Telephone companies are not the only ones looking to IP-based video for advanced services, according to a new report from ABI Research. Some cable companies also are exploring use of IP to offer interactive TV services, but face economic challenges that could delay that effort until 2008 or after, said Michael Arden, principal analyst and author of the new study, “Worldwide Cable TV Infrastructure, CPE and Services.”

The primary hurdle for cable to get into IP-based services is the cost of replacing existing customer premises equipment, including cable modems and set-top boxes, at a cost of up to $1000 per household, Arden said. The industry seems to be leaning toward providing IP-based interactivity over DOCSIS modems, but are waiting for the DOCSIS 3.0 standard to emerge in late 2007, he said.

“It seems that most of them are still in the preliminary stages of exploring what they can do with this kind of thing,” Arden said in an interview. “They are waiting for DOCSIS 3.0, which is expected in late 2007. In 2008, we will start seeing some stuff, maybe a little earlier. There may be some non-standard stuff being rolled out in anticipation of that.”

Some of the more aggressive cable companies, such as NTL in the U.K., are already using IPTV where they extend their footprint by deploying fiber, instead of coaxial cable, to connect customers in new housing developments, Arden said.

Between now and then, cable companies are working with their vendors to expand the bandwidth available on their existing networks, particularly in the upstream, to enable more video on demand and other types of interactivity, he added. And they are planning to deploy switched digital video to enable the kind of unicasting that telcos plan to do with IPTV.

“They [cable companies] are in a pretty good position – they are the ones with the subscribers that the telcos are going to have to lure away,” Arden said. “Satellite operations are going to have a bigger dent on the cable market than the telcos in the near term. The satellite companies are starting to bid on wireless spectrum as well, as they are trying to expand to move into triple play. With their customer base and the fact they can reach anybody, satellite companies pose more of a threat to cable.

“But telcos will present a competitive threat in key markets,” he said. Where cable is being forced to go head-to-head with telco IPTV, such as in markets served by independents, “there is certainly concern on the part of the cable operators, and we will see rollouts [of new services]in those markets fastest.”