With visions of cracked phones and open source apps dancing in their head, the mass of fruit infused evangelists returning from Apple’s Worldwide Developers conference this week are hailing the new iPhone 2.0 as a step forward for open networks. Paired with recent a recent demonstration of Google’s Android platform at its I/O Conference, one could assume we’re on the verge of who new world of openness where networks and devices are no longer joined at the hip and applications roam free like the deer and antelope of yore.

Then again, one would be wrong.

IPTV is open, or so it’s been promised. In reality, IPTV is not going to come close to any vision of an open platform for at least the next five years.

Certainly there will be some application development that happens in an “open” environment and some middleware vendors are pushing for third parties to contribute their creativity to a market that has heretofore been closed. But openness can only be tolerated by service providers in moderation.

Unlike wireless, where the growth engine is still running and service providers have had control of the throttle for years, the home entertainment market in which IPTV is playing is a fundamentally different animal. Imagine IPTV becoming a truly open environment where users could buy their own devices at the retail level and subscribe to any service. Where in the value chain would an IPTV service provider sit?

The move to Cable Cards and separable security is moving cable operators toward such and environment. And users have been able to buy retail set-top boxes from Apple, the now defunct Akimbo and Vudu for several years. However, for the vast majority of users the concept of open networks translates into a significant upfront costs, self-installation and self-help when the system breaks down.

For IPTV providers, the concept of openness can be truly scary. Under even the best cost structure, the payback periods for IPTV extend well into the 2-3 year range. And that assumes users take the highest levels of services and lay on additional goodies such as a lot of video on demand usage. Does it make any sense for IPTV to truly be an open environment?

Fret not, though, you purists who see nefarious schemes to keep customers bound to service providers in perpetuity. IPTV will be open, but it will be a kinder gentler version of open than we will see in the wireless world. IPTV service providers operating in highly competitive environments will be forced to differentiate their services from cable, satellite and terrestrial services. Among the options laid out before them are:

• Exclusive/more programming, which is a good short-term strategy but one not likely to last as content owners figure out that more distribution is a net positive for them;
• Price slashing, which simply can’t be viewed as a long-term strategy given the cost structure of IPTV networks; or
• Application differentiation, which is the only real long-term differentiator.

Most IPTV providers are recognizing that the first two strategies are good for short-term market share grabs, but ultimately differentiation must come from applications running in the IPTV environment. If history is any guide, the most creative applications will come from developers outside the traditional telecom environment. The kind of developers that are at their best when operating in open environments.

While IPTV won’t be open in the same way that wireless is driving toward open, it will help drive a wedge into a formerly closed world.