The Unclear Prospects of IP-TV
Not sure what to make of BCE’s decision to put the brakes on a plan to spend C$1.2-billion to upgrade its residential high-speed network in Ontario and Quebec. According to the Globe & Mail, BCE has only spent $400-million so far because it wants to allocate capital where it “best serves the interest of the business”. For BCE, this means spending money on upgrading its wireless network, improving customer service, and growing its retail presence.
But what does this decision mean for BCE’s IP-TV plans? The $1.2-billion project was supposed to give BCE a big enough pipe into 4.3 million homes so it could deliver IP-TV services to compete against the cablecos, which are aggressively moving into the $10-billion local phone business. Does BCE’s decision to spend money on other projects mean those projects have better ROI prospects? And/or does it suggest BCE is unsure if it can get enough bang for the buck by pouring money into IP-TV? Or Maybe BCE thinks it can get just as much strategic play from its satellite-TV business rather than pouring money into a new TV business.
For all the bullishness out there about IP-TV (53 million worldwide subscribers by 2009, according to Infonetics), the biggest issue/question is why many consumers would switch from cable other than lower prices or triple/quadruple play bundles. It’s not like IP-TV can offer consumers something so different and better than they feel compelled to cancel their cable service. Then again, many carriers have little choice but to press ahead with IP-TV if they want to play in the bundle war against the cablecos. This is an expensive proposition with, at best, uncertain prospects.
Note: BCE’s original plan was to complete the $1.2-billion project by 2008. Now, it’s talking about 2011.
April 1st, 2007 at 10:01 pm
It is a little unclear what is happening. Bell reported in December that it had passed one million homes with the FTTN network. This is a year behind the original schedule you cite (1M per year for four years). However, the announced plan was to double that during 2007 by getting back to the 1 million per year pace. This would represent an acceleration of the IPTV deployment.
If the Globe & Mail story is accurate, this pace will then slow down with the final two million (there are no plans to cover the rest of Bell’s customers beyond the 4.3 million homes mentioned) taking an additional three years (to end of 2010 or early 2011) — and ending up a full two years behind schedule.
Given that IPTV has been put off to as late as 2008 (despite the same press release you mention describing it as ready for launch “shortly thereafter”), the pace of the network roll-out may not matter.