Sky have been mulling about an IPTV service for a while. They were in discussions with THUS who provide the telecoms back-end for their SkyTalk service and helped Sky with their WapTV services, they were talking about doing an IPTV trial with THUS, but THUS pulled out of the LLU arena due to lack of cash. They were looking at spending £20m+ on just a trial.
Though Sky have 7.3m+ subscribers, they estimate around 20% of households (in the coverage) areas cant get Sky due to dish or coverage problems (including multi-tennant buildings). City centres tend to be problematic due to high buildings obscuring the satellites. There’s also a major problem if the building is in anyway listed.
Sky have got the resources to bolster a depressed telecoms market and put the necessary cash into a company to achieve a reasonable roll-out. Of course they also have the content that consumers want. If another “triple-play” broadband provider wants to get into the game (including BT Retail), Sky can make it very difficult for them by not licensing Sky content (of course Ofcom may force them to, as they have done in the cable industry).
Sky have also been talking to other high-speed broadband providers such as Be who also want to offer a triple-play.
If Sky do purchase Easynet, it’s likely they’ll move all their telecoms and Internet activities to them too, which will put THUS in a difficult position as a large ammount of corporate revenue comes from the Sky account.
Sky are also in an odd position as they’ll probably utilise MPEG-4 as the coding system, which means they’ll have to modify (or supplement) their existing transmission systems which are all based on MPEG-2. They’ll also have to introduce a new IP based set-top-box. However they’ll have to be carefull as to not make it too feature rich compared to existing STB’s used to decode the satellite transmissions or existing users will want to migrate to the broadband version – which will cost Sky a huge ammount as the exisitng boxes are considerably subsidised.
Whatever route they go, Sky moving into triple-play will have a major impact on broadband and LLU in the UK.