Is OTT The Right Direction for Telcos?

As demand increases for Internet delivered video content so the choice between IPTV (Internet Protocol television) and OTT (over-the-top). They both use the Internet as a means of delivery, but other than that they are very different entities.

In order to see why OTT is emerging as the go to option for telcos it’s important to recognize the differences between IPTV and OTT.

IPTV is delivered to the viewer via a set top box, much the same as traditional Cable content. Unlike Cable TV it is delivered via the Internet, using a a private and fully managed network. IPTV content is not accessible outside of the network, and can only be viewed by using a set top box, and no other device. This obviously restricts the choice of the end user, a major point of consideration when looking at optimizing monetization.

The fact that the content is distributed over a closed network does mean that providers such as Verizon and AT&T Uverse can guarantee the quality of content. This may seem impressive until you realise that viewing restrictions still exist. A major attraction of viewing content via the Internet is the freedom to view using different devices from a choice of location; IPTV does not offer this.

OTT providers, such as Hulu and Netflix, cannot offer the same guarantee of quality that IPTV providers can. OTT is distributed using the open Internet so providers do not have the same level of control. What they can offer is the ability to watch content on any device that can access the Internet; tablets, smart phones and smart TVs.

This is a major selling point when Telcos are looking to deliver in the way customers want, in order to maximize profits.

It may seem as though IPTV providers have the better options, having tighter control over the content they deliver; but there is little point in delivering high quality if people are not watching as they can’t access it on their smartphone or tablet. Cable providers who had begun to offer IPTV provision as part of their packages have seen customers opting away, and into OTT. Many providers are now transitioning into OTT. Not only is it a cheaper option to run, it also has the greatest potential for return on investment, as more and more viewers look to OTT for their Internet viewing provision.

OTT can also open the doors for growing internationally, since IPTV may be more rigid for expanding markets. In principle, telcos and cable companies are large organizations and in order to improve flexibility, they will have to give up on some of the control over the infrastructure and service offering to content providers or technology partners. Even though maintaining the video traffic in your own network is a significant pro, the distribution costs for running OTT video are dropping down drastically and should make OTT content delivery financially viable on the long term.

Michael Lantz (CEO at Accedo) sees the future where closed network IPTV solutions will disappear completely replaced by OTT offerings. He states that telcos will continue to play a major role in TV service aggregation, device management and consumer packaging but its network itself will remain less important as a competitive tool.

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Originally published at on April 29, 2015.

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