Adoption and Pricing: The Underestimated Elements of a Realistic IPTV Business Case

The adoption of IPTV increases competition for telecom operators. Especially video on demand and the move to HDTV push the bandwidth requirements to the limits. It is very challenging for an operator to construct a successful and sustainable introduction of IPTV over the existing infrastructure. This article gives an overview of a typical business case followed by a detailed discussion of the adoption and evaluation of the outcome. The results of this article indicate the importance of a correct choice of adoption model and related parameters. It illustrates how different IPTV-specific effects on adoption (i.e., competition and analog switch off) might have a considerable impact on the outcome. After adoption, the article shows how the outcome of the business case can be used within pricing decisions by setting sustainable and competitive boundaries on the tariff. Finally, as pricing will also have an important impact on adoption (e.g., a price reduction could lead to increased adoption), the possible impact of this feedback loop is indicated. In this sense the approach discussed in the article could easily be extended with a highly detailed cost model of the network architecture and technology, leading to a full business case for IPTV introduction by a telecom operator.