As a new year begins, it’s customary to look back at the year just ended and ahead to the year to come. Everyone watching or participating in the broadband industry agrees that 2005 erased any doubts that IPTV is real. Broadband carriers around the world have embraced the delivery of TV and associated interactive services over switched digital video-capable networks using Internet Protocol; that’s the definition of IPTV that our industry has come to accept.

But as 2006 opens, it’s time to reconsider this definition, based upon two trends: the spread (and containment) of digital media content in the home, and the proliferation of video content across the open Internet. These trends were underscored at the annual International Consumer Electronics Show, which took place in early January, and by events and announcements during the weeks and months leading up to CES.

In-home distribution of media content represents an extension of the service provider’s traditional point of demarcation (a term full of meaning to the telcos) in the home. No longer is the service provider simply delivering media content to the network interface device or even “just” to the set-top box but now going as far as off-line storage by the subscriber.

Two noteworthy examples of things to come were shown by Scientific-Atlanta at CES. One was the company’s new, direct-to-disk, DVD-burning, dual-tuner MPEG-2 HDTV PVR box for cable operators, the MCP-100. Programming recorded on its hard drive can be burned to DVD with content protection that enables it to be copied once, a fixed number of times, freely -- or never. If the subscriber likes a movie, he or she would purchase the right to make a personal copy of the movie or its sound-track, insert a blank disk and click “burn.” The resulting DVD is compatible with any DVD player and has its own menus. S-A also hosted a proof-of-concept demo showing a PVR-equipped set-top box integrated with a mobile phone; in which MobiTV’s mobile video service and Sprint Nextel’s EVDO-enabled phones might allow the subscriber to program the PVR while away from home or even route PVR’ed content from the home to the phone! The issues facing the service provider have more to do with content licensing than technology.

A third example was from Ruckus Wireless, which offers an optimized Wi-Fi CPE access point device capable of distributing video at a sustained 10 Mb/s within the home. One of Ruckus’ demonstrations was the in-home distribution of VOD content stored on an IPTV video server and distributed wirelessly in the home to an Amino AmiNET 124 set-top box, with Ruckus wireless sets in between. A similar IPTV application is in use at PCCW in Hong Kong, currently the largest IPTV deployment in the world at over 500,000 users; the service provider is a Ruckus device reseller.

All of these cases demonstrated the closely controlled distribution of content, where the content owner and distributor collaborate to define the business terms of the content transaction to the consumer, and use compatible consumer electronics devices to enforce those rules.

But now, let’s look at how content initially purposed for TV (and closed network distribution) is being distributed and/or redistributed over the Internet, which isn’t so closely controlled. Another of Ruckus’ CES demonstrations showed their devices working with Sling Media’s SlingBox, a device I mentioned in a past column. The SlingBox was used to encode and distribute video output from a PVR set-top box to a WiFi-enabled laptop and to a PDA within the demonstration area. But the SlingBox can just as easily datacast over the open Internet. This is also the case for Sony’s new LocationFree TV, a CPE device that takes a similar role, to distribute media content across any IP network, including the open Internet.

Some content owners have already privately raised the issue that the SlingBox and LocationFree TV represent a new form of content access and therefore should carry additional charges to the user. But does the content owner have the right to exert this level of control? On one hand, nobody should take issue with the concept of paid content. Intellectual property has value, and it should be up to the content owners to determine whether or not the value has a monetary value. But if the content is being viewed within the context of a single subscriber who is simply extending the network – even though the extender is a “wireless” and not a “wire” – isn’t that Fair Use? The content isn’t being resold.

To ensure that content is paid for, some providers are finding ways to embrace Internet-based delivery but at the same time keep viewers within the confines defined by the distributor. For example, Tracy Swedlow’s InteractiveTV Today newsletter reported in January that BSkyB, the satellite TV provider in the UK, launched a new PC-based video service called “Sky by Broadband,” offering several hundred movies and more than 1,000 sports video clips at time of launch. But Sky will offer them free only to paying subscribers of Sky Movies 1 and 2, and to Sky Sports 1 and 2 respectively. Yes, delivery is via the Internet, but it’s limited to paying subscribers of the distributor’s satellite TV service.

Meanwhile, virtually all of the major news outlets are offering video content over the Web. Not to be overshadowed by Apple’s video store, Google and Yahoo are both in the process of introducing TV portals, offering videos for sale. And it’s not just network programming: as I write this column, the top hits on the video.google.com portal included “The Curry and Rice Girl” from Fobbed Out Entertainment and a selection from CamKaraoke.com. Separately, Opus Media is offering Bollywood (Indian) video programming over the Web while TiVo has built a bridge between the TiVo service and the Fandango movie ticket service.

And then: the January 2006 issue of a popular computer magazine contained a feature article on TV, most of which was about downloading video content from online stores to portable consumer electronics devices and to the PC, using software programs like Bit Torrent. There was nary a mention of the “IPTV” that we in the telecommunications industry have grown accustomed to. And yet, by rigorous definition, these are “IPTV” – the distribution of TV programming over a broadband IP network.

Despite all of these developments, broadband service providers have yet to resolve their concerns over “disintermediation,” wherein the broadband service provider provides a “dumb” broadband pipe while the content owner (or aggregator) provides and monetizes the content itself. I posed the question to a senior telco representative who took part in a CES panel discussion: “Is disintermediation a threat, and how will you resolve it?” His particular company is convinced its superior customer service would be enough to keep subscribers in the fold and not out roaming the Internet for alternatives. Meanwhile, others talk about policy management as a way to prioritize network traffic; presumably more favorably for higher-paying subscribers. Such answers will not satisfy everyone.

Many will argue that both the free-versus-paid content and the disintermediation-versus-control discussions are part of a larger set of social issues that includes the very concept of open access to the Internet. Already, multiple providers offer services wherein a subscriber can have a virtualized "digital personna," which includes his or her personal digital media content. The Internet is now such a fundamental part of modern life -- just as fundamental as phone service; maybe even more so – that it should be subject to universal access and therefore anyone should be able to have such a digital personna. Philadelphia and many other municipalities are ramping up to ensure that there is equal access at least for their own residents and visitors. Like it or not, “IPTV” will be an increasingly apparent part of this discussion: who has access, when, and for what cost; whatever IPTV may ultimately be.

Let all of this be a reminder that telcos must be proactive participants in the technical, business and policy issues in this "any content, any device, any time, any context, any network" world of IPTV. CES showed us evidence of this in the form of products and services that will shake our assumptions as the year unfolds.

Steve Hawley is principal consulting analyst of Advanced Media Strategies. He may be reached via his Web site, www.tvstrategies.com.