In the US, IPTV technologies enable current telecom service operators to take a "fresh shot" at the existing $60 billion in TV advertising and $70 billion in cable, satellite, and over-the-air TV subscriber revenues. The commercial fight for account control and wallet share from TV are reflected in the service bundling terminology and service packages, such as in triple play (voice, data, and video services from a single provider) and in quadruple play (the addition of cellular phone service to the bundle). Figure 4 reflects the physical topology of wires, cable, fiber, and wireless connections into the home.

Figure 4: Physical Topology

For a number of marketing reasons, bundled service packages come at a lower retail price than the discrete services, and this usually means profit margins go down for the legacy infrastructure, while the new competitor gains market share and new revenues.

It should be noted here that these new packages do not impact the physical infrastructure, and they only seem to increase revenues for the "new guy" in the short range.

At some point, the new TV service operators will need massive cost improvements versus the legacy providers, or both supplies will soon have margin and profit problems, similar to the AT&T attempt to convert the company into a cable TV supplier. In fact, IPTV technologies hold out the promise of both providing lower cost and better margins.

Now, the fight for account control and wallet share has already redefined a large part of the industry and will continue to do so into the near future. The wave of mergers, acquisitions, bankruptcies, and financial mischief were partially the result of deregulation and positioning for IPTV-like broadband services to the mass consumer market.

These cataclysmic events have punctuated the transition toward the next generation networks, as carriers moved away from the public utility service model and began to develop new business models, based on both profits and the exploitation of their competitive advantages.

The impact of this shift from public utility service, that is, the quasi government agency servicing consumers, to Wall Street style profits is reflected in the Figure 5. From 1990 to 2002, household spending on communications increased faster than any other consumer spending category. Moreover, unlike simple inflation that drives the increase behind many of the other categories, the key to communications growth has been the new services that were not generally available in the 1990 public utility market. This was actually driven by regulators, government agencies, and government protected monopolies.

Figure 5: Wallet share growth from deregulation

These new services and increased revenue forces are a major driver behind the evolution of IPTV services and the deployment of IPTV and Web TV transport technologies. In the following chapters, we will see that IPTV technologies can have a significant impact on current operation costs and can help offset the cost for operating the declining cash revenue in legacy public carrier services; wireline analog voice, long distance toll charges, and analog cable TV revenues are actually in steady decline in most countries.

The new IP technology and service offerings can also be used to create an overwhelming competitive "new service" edge that can help carriers initiate new service bundles and portability packages that can help them "poach" the accounts of tomorrow, in a large drive for market and wallet share, account control, advertising dollars, and new profits.