Telco Headend in the Sky to Shut Down

SES (News - Alert) Americom will cease providing its IP-Prime service, which provides a complete IPTV programming solution to North American telcos, by July 31, 2009, due to "slow adoption" of IPTV (News - Alert) by small and medium size operators in the region as well as the "difficult market outlook" for the service.

 

"In line with its plan, IP-Prime has contracted IPTV signal delivery agreements with 70 small telecom operators, of which 37 have so far reached commercial stage," says Rob Bednarek, SES Americom CEO.  "However, with a subscriber base of less than 10,000 at the end of November and after more than two years of service, the consumer uptake is insufficient to justify continuing operations."

 

IP-Prime offers a range of programming in standard-definition and high-definition for North American telcos wishing to offer IPTV services without investing in their own headends.

 

Some will see the shutdown as evidence of the ultimate failure of small telco IPTV efforts. Others will say it simply is a matter of insufficient scale to continue operating the business, caused in part by insufficient market share. There are other providers able to supply the same functional requirement, and some would argue a direct-to-customer approach, operated on a revenue-sharing basis, makes more sense.

 

The ultimate success of IPTV in the small telco market remains to be seen. The biggest argument in favor is that new broadband access networks must be built, in any case, and the incremental video entertainment revenue can help the business case immensely, at least in terms of gross revenue. The biggest argument against doing so is that, without scale, IPTV cannot actually make money as a service in its own right.

 

The IP-Prime shutdown does not directly answer any of those questions.