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Asia IPTV rollouts a slow go

Posted: 01 Jul 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Mike Clendenin? IPTV? Asia-Pacific? STBs? Parks Associates and Pyramid Research?

Although Asia is pegged as fertile ground for IPTV, and China as perhaps the biggest market, progress is not as fast as the boosters were hoping for in many countries, with promises outpacing reality.

By many estimates, Asia will lead other regions with more than 40 percent of global IPTV subscribers by 2010. So far, the pearl of IPTV success here remains Hong Kong, with more than half a million users of telecom provider PCCW's NOW broadband TV service. Not far behind is Japan's Softbank BBTV, which has about 180,000 subscribers and is adding new ones at the rate of about 18,000 a month.

Elusive prize
Still, China remains the grand, yet elusive, prize. Despite dozens of trials, with more than 100,000 test users, it is still years away from ironing out regulatory issues that will enable telecoms to fashion realistic business cases in which IPTV can compete against the cable industry.

Another sticking point: China's relatively poor access network. "There are lots of pockets in China where the network is suitable for IPTV, but it's certainly not nationwide, by any stretch," said Egwin Sung, director of Asia-Pacific IPTV business development for Tandberg TV.

This isn't the toughest obstacle, either. Vendors tend to red-flag regulatory hurdles that restrict content as the major concern. China may look like a fast-paced, freewheeling capitalist society, but beneath the surface, the government maintains a tight grip on what news and entertainment is piped into homes.

"If they don't relax on the content, then there is no business model, and there will be no demand for IPTV," said an executive from Motorola Inc., who asked not to be identified.

With little immediate relief in sight on the content issue, China's telecoms are moving more aggressively to solve problems within their immediate control. Topping the list are increasing bandwidth and improving reliability of the access network. At the same time, the telcos are beginning to test H.264-based STBs and headend encoders that will replace earlier implementations of MPEG-4 Advanced Simple Profile, used in early trials.

Cost remains a huge barrier, though. Like telecoms elsewhere, China must aggressively compete with the established cable industryand in China, cable is dirt cheap. Yet, as cable undergoes a government-mandated transition from analog to digital, there are lessons to be learned for potential IPTV operators. Despite strong government support, which often includes loans and subsidies, the changeover is proving difficult, said Mark Natkin, of Beijing-based Marbridge Consulting. He notes that in Qingdao, a case study for the rollout of digital cable, user cable bills only increased from about $1.50 to $2.70 per month. "That clearly leaves the cable company little room to recover the cost of the STB," he said.

Two recent studies, by Parks Associates and Pyramid Research, both cited the wild-card status of China as a feasible market for IPTV because of overhanging issues like quality access networks, regulatory hurdles, content restrictions and the government's apparent focus on implementing digital cable services. Parks also cited a lower willingness among consumers across Asia to pay for some of the premium and related services that IPTV can enable, such as video-on-demand, interactive gaming or online commerce.

That reluctance will "counterbalance" the head start that Asia has established in IPTV, and help some of the slower-moving markets in Europe and the United States to catch up and potentially leapfrog the current leaders, said John Barrett, head of research at Parks.

"A higher willingness to spend in these countries gives service providers more freedom to experiment with features until they discover the ones that resonate with the market," Barrett said. "More-robust deployments in the West may therefore ultimately prove more profitable than the proliferation of basic IPTV service in Asia."

- Mike Clendenin
EE Times

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