Attempts to provide telephone, internet and television packages could be "financial suicide" for telecoms companies in western Europe, warns a new report.
According to findings from technology experts Forrester Research, many of the continent's telcos are offering broadband triple-play services only after being overwhelmed by "competitive pressure and massive vendor hype".
Telcos should not expect a profit boost from offering internet protocol television (IPTV) along with voice and data services and should see TV services "as purely defensive", says the Forrester study, which adds that companies face greatest hardships in the UK, Spain, Italy and France, while Germany's Deutsche Telekom can expect the lowest loss in western Europe.
Forrester telecoms analyst Lars Godell said that "all incumbents need to take a deep breath before proceeding further down the IPTV path" and added that "the only way to improve the profit and loss is to bet on a hybrid digital terrestrial television and IPTV strategy".
Godell continued: "Creeping telecom and media industry convergence and increased competition between cable companies, telecoms operators and ISPs explain why broadband triple play is seen as the battlefield for future ownership of the consumer and the digital home.
"However, the poor revenue potential undermines this hype, and the big question remains: will operators be able to make money from their push into IPTV? At the moment, the answer is no."
Forrester's findings follow IT research group Gartner's announcement earlier this year that telecoms operators in western Europe will struggle to make IPTV services a mainstream revenue opportunity because of fierce competition from entrenched pay-television operators and free-to-air terrestrial TV stations.
Lovelace Consulting | 23.06.2006