ISP trends 2010: Telsyte

IPTV, 'unlimited' downloads, fourth screen, pre-paid broadband

In the year ahead Australians can expect to see download limits continue to soar, the emergence of pre-paid broadband and a watershed year for IPTV, according to Telsyte.

Detailing the analyst firm’s 2010 predictions for ISPs, research director Warren Chaisatien said that the rise in mobile broadband use among Gen-Y and student users would likely see an explosion in prepaid broadband as wired ISPs sought to capitalise in the market.

“The concept was introduced in 2009 already, but it is still very nascent,” Chaisatien said. “Telstra was doing a good job a few years ago of stemming the tide, but in the same way people are using mobiles to replace landlines, people will use prepaid DSL to replace post paid.”

However before the market could fully take ISPs would have to come to terms with essentially giving away hardware for free, or similar to mobile phones, lock their modems for a period of time or until sufficient costs were recovered.

Reflecting the commodity nature of broadband, the market could also expect to see ISPs - particularly in the second tier - offering virtually unlimited broadband caps, Chaisatien said.

“There are still limits but if you look at the second tier – TPG especially - they have been very aggressive offering 80 gig now rising to 100 gig,” he said. “The average household downloads per month is five to six gigs so even at 10 gig it’s considered high usage.

“From a practical perspective 100 gig is unlimited and you’ll see that intensify in 2010. The trend is initiated by second tier players, but you will see Telstra and Optus forced to mimic that.”

In keeping with the high download limits, IPTV will also feature prominently in the year ahead, Chaisatien said

“2010 is the watershed year for IPTV development in Australia,” he said. “It’s been in the pipeline for a while but with virtually unlimited downloads this will grow. We are seeing iiNet, Exetel and Internode move and expect to see Telstra do the same with its online content and the T-Box. It won’t be the full IPTV we see in Korea and Japan – more the TV on demand model.”

With ISPs providing unique and pre-negotiated content on their online portals, a potential issue around Net Neutrality could arise in 2010, Chaisatien said.

“[ISPs] are making their platforms un-neutral,” he said. “If the practice continues, search and other providers will say something as it undermines their positioning. On the issue of network neutrality I expect Google to be quite vocal.”

The consumer cloud as the next battlefield for consumer IT in 2010 will also be another major theme during the year, Chaisatien said.

Of particular note will be the battle between Google with its free cloud services such as Gmail, and its forthcoming Chrome OS, and Microsoft with its consumer cloud platform, Microsoft Live.

“The objective is this: today we are surrounded by three screens – the TV, phone and PC,” he said. “So the consumer cloud is important as whoever wins our hearts and minds on the PC will influence our preference towards the other two screens.”

Related to this, was the rise of the fourth screen in 2010 - a new form factor device positioned between the netbook and the smartphone, Chaisatien said.

“The challenge of the fourth screen is that consumers still need a lot of education and we are surrounded by three screens at the moment and we find it hard to justify a fourth,” he said. “It needs to be light, portable and the key purpose needs to be around social, like sharing photos with friends.

“A smartphone is too small, a notebook is too bulky and it’s too awkward to boot up your PC. It’s there that the fourth screen will come into play.”

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