Network vendor giant Alcatel-Lucent predicts online video will soon become the primary way for users to access TV content, as the industry continues to see widespread consolidation in the IPTV and cable sectors.

Speaking at the company’s IP video open day in Cambridge, UK, yesterday, Paul Larbey (pictured), head of IP video, said TV was now becoming the “killer application for broadband” and operators investing in fibre were looking at a number of ways to include the service within their converged platforms.

Alcatel-Lucent opened a Bell Labs research site to focus on the development of next-generation video in Cambridge last year.  At the same location, it also operates its Network Operations Centre, where the company is able to monitor and manage video traffic for its customers all over the world.

It now has an IP video presence in seven global locations, including Belgium, India, UK, Portugal, the US, Singapore and Spain.

“For us, it’s an interesting market to be involved in,” said Larbey. “Of course, there’s a big advantage because we own the network and companies are now looking at a number of ways to integrate more with pay-TV and content coming in from a number of sources. Going forward, as we see a change in consumer demand for things like high-definition and 4K, the network becomes increasingly important.”

Alcatel-Lucent noted that quality of service expectations from IP video services like YouTube and even Netflix, given its modest monthly fee, have been traditionally low in the past.

This, however, will change with the evolution of TV, according to Larbey, who claims IPTV services will eventually replace the set top box and become the primary way for consumers to watch content.

“In a market where consumers will continue to demand better user experience across a number of devices, the roll of the set top box changes and becomes less relevant,” he said. “Pay-TV operators spend approximately $13 billion a year on set top boxes, but these will be replaced by applications and connected TVs. This will then enable pay-TV operators to then spend on their network.”

Alcatel-Lucent revealed it was already working with an unidentified customer in North America on taking its entire cable network towards a unicast offering, and drive more functionality to the network.

“The set top box is limited in offering new features. Through a network based solution, you not only have added storage, but you also lose the burden of the box.”

Throughout the course of the day, the company hosted a number of presentations which looked into IP video trends, its product strategy, Content Delivery Network capabilities and a look into the work being done by Bell Labs.

Movistar TV
2Robert Porras (pictured, left), brand manager at Telefonica’s Movistar TV, also hosted a customer case study on the day, and talked through how the company had grown its TV subscriber base from 740,000 to two million in just over a year.

Largely, this was driven by the launch of cDVR services, which it deployed from Alcatel-Lucent last year. Driven by TV services in the cloud, one of the most innovative features is the ability for users to watch up to six different live streams at once, which is particularly popular with sporting events.

Porras said that, while Movistar was now transforming into a premium video company, “it saw investment in fibre and fixed-mobile as ever more essential”.

Telefonica also recently acquired Canal +, to add an extra four million subscribers to its TV offering, and Porras believes the move represents the ever evolving state of the market.

“Vodafone just acquired Ono, Orange acquired Jazztel and Netflix, who I worry about the most, recently announced it will be launching services in Spain,” he said. “We are clearly not alone in this market and we need to keep evolving to stay ahead.”