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IPTV is all about the walled garden approach. For the last five years or so, Telcos around the world have been building up their broadband networks in order to support advanced data, voice and video services.

With declining wireline/voice revenues, many telcos are realizing that adding video to their offerings makes great sense. Although it’s an expensive and time-consuming proposition, rife with few global standards and unknown ROI, telcos realized that they had to do something or they’d no longer have a business. Innovation and investment is what is saving the telcos.

IPTV was always about the walled garden–meaning keeping the broadband network manageable by only allowing broadcast TV and VOD services. And keeping out content that wasn’t authorized. Opening up the full Internet to consumers was seen as a risky move.

It is also unprecedented. I don’t know of any telco providers anywhere in the world that allows full Internet browsing via their IPTV networks. It was seen as a threat. Opening the doors to Internet video, like YouTube and Netflix on the TV was a threat to TV revenues being generated by Service Providers.

After all, won’t consumers just watch shows on YouTube? Won’t they forget about watching the broadcast version of a show and just watch highlights later on? Or save it on their DVR? Or even order a recent blockbuster through Netflix or Amazon, rather than using the cable or IPTV carrier’s VOD system?

But it looks like the genie is out of the bottle.

Consumers are consuming more and more video on their computers and phones. It’s almost second nature. Consumers also want to watch TV shows and movies on their own time–not just waiting for shows to appear on primetime every night at a certain time.

Now that the genie is out, consumers have taken the lead. Service Providers are finding that offering a variety of Over the Top (OTT) video services can be a crucial differentiator for them and something that consumers really want and value.

As a result, many Service Providers are opening up their walled gardens. The real question now is: how much of the walled garden do you open? Do you open the gates all the way? Or just open up certain sites? Or certain TV apps?

Perhaps the bigger question is, how do you earn more revenues from opening up the walled garden? Do you charge broadband subscribers more per month? Is there a premium offering that lets consumers watch unlimited Internet video? Will providers switch to tiered pricing and throttling, rather than unlimited data plans?

It seems like Broadband operators understand that they are getting to the point where they may be seen as a dumb pipe operator. But before that happens, I think they’ll fight tool and nail.