Though still early in the IPTV game, the initial results from some of the independent telcos deploying services in competition with incumbent cable operators suggests that the newest kids on the block should be able to capture somewhere around 30% of the available video market.

Not bad for a service provider that is starting with essentially no market share and entering a business that is related in the way that ham and pork chops are linked--similar but not quite the same.

The question that must be asked, though, is not whether carriers will be able to differentiate their video service from cable and satellite. On that count, I've had an epiphany of sorts, realizing that differentiation takes many forms, and there is enough activity and focus on IPTV that telcos will be able to come up with something that makes its mark in a crowded market. The real question is whether carriers can make a business out of 30% market share?

While many have touted the customer-retentive benefits of adding video to the bundle, the issue of whether service providers can generate sufficient new revenue is open to debate. Early indications--very early--are that there is enough revenue to be had if they focus on the right market. Indeed, while many will be forced by local authorities to build out networks to every home in a given region, carriers would be best served by focusing on those demographics with the most disposable income and time. In effect, it likely will pay for carriers to be a bit snooty. Stealing a single customer away who willingly pays more than $100 for a package of video services is more effective than capturing four who won't consider anything over $25. Not only are the costs going to be lower, but that higher-end customer is more susceptible to being upsold with new services.

E-mail me at vvittore@primediabusiness.com.