Free basic IPTV helps explain Swisscom interest in avoiding STBs

Swisscom would like to present its IPTV service via connected TV

apps and provide this as an alternative to using set-top boxes

Swisscom has provided a glimpse of the high-level strategic considerations that could be driving its interest in using connected TV devices to deliver a future IPTV service. Speaking at Connected TV Summit in London last week, Peter Fregelius, Strategy & Innovation Head at the Swiss telco, predicted that his company would eventually have to give away a basic 100 channel television package, bundled with broadband. And this seems to be a primary motivation in the company’s interest in how connected devices could one day be used to replace set-top boxes.
Swisscom hosted a private meeting last Thursday at Connected TV Summit to discuss how the industry could reduce its reliance on set-top boxes. The content of that session is off-the-record but in a public debate earlier in the day, Fregelius outlined his belief that set-top boxes would first become smaller, maybe in the form of HDMI dongles, for example, then eventually disappear altogether. “It will take a while, and it will depend what the end user wants, but we will move away from the set-top box,” he predicted.
He said the ‘Operator as an App’ model (where a platform operator presents its aggregated content services through an app on connected devices as an alternative to using set-top boxes to perform this role) is something the company is following very closely. He noted that for customers that want more services, the set-top box would remain a more suitable approach. This all points towards a hybrid strategy of having STBs in some homes and apps in others – with presumably the free basic television service (at least)  delivered via an app.
There is already a precedent for this kind of approach. In Estonia, TeliaSonera has rolled out a virtual-STB app in cooperation with Samsung so that some customers can use an app on Smart TVs to receive its IPTV service, while others have set-top boxes. Notably, that service is delivered as a full multicast IPTV service, not as OTT adaptive bit rate. In the case of TeliaSonera, the services are the same whether you take the app or the set-top box, but this service is an important test of the ‘Operator as an App’ model.
Whatever approach Swisscom is taking, the company is the first major platform operator to explicitly state its desire to move away from STBs as the primary receive ‘device’ for at least some of its customers. Deutsche Telekom has previously stated its serious interest in moving more functions to the cloud and reducing reliance on hardware, without ever going this far.

Swisscom and Deutsche Telekom both believe it is time for platform operators to start taking the ‘Operator as an App’ and virtual-STB model seriously to see whether operator demands can be met with this model. Deutsche Telekom also spoke at the private meeting that Swisscom hosted,  which was titled: ‘Ending operator reliance on set-top boxes’