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Several internet TV initiatives in Asia and Europe plot a difficult path for telecom IPTV. That being said, some of the initial installations do hold out the promise of robust growth.

Hong Kong based PCCW is that largest IPTV operation in the world with 700,000 subscribers. The PCCW project has a distirbution that is close to parity with cable. However, the reasons for fixed-line PCCW to introduce IPTV is to keep subsribers from migrating to wireless, a situation no replicated in the US.

KT of Korea, China Netcom, and France Telecom have also deployed IPTV but have found that the start-up costs can be so high that they may push profitability out several years.

Industry research group iSuppli forecasts that IPTV could have 63 million subcribers worldwide by 2010 driving revenue to $27 billion. But, those forecasts may turn out to be fantastic. Problems with software like the Microsoft internet TV product and long installation times for new fiber could push those forecasts out several years. Content piracy is also an issue Or, it may be that for some telecom operators you can’t get there from here.

Programming costs are also a hurdle. In the US, large content providers already get fees from cable operators and have significant program distribution. They do not need the telecom companies to get eyeballs. That gives them some real advantage in negotiations with new outlets like fiber-to-the-home.

Although fixed line telephone companies can increase their yield by 20% to 40% according to UBS, cable is hampering distribution of programming by telecom operators. In Korea, cable VOD has an 80% penetration of households. That stronghold will be hard to breach.

Based on an interview with Reuters, one analyst was especially pessimistic: "There is no immediate profitability in IPTV, and no quick fix in intensive fiber rollout," said Shirley Tse, a Hong Kong-based analyst at UBS. "IPTV on a standalone basis does not justify the economics."

Well, AT&T and Verizon should hope that is not true.

Douglas A. McIntyre canbe reached at [email protected]. He does not own securities in companies that he writes about.

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