DSL digital TV to reach 46 million homes; Telcos face financial and cultural challenges.

M2 PRESSWIRE-25 September 2001-STRATEGY ANALYTICS: DSL digital TV to reach 46 million homes; Telcos face financial and cultural challenges (C)1994-2001 M2 COMMUNICATIONS LTD

RDATE:25092001

Boston, MA -- 46 million homes worldwide will be watching digital TV delivered over their phone lines by 2008, according to a new report from Strategy Analytics. But telephone companies must overcome a number of financial and cultural hurdles before they can compete with established players.

These conclusions are presented in a study entitled "DSL DTV: Status and Prospects," published recently by Strategy Analytics within its strategic advisory service, Broadband Entertainment Strategies.

Digital television and video services can be delivered over existing copper phone wires using technology known as xDSL. Commercial services have been available for some time from operators such as Qwest in the US, and Kingston Communications and VideoNetworks in the UK. Strategy Analytics predicts that xDSL will account for 11% of worldwide digital TV services by 2008, up from less than 1% today.

The report recommends that telcos steer their communications-oriented business culture towards dealing with content providers, as well as investing for the long term in network upgrades. If they can meet these challenges, then DSL DTV will be a valuable weapon in the fight against continued decline in their traditional fixed line voice businesses.

"DSL can become the fourth DTV platform," says David Mercer, VP, Consumer Practice at Strategy Analytics. "But it is doubtful that many of today's telcos will make it: delivering content is an alien business for most of them."

Telco players should also maximize the opportunity to bundle digital television with such services as telephony and messaging, broadband Internet and home network management. This approach will position telcos for the long-term battle with cable, satellite and other emerging players.

The report also predicts that annual sales of DSL DTV set-top boxes will rise to 10.7 million units by 2008, a substantial increase from 1 million in 2002. More detailed forecasts are available on request.

Company Background:

Strategy Analytics, Inc. provides information and insights to help competitors develop strategies in consumer electronics and media, wireless communications, ebusiness supply, automotive electronics, energy and enabling technology business.

CONTACT: Michael Mascioni Tel: +1 781 235 6550 x 213 e-mail: mmascioni@strategyanalytics.com David Mercer Tel: +44 (0)1582 405678

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