The telecommunications industry is very prone to getting excited over technology. Anything new that comes along is immediately seized upon and hyped to the skies as the solution that will cure all the industry's problems. Amongst the current Holy Grails are the IP Multimedia Subsystem (IMS), mobile TV and IPTV, all of which have enjoyed a high level of hype over the last twelve months. However, analysts have flagged up warning signals that perhaps the path to global success for these new technologies might have a few twists and turns, not to mention mantraps.
IMS is an almost perfect example of industry hype. From being an obscure technology still ploughing through the standardisation process, IMS has come to be the great unifying solution for fixed and mobile operators. However, a report from the Yankee Group says that there are what it describes as 'gaping holes and inadequacies in the architecture'. Echoing the views of the Editor, Arindam Banerjee, a senior analyst at Yankee Group comments that the promises of IMS architecture for carriers are truly mind-boggling. However, Banerjee goes on to say, 'Beneath all the academics and hype, the road to IMS and next-generation architecture is rocky and treacherous. An aggressive approach to IMS has a greater chance of failing. A slower and more cautious path to IMS will help reduce uncertainty and provide greater architectural stability, which will subsequently result in increased APRU and improved customer stickiness.' Hardly a ringing endorsement.
Another technology hailed as an ARPU buster - IPTV - is also singled out as having potential problems. Although eleven Western European telcos have launched IPTV services, Forrester Research's 17-country IPTV revenue model reveals low consumer interest and only moderate revenue potential. Apparently European consumers are unwilling to pay for TV content.
According to Forrester's Lars Godell, incumbents should proceed carefully with their IPTV plans: 'Telcos should first look at the full P&L impact of their IPTV strategies and take a deep breath before proceeding down an IPTV path that will generate a cumulative EUR3,742 in losses per average broadband subscriber over a 10-year period - assuming telcos pursue the CapEx-intensive, vendor-recommended deep fibre/VDSL route to deliver IPTV. Telcos should view IPTV only as a defensive, not a profit-generating, activity.'
And finally to mobile TV, another technology suffering from a surfeit of hype. A new report from BroadGroup Tariff Services, based on a survey of operators worldwide, suggests that current mobile TV pricing and marketing models fall short in meeting customer requirements. Many technical and business model issues are yet to be resolved to facilitate mobile TV. There is a real danger, says the report, that consumers will prefer to watch TV and video on a portable device other than a mobile handset, or that content providers will sell directly to the end user who wants interactive, personalised and flexible services. 'The idea of simply watching the entire output of a particular TV channel on your mobile handset, offered by many mobile operators, is simply unattractive to users,' commented Margrit Sessions, managing director of BroadGroup Tariff Services. 'Instead, users want a much more customised service.'
So there you have it, just because a technology is new doesn't mean it is going to succeed! You have been warned! TE