Friday, May 19, 2006

AT&T looks back on plan with Internet TV rollout - can they ultimately win the digital TV race?

AT&T has announced that they are on plan to offer television service in 15 to 20 US markets by the end of the year, a sign that the company may be overcoming the hurdles imposed by its decision to use a new Internet technology to deliver TV signals.

AT&T decided to go with Internet TV technology running along existing phone lines rather than upgrade their entire network as Verizon have opted at considerably greater expense. That puts Verizon ahead of the game with their rollout of fibre optic TV-on-demand, but AT&T are sticking to their objective of spending $4.6 billion to make TV available to 19 million homes in 41 markets by the end of 2008.

That means that in 2007 the real acid test for telco TV will start. Many a scpetic is wondering whether telco's can realistically compete with cable and satellite companies. Mind you there was a time when people were sceptical of cable companies successfully selling phone services - they were wrong about that one!

By 2010 digital TV-on-demand will be mainstream with a critical mass of users and the providers will be fiercely competing for eachothers customers. The challenge today is to figure out who will be the ultimate winners from cable/satellite providers, telco's and Internet portals such as Yahoo, Google, MSN, AOL and MySpace.

The answer may lie in who is the first to merge rather than the first to roll out or gain the greatest share of viewers. It also puts Time Warner and News Corps in strong positions, because they are the only players today who own both cable/satellite assets as well as Internet portals. So, right now my money would have to be on one of them.

Should Comcast merge or partner very tightly with Google, my view could change.

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