Telco TV

As one of the merry band that frequents many of the media-related conferences that occur pretty much constantly across the country and in Europe, it strikes me how innovation in media follows the same basic pattern: from tech-led rumbling, through disruptive but unrealized potential, to full-blown contender for attention, dollars and time. It's also striking how consistently we respond to these innovations.

Each time something new comes along (the Web, cell phones, broadband, VoIP, online console gaming etc.), advocates trumpet the game-changing nature of their particular vehicle, while the incumbents who benefit from the status quo do their best to play it down--and, if it's deemed a genuine threat, to suffocate it at birth.

In some cases, these innovations deserve to be championed, while in others not, but too often a kind of corporate myopia sets in, based on previous experience and vested interest. Now, while previous experience can sometimes provide just cause for skepticism (note my use of the word "sometimes"), vested interest too often simply induces blindness and denial. Just because we want something to remain a certain way, does not mean it will--or that it should.

A case in point: At a handful of conferences lately, it has been interesting to listen to the conviction with which an alarming number of media executives, consultants and pundits have declared that the telcos will not succeed in their attempts to break into the TV space with their IPTV offerings.

Many cite the apparent "fact" that as previous--mostly cable-based--endeavors in which the telcos had been personally involved had failed, the initiatives now being rolled out by them are similarly doomed to failure. Almost all of these commentators work within companies who stand to lose if the telcos succeed.

Even if we leave aside the obvious fact that much has and continues to change over the last few years in the content distribution business, and that knocking the competition is par for the course, this kind of myopia does not serve the incumbents well.

The truth of the matter is that--depending on which finger you stick in the air--a large proportion of what we currently call TV content (or data in the IP lexicon) will be delivered over one IPTV system or another within ten years--maybe much less. And the telcos will have a healthy chunk of that market.

There is, after all, a fairly major factor that will drive the telcos to do whatever is necessary to achieve the market share they need to succeed: namely, the demise of the voice market. What used to be the bread and butter of the phone companies is now fair game for just about anyone who wants a piece of it. With new VOIP offerings continuing to come to market and cable seeking an ever- larger share of the voice market, telcos are having their lunch eaten in every developed market. Getting into data (including TV) is how they will ensure they still have something to eat in the future. As voice becomes more of a commodity, it is likely to become the "free" part of a data-led package to entice consumers into the TV and Web services.

I'm one of those who believe that the telcos will succeed in some measure in securing their share of the market for data delivery to the home. Don't get me wrong. I don't imagine they'll have it all plain sailing, but they aren't going to go away, either. There will be mistakes made and lessons learned. The telcos have billions tied up in the need to succeed-and, unlike their competitors, who are mostly seeking small incremental increases in market share and revenue-per-user--telcos are looking to ensure their continued existence as consumer-facing businesses.

In ten years' time, the difference between the telcos that succeed and cable companies will largely be defined by their respective histories. For those that fail, we won't be making any comparisons. Just don't write them off too soon.