IPTV Subscribers Grow 19% in 3Q06!

Friday, December 29th, 2006 

Established Operators’ Growth Accelerates while Many More Launch the Service

Bethesda, MD — According to DITTBERNER’s recently released report “Global Broadband Subscriber Survey”, IPTV subscribers grew 19% to 2.7 Million in 3Q06. PCCW with 638,000 subscribers was the largest IPTV operator. France Telecom in second place grew the fastest at 37%, followed by third place Free at 28%. Telefonica Espana and FastWeb round out the top 5 IPTV service providers. The leading service providers are listed below.

Table 1: IPTV Subscribers by Service Provider

Rank Service Provider 2Q06 3Q06
1 PCCW 608,000 638,000
2 France Telecom 306,000 421,000
3 Free (Iliad) 273,000 350,000
4 Telefonica Espana 267,000 304,400
5 Fastweb 144,000 161,100
6 City Telecom 112,000 116,000
7 Neuf Cegetel 100,000 125,000
8 Versatel 96,300 103,000
9 Belgacom 73,000 102,971
10 Maroc Telecom 50,000 72,000

Source: DITTBERNER

According to the DITTBERNER report, France has the most Broadband subscribers, but Hong Kong has the highest penetration of the whole Broadband subscriber base at 59.5%. Hong Kong’s high penetration rate is due to its developed infrastructure with short average LOOP length. The absolute minimum bandwidth needed to deliver one SDTV channel and simultaneous Internet access is 2.5 Mbps. In Western Europe it is estimated that only 40% of DSL subscribers receive the requisite bandwidth to allow IPTV services at the minimum level signifying that the IPTV penetration of the addressable market is about 20% for France and 13% for both Spain and Belgium.

The top ten countries and their penetration rate are shown below.

Table 2: Top 10 Countries by IPTV Subscribers

Service Provider Subscribers Penetration
France 896000 7.8%
Hong Kong 754000 59.5%
Spain 304400 4.9%
Italy 161100 1.8%
Holland 139500 2.9%
Belgium 102971 5.3%
Morocco 72000 20.7%
Russia 61711 5.0%
United Kingdom 49000 0.3%
Sweden 45000 2.3%

Source: DITTBERNER

France’s lead reflects the leadership of its operators in the IPTV market, which is a product of both the intense competition between DSL service providers, and the lack of competition from Cable TV operators.

The DITTBERNER report shows that Western Europe dominates the IPTV market with 68% of global IPTV subscribers. Only Asia, with 28%, has a comparable slice of the market. North America, Eastern Europe, Middle East & North Africa together comprise only 8% of all subscribers. Western Europe will likely increase its market share in the short term due to a combination of factors such as the competition causing service providers to be more aggressive in signing up IPTV customers, the recent launch of many operators’ IPTV services, and the spread of the pan-European carriers, such as France Telecom, Deutsche Telekom, and Telefonica. Eastern Europe on the other hand is struggling to switch its fixed line network to digital whilst Asia, besides Hong Kong which is reaching saturation, has not resolved regulatory issues prohibiting IPTV in China and Korea.

DITTBERNER predicts that Japan is most likely to make the biggest impact in the next two years in the IPTV market. Japan’s 7.4 Million households subscribe to 100 Mbps service from either FTTH or FTTB/VDSL which accounts for 28% of its total broadband subscribers. Regulations that disallowed the transmission of broadcast TV over broadband networks have been amended in the past year, and coupled with low Cable TV penetration, Japan is set to be a prime target market for IPTV suppliers.

Noticeably absent from the top ten countries is the USA where no major service provider has launched a commercial IPTV service, although AT&T is in a trial phase. The USA will probably lag the rest of the world for some time in IPTV because of the strong competition from the Cable TV operators, as well as the inadequate infrastructure. Verizon, with the most ambitious FTTH program outside of Japan, is not offering IPTV today, but instead is using an RF frequency multiplex delivery method over its optical fiber similar to that used by the Cable TV operators over their HFC networks. According to James Heath, Broadband Market Analyst at DITTBERNER, “AT&T is midway through an upgrade that was to offer 25 Mbps access using FTTN and VDSL2, but now finds not only that it is difficult to achieve 25 Mbps, but also that 25 Mbps is inadequate to compete against the HDTV offerings of the Cable TV operators”. “The IPTV market in the USA will probably be dominated by a scattering of small, local service providers who have community roots and no Cable TV competition.”