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Telecom Italia has confirmed that it is going to rely on Connected TV, using OTT video delivered to its proprietary Cubovision set-top boxes or Internet-enabled television sets, for future expansion of its IPTV service. Speaking at the Connected TV Summit on Thursday, the company admitted that the cost of achieving a national footprint for a closed network IPTV service is prohibitive and that it was no longer seeking to expand the footprint of its ‘traditional’ video offer beyond the 60% of Telecom Italia customers who can receive it today.
Paolo D’Andrea, Head of Broadband Content at Telecom Italia, told the London audience: “Moving to this new concept we will be able to reach 95% of our customers and even if we want to stream 720p HD content we will be able to reach 80% of our customers, which is a big jump compared to the previous approach. So this is the right way to deliver the future IPTV experience.”
He emphasised that the company was “moving from a familiar solution” because of the limits of the current approach. “In order to provide IPTV services you need to create a closed network environment and that requires dedicated investment. The vast majority of Internet traffic now is related to OTT services so if we stay in the legacy situation we need to double our investment to sustain our own television service and also what is being offered by other providers.”
D’Andrea emphasised that the addressable customer base is limited by current bandwidth using today’s IPTV model. And he pointed to Cubovision as the engine for video service innovation. Having outlined the opportunities provided by a hybrid service and multi-screen TV, he added: “We will not be able, in the short-term, to fully integrate the traditional TV experience with what we want for our customers, which is truly comprehensive access to video content.”
Francesco Fraccalvieri, Domestic Market Operations, Broadband Content at Telecom Italia, confirmed that the plan was to stop relying on traditional IPTV for growth in video services. The company will use the Cubovision OTT approach, and the way this is evolving into a full multi-screen offer, to turn more Telecom Italia homes into video customers.
He declared: “Nobody is getting money back from the huge investments in IPTV; no European carrier. From a capital perspective, managed IPTV is not sustainable. Given changes in encoding and powerful copper DSL networks, I think you can try to take a different approach and leverage Consumer Electronics reach, whether it is tablets, large screens, mobile phones or games consoles.”
Telecom Italia said in January that Cubovision was complementary to the IPTV offering rather than a replacement for it and that remains the case, but these latest comments do mark a change of emphasis, suggesting that full IPTV is now viewed as the ‘legacy’ video service. As we have reported previously, there are telcos who have been even more robust in their support for Connected TV as the future of IPTV, including the UK broadband provider TalkTalk, which is throwing its weight behind YouView rather than actively marketing its closed-network IPTV offer, and Australian giant Telstra, which has skipped full IPTV altogether and offers its BigPond service through its T-Box set-top box and LG and Samsung connected TVs.
Telecom Italia also seems to be positioning itself to provide content owners with the chance to be part of a unified OTT and multi-screen service offer, harnessing its existing IPTV strengths, like an existing billing relationship with consumers and customer services management. D’Andrea said the company is receiving requests from content providers who want to reach viewers through different devices and the company wants to deliver a consumer experience that is seamless across those different platforms.
We reported previously how the Cubovision OTT service was evolving beyond the PC and the Cubovision set-top box provided by Telecom Italia to include Samsung Smart TVs. And another important change for the company is the focus on subscription rather than transactional VOD in the multi-screen and connected TV environment. One thing remains the same: video is being used as a way to encourage broadband adoption. D’Andrea views Cubovision on its various platforms as a way to highlight the richness of Internet entertainment and therefore the benefits of broadband.