Communications market research firm Infonetics Research reports in a new study that a growing number of North American, European, and Asia Pacific service providers are betting on IPTV and video services to stay ahead of the competition.

The report, Service Provider Plans for IPTV and Video, says the loss of revenue associated with fixed-line telephony services to cable operators and other competitors, along with the threats to revenue posed by over-the top Internet content providers, such as Google, Apple, and Yahoo!, are forcing service providers to move into the TV business to increase ARPU, reduce churn, and expand their brands beyond the staid, monolithic telephone company.

Further fueling the drive to IPTV and video is the fact that service providers now have many more access options over which to deliver high bandwidth, high revenue IPTV and video services to subscribers, including heretofore expensive access technologies that are now available at comparable prices from multiple manufacturers, including DSL, PON, Ethernet FTTH (active Ethernet), cable HFC, and WiMAX, among others.

"IPTV is the application many service providers feel offers them the best opportunity to stem the loss of revenue from declining fixed access lines, and help them to more quickly recoup revenue from their ongoing fiber deployments. Yet, there are significant hurdles faced by IPTV and video providers, and chief among them is interoperability. Various standards organizations are developing IPTV standards but all are in various stages of completion and adoption. Until the majority of vendors agree to rally around a particular group of standards, interoperability will remain a critical problem for would-be IPTV providers," said Jeff Heynen, directing analyst for IPTV and next gen OSS and BSS at Infonetics Research.

Other highlights from the study:

• The number-one technical challenge IPTV and IP video service providers face is interoperability between products
• Implementing interactive video features is the second highest rated technical challenge, as providers move away from their legacy linear model and adopt interactive advertising, online gaming, etc., as differentiators
• The percent of service providers offering interactive advertising grows from 20% now to 70% in 2009
• Ensuring QoE remains the most critical aspect to any operator's IPTV service because they absolutely must have a unique and differentiated service right out of the gate
• 30% of respondents use a hybrid solution, combining digital terrestrial or satellite delivery of broadcast programming and multicast delivery of premium and VOD content

Infonetics' study takes a detailed look at North American, European, and Asia Pacific service providers now offering or planning to offer IPTV and video services by 2009, including which of the many service features they plan to offer, when they plan to offer them, and how these services will impact their top and bottom lines.