Sky TV's dominance makes for poor IPTV prospects in the UK

Internet television will struggle to become a mainstream revenue opportunity for European telecoms carriers, Gartner has warned.

The analyst firm said that subscribers for television services over the internet hit 1.7 million last year and expects them to grow at a 58.8 per cent aggregate rate until 2010, when the service is expected to attract 16.7 million subscribers.

But despite this robust growth, IPTV providers will be forced to undercut the prices of entrenched operators to give consumers an incentive to switch.

"While the short- to medium-term profits from IPTV will be modest at best, carriers cannot afford to delay the deployment of the IPTV platform," said Susan Richardson, principal research analyst at Gartner.

"Those who delay too long will risk undermining their ability to be long-term key players in the consumer 'infotainment' communications business.

"This is because IPTV is not a single service; it is a new distribution platform over which many services can eventually be offered. Investments now have to be seen in the context of seeding the ground for the future."

Richardson noted that the UK has the smallest number of IPTV subscribers of Western Europe with only 75,000 projected for 2006.

The analyst expects this to increase dramatically when BT introduces its BT Vision offering this autumn, but expects the region to remain a weak prospect for internet television because of the dominance of Sky TV.