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Volný launches IPTV service, challenges O2

Volný's arrival to raise standards of once monopolized market

By Markéta Hulpachová
Staff Writer, The Prague Post
August 8th, 2007 issue

COURTESY PHOTO
Volný's new IPTV service is priced lower than rival Telefónica O2's.
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The country’s largest telecommunications provider, Telefónica O2, has a new rival on the Internet television (IPTV) market.
Eleven months after launching O2TV, the country’s first IPTV service, Telefónica O2’s biggest competitor, Volný, entered the IPTV market July 31 with its introduction of Volný TV, a new service available to approximately 200,000 households in Brno and select areas of Prague.
Despite its limited availability, Volný TV may help raise the standards of the previously monopolized IPTV market.
“The arrival of any competitor is a welcomed development,” a local telecom expert who asked not to be identified said. “It brings new potential into a market that is still heavily controlled by Telefónica O2.”
Telefónica O2 owns most of the telephone lines in the Czech Republic and charges outside operators for the use of its infrastructure. Because of this advantage, O2TV is available to 97 percent of O2’s fixed phone lines, which cover more than 99 percent of the country.
Volný TV is currently available to 200,000 phone lines in Brno and parts of the Prague neighborhoods of Žižkov, Strašnice and Spořilov. The company intends to expand its availability this fall.
As part of its long-term goal to increase national coverage, Volný plans to cooperate with regional Internet service providers that meet Volný TV’s high-speed Internet connection requirements. Partnering with small providers may provide Volný with an alternative to spreading IPTV coverage using its own resources.
“Unlike other operators, we want to work with local companies,” said Volný product manager Miloslav Diviš. “Because of all the permits and legal complications involved, joining forces with us is beneficial for small providers. We, in turn, get to broaden our coverage.”
Telecom companies see the steady increase in IPTV demand as a strong indicator of future market potential. Since its launch in September 2006, O2TV’s customer base has grown to 40,000, “a clear indication of the extraordinary interest in this product,” said Bohdan Tetiva, a product marketing officer for Telefónica O2. “More new customers who never even owned a fixed line until now are ordering [IPTV].”
Low definition
Owned by the Telekom Austria Group, Volný first entered the local market in 1995 as a dial-up Internet provider. In April, Volný merged with the Central European telecom group eTel.
The company aims to compete for IPTV customers by pricing its services lower than Telefónica O2’s. With basic service starting at 996 Kč ($48.60) per month, the cost of Volný’s phone line, high-speed Internet and digital TV package is 371 Kč lower than Telefónica O2’s equivalent plan.
“We are the only company that was able to get the monthly price under 1,000 Kč per month,” said Diviš.  
Aside from its lower price point, Volný is also looking to beat out its competition — which includes cable and satellite broadcasters — by offering a broader range of channels and interactive features. Through a partnership with the U.S. movie channel HBO, Volný is the first Central European IPTV provider outside of Hungary to offer video on demand. The service offers about 40 television channels in total, matching the options provided by Telefónica O2 and the leading cable providers, UPC and Karneval Media.
Although lower fees and expanded services may make it viable, Volný lags behind its competitors by not offering high-definition television (HDTV). The upcoming nationwide switchover from analog to digital broadcasts, which will make all broadcast TV channels available in HD quality, will set Volný’s lack of support in sharp contrast.
Telefónica O2 already offers HDTV in Prague and Brno; Volný has made progress toward adding HDTV, the company says, but does not plan to launch the service in the near future.

Markéta Hulpachová can be reached at mhulpachova@praguepost.com


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