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IPTV is Not a Silver Bullet

According to Pyramid Research, IPTV is more about broadband, not TV. Successful IPTV deployments are more about selling broadband than about selling television. While telcos are leaders in the broadband space, they remain novices in the pay-TV market.

Therefore, it is arguably more profitable for telcos to maintain their position in the broadband segment than to become a leader in the pay-TV space, as TV is only one of the many revenue-generating applications that can be carried over broadband.

For decades, voice services have been the bread and butter business for wireline operators. However, over the past decade, telcos have seen their voice revenues decline significantly, primarily, due to fixed-to-mobile substitution.

For example, Verizon reports a 4 percent per-year loss of traditional phone lines to wireless and broadband. Similarly, Telef�nica�s estimates for wireline revenues in Spain show voice declining from 49 percent of overall revenues in 2004 to 35 percent by 2008. With declining voice revenues, broadband has become a key source of revenue for telcos.

However, to sustain revenue growth and to differentiate their offerings, telcos must move beyond being just a provider of Internet access. They need to leverage their network capabilities and provide enhanced services � essentially monetizing the broadband network further.

IPTV is not a silver bullet for telcos, but it is the first significant broadband service to emerge from the telco broadband network. It is the missing piece in the telco triple play bundle, necessary in today�s competitive markets, and it could be a powerful revenue preservation tool by enabling operators to replace their fading voice business with a growth business. Moreover, the IPTV set-top box extends beyond just TV and creates a platform for telcos to penetrate the home and offer a wide array of broadband services.

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