Industry


    Blog, Digital Rights - Jun 30, 2014 22:24 - 0 Comments

    Will Netflix launch in Australia, or not?

    More In Digital Rights