The past year has been something of a watershed for firms in the IP video industry. Relevant codecs (MPEG4 chiefly), chipsets, and other enabling technologies are shipping– relieving a bottleneck in the delivery of set-top boxes and core infrastructures. Some in the industry still feel that a shakeout is needed in the middleware space, or in efforts to develop standard operating platforms. Many also feel that “traditional” IP networks (if you can call them that) are not optimized for video delivery, meaning even more investment is required to ensure that stable bandwidth levels video demands.

The technology is available today to make IPTV and other IP-delivered video services available to mass markets. Yet there remain two hurdles along the way. The first is linked to the flexible, shared nature of IP networks themselves–ironically the very same attributes that make converged, multimedia delivery possible in the first place. Video’s bandwidth-hungry nature and low tolerance for jitter continue to bedevil multimode, multicast IP servicedelivery platforms. The second is more basic, and yet more complicated to solve. Business models are only just now emerging that begin to push IP video in more Internetcentric delivery models. And until they push them further, there will be little reason for TV viewers to switch from “plain old” television.

John Burnham, Vice President of Marketing at Brix Networks (www.brixnet.com) points out that IPTV is simply moving through the same development curve that every other IP technology has, maturing as it goes along. “VoIP was only transport technology a few years ago,” says Burnham. “Now it’s a rich set of services. In the same way, we will see IPTV develop” from a video-delivery platform into an ecosystem of applications, tools, and business models. However, the IP video curve will likely be slightly longer than the VoIP curve. “It will take time, as the quality requirements are much more rigorous. IPTV isn’t rolling out on the basis of ‘it’s free!’ [like VoIP was]; rather, IPTV is being developed as ‘your IPTV,’” meaning that the expectations around service quality and customization of experience will place greater pressure on service providers delivering video over IP networks than their voice counterparts.

Alex Mushkin, with Dialogic’s (www.dialogic.com) Product Marketing, Video Segment, agrees. “With some exceptions, technology is still at the early adopter stage,” he says. “Aside from the most obvious ones–building up wireline and wireless infrastructure with sufficient bandwidth–there are still significant challenges with the standards and interoperability, where the industry has yet to converge on the standard codecs, protocols, and interfaces and move away from the ‘walled garden’ model.”

That lack of cohesion around standards and interoperability is also linked to the market’s early development stage. “There are simply lots of players in the IP solution, middleware, and conditional access space,” says Roy Kirsopp, VP and General Manager at IP-based consumer premises equipment maker Amino Communications (www.aminocom.com), and they’ve had to integrate with all of them. “There are too many players. Going forward, there needs to be some rationalization. That’s the irony. The benefit of IPTV is that there is lots of [technology] choice, but the drawback is that there is lots of choice.” And while the advances continue, take-up of IP-based video services has been slower than expected because “the consumer doesn’t see the additional benefits, even though…clearly one of the benefits on the IP back channel is interactivity,” says Kirsopp. “VoD, interactive gaming is all now easier and quicker to do.”

But Kirsopp adds, “A traditional carrier is in a difficult position. They aren’t going to make money out of IPTV, but they are losing customers hand over fist. IPTV is now simply a customer retention strategy. It will be three or four years before Internet TV becomes a viable strategy, but only if the telco can convince the consumer that these applications add value to the home.” Amino looks at the notion of the networked home as being something that IPTV providers can push to help create buzz, and Kirsopp sees it as a logical hook because “video is one of a number of things that interacts with all the other elements of a digital home, and an IPTV set-top box can easily be a central gateway product” for managing both access to the Internet and a consumer’s personal photos and media files. “But the telco today is just selling IPTV as an all-in-one TV service-bundle proposition, and that’s not compelling.”

While carriers haven’t yet hipped to the home-network proposition sufficiently, they have started to explore the targeted advertising issue. “This is particularly relevant for young carriers,” says John Reister, Chief Architect of IPTV for broadband multimedia infrastructure provider BigBand Neworks (www.bigbandnet.com). “They need to break into [the television service industry] by offering media companies advertising services that are focused, pertinent, and meaningful.” Brix has developed a verification agent on set-top boxes (developed in partnership with Taiwanese set-top box maker Huacom, and currently in use by Taiwan’s incumbent telecom provider Chunghwa Telecom), which allows carriers to manage advertisement insertion rates and view granular detail on the viewing habits of video-service subscribers. IP video’s “hold up,” if you can call it that, is therefore nothing more than basic technology business evolution, or what Brix’s Burnham refers to as “the basic principle of entrepreneurialism. There’s a stage of conceptualizing a business model to get investment and build the platform. Then, there is the shakeout stage, and we aren’t even there yet with IP video. What’s next then will be a ‘bring-yourown- broadband’ world,” where would-be subscribers are not dependent on the video service provider for their connectivity, but rather accessing video services independent of their broadband connections. Burnham predicts that the YouTube-ification of video services will result in a five- to ten-year up-cycle for the IP services industry.