To contribute, I'm answering some questions.
VoD uses two way data flow. Standard tv they just broadcast and IPTV offers you the possibility to interact with your tv, for example apple TV.
Iptv can be free using software or hardware, for example, access to youtube through apple tv. That's free, but with access to neflix, you pay for the movie you want to watch.
The best example for free IPTV would be xbmc, software based, which gives you access to the whole internet media.
You don't necessarily need software to get access to media content; a browser can do it for you.
I hope that I have answered your questions.