Italian telecoms operators must rethink their approach to Internet TV (IPTV) or risk losing business to satellite and other competitors.

Telecoms see IPTV as the solution to offset the decline of the traditional fixed-line business, boost revenue and retain customers but in Italy their IPTV offerings so far are considered to be based on an outmoded low-cost standard.[...] "Italian operators have all adopted an old-fashioned business model, which aims at reducing risk to the bare minimum. Consequently it doesn't deliver big numbers," said Augusto Preta, general manager of research firm ITMedia Consulting. [...] "At present all the operators are just replicating Sky's offer on all the different platforms. Any of these offers has a distinctive feature that can convince users to favor it against another," Preta said.

ITMedia Consulting's Preta agreed that 'video on demand' will be a winning feature, expected to surpass the classic pay-TV model and deliver 46% of IPTV revenue in 2010.

"But it will face the competition of social networks, like YouTube and MySpace, successful in term of growth and popularity. These sites will be increasingly financed by advertising, with user-generated content expected to attract 18% oftheEuropean Internet ads market, topping EUR2 billion in 2010," he said. Missing the IPTV opportunity would mean Italian operators lagging European rivals in a fast-growing market set to be worth about EUR2.6 billion by 2010 in western Europe, according to ITMedia Consulting forecasts.

The Wall Street Journal, 14 December 2007