Television over the Internet -- known to many as IPTV -- is the technology landline operators hope will let them compete with cable providers and others in offering bundles of services to customers.
So far in North America it's been a struggle, but Nortel Networks has what it believes is an answer: An application platform using open interfaces that allows the development of services for many brands of middleware.
The goal is to enable providers to charge subscribers for these services, enhancing the bundles they're buying and increasing revenues.
Services imagined by Nortel include targeted advertising; the ability to track children carrying a cell phone to make sure they stay in the neighborhood; and the ability to watch, pause and continue watching a movie starting from home, shifting to a handset and ending on a laptop across several hours in the day.
"We think what we're doing here is revolutionary," said Grant Hall, Nortel's marketing leader for video solutions about Nortel's VSP9500, an application sold with an IBM server.
Pricing depends on the size of the system the provider wants to serve.
"It's one of the first Web services platforms to allow you to very quickly develop applications, get them out and see what develops traction," Hall said.
The fact that it has an open architecture and can be used for middleware from Microsoft down to custom-developed applications should entice application developers, he said.
While the Internet is a raging success, viewing TV over the Web -- particularly over large screen TVs in living rooms -- is less of a hit in Canada and the US, although admittedly it is a new technology.
According to IDC Canada, as of January there were only 160,000 IPTV subscribers in the country. That is forecast to grow to 690,000 by the end of 2011. By comparison cable subscribers number in the millions.
Providers want to lure subscribers with triple-play or quad-play bundles of TV, Internet, wireless voice and data packages. IPTV has the advantage of being able to be interactive as well as link to other home devices.
But with applications working across a number of services Nortel argues their value will increase, and make it more likely customers will stay with the provider.
So far Nortel has sold six of its IPTV systems, built around its hardware and applications from a number of partners.
Still, Hall acknowledges that providers still wonder "what is my return on investment -- how can I fend off cable and satellite and over-the-top VoIP providers, how can I reduce churn?"
Nortel's answer is the Video Services Platform (VSP) 9500, being demonstrated this week at IPTV World Forum in England.
The platform is a layer that fits in between the provider's network and its IPTV infrastructure. At the moment, it only has adaptors for Nortel's switches as well as middleware from Nortel partners Minerva Networks and NDS Ltd. Hall says Nortel will develop links to other manufacturer's switches and middleware on request.
"We'll be assembling an ecosystem of application partners that can develop applications on the platform," he promised.
Nortel will also be selling providers several modules with pre-built applications they can turn on, around general themes such as personalization (such as the ability to shift an IPTV stream from home to a mobile device), content (including the ability to target advertising) and innovation (such as interactive games).
Hall said one of the advantages of the open nature of the platform is that developers can create "mashups" of different services, such as linking a cell phone with location-based service carried by a youngster to an Internet map service to show where they are.
To entice buyers, Nortel is including the Communications Module 9520, a plug-in allowing providers to offer services such as the ability to link caller ID to an IPTV system, in with the VSP 9500. Customers would have the ability to see onscreen who is calling and decide whether to answer the call or shift it to voice mail or the phone of another member of the family, play voicemail and other telephony features.
Providers would pay Nortel for turning these services on based on the number of subscribers.
"These services can be extremely high margin," said Hall, "because we're leveraging the investment you [the provider] have already made in your broadband, IP infrastructure and in your IPTV infrastructure."
"The time-to-payback for the platform and the application can be under a year," he said.
Nortel's IPTV system, being an end-to-end solution, is aimed at Tier 2 and Tier 3 providers, said Hall, but because the VSP 9500 can reach across any middleware "gives us entry to the Tier 1 market."