EVP IT and Business Operations
Interview – will telcos dominate the TV channel?
Alex Leslie - 05/01/12
BillingViews wanted a TV perspective on the opportunities for telcos in the TV world and sought out Jeremy Deaner, CEO and Bruce Devlin, CTO, of online content optimization company, Amberfin. Deaner’s background is in telecom.
BillingViews – There is a real shake up in the TV world at the moment, Verizon looks as if it might buy Netflix, more than 201 billion videos were viewed online during October 2011 – does this mean that telcos will take over the TV world?
Deaner – No, I’m afraid not.
BillingViews – So, how do you see it panning out?
Deaner – TV is fundamentally about content. The device is not important to the customer. What we will see is a shake out of the distribution network. Whether the content in the living room is delivered by IP, cable, broadcast or digital free to air is irrelevant. But the battleground will be in the distribution of content –that is where the money will be.
BillingViews – There are conflicting drivers here?
Devlin – There certainly are. Five years ago the only high definition experience available was via broadcast HD TV, or Blu ray or in a tiny percentage of cases via the internet. Now that bandwidth is here we are seeing a shift in how consumers consume video type content. TV used to be a communal decision, in the living room. Then it became binary as second TVs became widespread. Now it is individual. Families do not even compete for the ‘big screen’ in the living room. Everyone can be in the same room, watching and doing different things. Kids will plan, too. Where I live we do not have ‘broad’ broadband, we have narrow broadband and my kids will download programs overnight and plan ahead.
BillingViews – So, for instance, if Verizon buys Netflix, will their OSS/BSS capabilities work to their advantage?
Deaner- Not in the delivery of content. In this game, telcos have no advantage through BSS. It is not about flexibility of infrastructure it is about delivering content while managing customers’ expectations. Customers will find the content they want.
Devlin – You must also remember that brands are magnets in this game. Whether you are Warner Bros or the BBC, content will flow and money will follow. Data itself will become a utility. Customers will look upon data as water and decide how to use it. But brands will divert that water, or data, into large channels that they control.
BillingViews – So, the trends of analytics and policy management will not affect who wins this one?
Deaner – Not really, although one man’s chaos is another man’s choice. Essentially winning is about content and cost. You must invest in content to make money out of advertising.
Devlin – Exactly. To the industry, content is the annoying stuff in between the revenue generating messages; to the customers advertising is the annoying stuff that interrupts the program. One area that I do see telcos coming into their own is around personalised advertising – knowing what I like and what Jeremy likes to watch between program segments is very compelling for advertisers – and possible.
BillingViews – There are some companies in the telecoms world producing software that can monitor what is happening on networks to the point of being able to know whether it affected a video downloaded by a customer – surely that is useful.
Deaner – Absolutely. Managing the expectations around quality is critical.
Devlin – One thing that is interesting is the mergers that will occur. It is, as always, about culture. Verizon buys Netflix – not, I suspect for its delivery model but for its licensing skills. It will be interesting to see how the cultures work – pipes versus pictures.
Deaner – It is interesting, talking about telcos and TV companies, that the internet offerings of the big players are free – for instance on TV Everywhere – because no-one can guarantee the quality. That is the key – guaranteeing quality over IP.
BillingViews – So, telcos have a role in advertising but not in content delivery?
Deaner – They can deliver the content, but they need to get the quality right, and, yes, the personal relationships will drive personalized adverts. I think we are entering a world of high risk entertainment.