IPTV Poised to Give Cable and Satellite Television a Run for their Money

ROCHESTER, N.Y. – February 13, 2006 – The Internet appears to be the threshold of new technology these days, and the future of TV may be in its hands. A recent survey by Harris Interactive^® conducted among U.S. adults explores consumer awareness and interest in and the potential impact of IPTV, an upcoming digital television service that is delivered through Internet protocol over a broadband connection. Despite limited availability in the United States, more than half (56%) of all U.S. adults say they have heard of IPTV and substantial numbers indicate interest in adopting it for use on their TVs and home PCs. The survey also shows how the adoption of IPTV may impact cable and satellite providers and the types of providers that may be able to capitalize on this new technology.

These are some of the results of The 2005 Technology Report: Hot Issues Facing the Industry, a study conducted quarterly by Harris Interactive. The most recent study was conducted online from December 2 to 8, 2005 among 1,039 U.S. adults.

Many adults expressed a great deal of interest in the interactive features IPTV has to offer, the most popular of which include:

• The ability to save money, since IPTV should be far less costly than cable or satellite (42%)
• The ability to select the time you watch a program (on demand) (33%)
• The ability to receive a broader array of programming content to meet your particular interests (24%)
• High-definition viewing (20%)
• Digital video recording (18%)
• Interactive program guide with navigation and search functions (15%)

Though IPTV is still in its infancy, substantial numbers show a great deal of interest in adopting the technology and some say they would sign up and try it immediately if it were available. One-quarter (26%) of adults say they are quite interested in adopting IPTV for use on their TVs, and 19 percent express a lot of interest in adopting IPTV for use on their computers. Fewer adults (4%) say they would be quite interested in adopting this technology for use on their cell phones.

Twelve percent of adults say they would sign up and try IPTV immediately if it were only available for their PC, and 57 percent say they would wait and see how others like it. Almost one in five (18%) say they would try IPTV immediately if it were available for their PC and could be sent to TV’s in their house using a set-top box, and 59 percent said they would wait and see how others like it. Minorities say they would ignore IPTV for their home PC (31%) or their TV (23%) as they are happy with their current service.

The survey results suggest that the development of IPTV could pose a formidable threat to cable and satellite services. Among those saying they will sign up for IPTV or that they would wait and see how others like it, almost one if five (17%) say they would cancel their existing cable or satellite TV service and go with IPTV, while two-thirds (66%) say they would keep their existing cable or satellite TV service and give IPTV a trial run. Only seven percent say they would keep their existing cable or satellite TV service and add IPTV, and one in 10 (10%) say they don’t currently have cable or satellite TV, but would adopt IPTV.

Since IPTV is a new technology that uses the Internet to deliver TV programming, consumers would need to select a provider to deliver this service to their home. Types of providers adults say they would feel most comfortable with delivering IPTV service include:

• A cable company like CableVision or Comcast (33%)

• A new company that has no baggage (25%)
• A technology company like Cisco or Microsoft (15%)
• A telephone provider like Verizon or SBC (13%)
• An Internet provider like AOL or Earthlink (11%)
• A content provider like Disney or CNN (4%)

Milt Ellis, vice president and senior consultant for the Technology Research Practice at Harris Interactive comments: "It’s no surprise to find that consumers want to save money on their cable or satellite bill, but the survey results also show that many consumers are quite interested in having access to a broad range of content to watch, at a time they determine. When consumers are able to watch their favorite shows at a time of their own choosing, "prime time" may need redefining, network program schedules may have little meaning, and TV ad rates will have to be recalculated. If and when IPTV becomes a mainstream reality, it could be the best of times for consumers and IPTV providers and challenging times for the networks, as well as cable and satellite providers."

"Internet TV or (IPTV) is a method of distributing television content over the Internet. The viewer must have a broadband connection to view content on a computer. Content may also be viewed on a standard TV if a set top box is used. IPTV allows viewers to select content on demand, time shift, and take advantage of other interactive TV options. Have you heard of this technology?"

Base: All Adults

"How interested are you in each of the following IPTV interactive features?"

Scale: 1 to 10 where 1 = "Not at all interested" and 10 = "Very interested"

Base: All Adults

"How interested are you in adopting this technology…?"

Scale: 1 to 10 where 1= "Not at all interested" and 10 = "Very interested"

Base: All Adults

"If IPTV service were available now only for your home PC, at a very reasonable price, what would you do?"

Base: All Adults

"We will now ask you the same question, but now IPTV is available for your PC and can be sent to TV’s in your house using a set-top box. How would you answer this question now?"

Base: All Adults

"Assuming you are going to adopt IPTV, what statement best fits you?"

Base: Those saying they will sign up or they will wait and see

"Since IPTV is a new technology that uses the Internet to deliver TV programming, which type of provider would you feel most comfortable with as the provider of this service?"

Base: All Adults

Note: Percentages may not add up to 100% due to rounding.

Harris Interactive^® conducted the online study from December 2 to 8, 2005 among a nationwide sample of 1,039 U.S adults (aged 18 years and over). Figures for age by gender, race/ethnicity, education, region, and household income were weighted to reflect the total U.S. adult population. Propensity score weighting was used to adjust for respondents’ propensity to be online.

In theory, with a probability sample of this size, one can say with 95 percent certainty that the results for the overall sample have a sampling error of plus or minus 3 percentage points of what they would be if the entire U.S. adult population had been polled with complete accuracy. Sampling error for the various sub-sample results is higher and varies. Unfortunately, there are several other possible sources of error in all polls or surveys that are probably more serious than theoretical calculations of sampling error. They include refusals to be interviewed (nonresponse), question wording and question order, and weighting. It is impossible to quantify the errors that may result from these factors. This online sample was not a probability sample.

The Harris Interactive Technology Research group doesn’t just monitor and measure the industry. It interacts with the thought leaders who drive technology, telecom and e-business everyday and provides insights from a variety of vertical perspectives. Using the group’s unique knowledge, experience, and expertise in both the telecommunications and information technology sectors, Harris Interactive asks the right questions, confirms business issues, and designs and implements studies to provide clients with actionable results.

A copy of The 2005 Technology Report can be obtained upon request.

About Harris Interactive^®

Harris Interactive Inc. (www.harrisinteractive.com), based in Rochester, New York, is the 13^th largest and the fastest-growing market research firm in the world, most widely known for The Harris Poll^® and for its pioneering leadership in the online market research industry. Long recognized by its clients for delivering insights that enable confident business decisions, the Company blends the science of innovative research with the art of strategic consulting to deliver knowledge that leads to measurable and enduring value.

Harris Interactive serves clients worldwide through its United States, Europe (www.harrisinteractive.com/europe) and Asia offices, its wholly-owned subsidiary Novatris in Paris, France (www.novatris.com), and through an independent global network of affiliate market research companies. EOE M/F/D/V

To become a member of the Harris Poll Online^SM and be invited to participate in future online surveys, go to www.harrispollonline.com.

Jennifer Cummings
Harris Interactive
585-214-7720