Gartner Says IPTV Operators Need to Offer One-Stop, Whole-Home Networking Solution

STAMFORD, Conn., May 21, 2008--Internet
Protocol television (IPTV) faces an uphill struggle to penetrate the
consumer market if it remains a stand-alone pay-TV service, according
to Gartner Inc. In an industry dominated by incumbent cable and
satellite operators, as well as traditional terrestrial free-to-air
network broadcasters, Gartner said that IPTV operators need to entice
consumers with a range of bundled services, including IP-based home
networking, offering a one-stop, whole-home solution.

"Although today's newest, leading-edge PC-based home
networks are able to deliver high-quality video and audio around the
home, most consumer electronic products, such as TVs, digital set-top
boxes (STBs), and DVD players, remain stubbornly isolated in their
ability to communicate with other equipment over a wide area," said
Paul O'Donovan, principal research analyst at Gartner. "As the Internet
increasingly becomes a source for video consumption by a wider family
audience, there is a need to address this issue and expand
home-networking options."

Gartner believes that the STB is well-placed to become
a core component of an entertainment-based home network, particularly
in countries with a high number of cable TV homes (penetration of 40
percent or above) or countries with a large number of homes passed by
cable TV.  

In the U.S., cable companies have already introduced
home-networking solutions using cable STBs linked by existing coaxial
cable. This has distinct advantages, because in many U.S. homes most
rooms are already connected with coaxial cable, so no new wires are
required to bring the home network together.

IPTV pay-TV services can use the existing coaxial
networks in U.S. homes; many homes have multiple coaxial sockets.
However, few houses in Europe, Japan and Asia/Pacific have multiple TV
sockets around the home, so a networking solution based on coaxial
cabling using pay-TV STBs from cable or IPTV operators is less likely
to be commercially viable in these regions. Instead, STBs with wireless
connectivity — using, for example, 802.11n — could be an opportunity
for pay-TV operators in these regions.

"As long as it was simple for consumers to set up and
gave a good quality of service, this would also have the advantage of
being able to connect into an existing PC wireless network," said Mr.
O'Donovan. "However, for ease of installation and consistency of
service in the home, a network combining wired and wireless
technologies will be the most successful topology."

The real commercial advantage for the telecom companies
will be their ability to offer consumers bundled services, such as
broadband Internet access, mobile cellular services, and voice and IPTV
services, including voice over IP. This combination of services can be
networked around the home, offering flexibility and one-stop provision
from a single supplier, which will be enticing for the average customer.

Gartner expects home networking to become commonplace
in consumer electronic hardware in the next five to six years,
predicting that whether consumers need the functionality or not, it
will be embedded in many products. Mr. O'Donovan said that in North
America, digital cable and IPTV will be the mainstay of
entertainment-based home networking, while in other regions, a mixture
of PC-based media centers, game consoles, DVD players and recorders,
and pay-TV cable and IPTV STBs will be how home networking reaches the
mass market.

"The PC is an important part of the entertainment-based
network, and most networks will contain one, but the PC is not a
crucial part of the future home network," he said. "Consumer
electronics companies are aiming to build connectivity to components
with or without the PC being present."

Additional information is available in the Gartner
report "Dataquest Insight: IPTV in and Around the Home." The report is
available on Gartner's Web site at http://www.gartner.com/DisplayDocument?ref=g_search&id=644010&subref=simplesearch.