Touted as the next big thing in broadband, internet protocol television (IPTV) is fast becoming popular in many countries around the world including France, South Korea, Germany and Hong Kong. By 2009, the global market for IPTV technology is estimated to touch $1 billion with the subscriber base reaching 14.5 million by 2007 and 63 million by 2010.
The Asia-Pacific region is and will continue to be home to some of the most rapidly expanding IPTV markets. Korea and Hong Kong are, for example, expected to have over 1.3 million and 800,000 IPTV users respectively by the end of 2007.
India, despite making its mark as the fastest growing telecom market in the world, however, features nowhere in terms of IPTV uptake. This is surprising considering that IPTV was expected to be one of the key drivers for broadband growth in the country. Not only has the user base increased at a sluggish pace but companies haven’t looked too eager to launch the service either.
Mahanagar Telephone Nigam Limited (MTNL) was the first to launch IPTV services in India, in November 2006. However, 10 months later, private operators such as Bharti Airtel, Tata Teleservices and Reliance Communications are still testing the waters. Bharat Sanchar Nigam Limited (BSNL) too has commenced operations only in a few select cities. Therefore, to date, MTNL has managed to garner just a little over 9,000 subscribers.
Nevertheless, of late, the IPTV segment has started attracting increasing interest. On their part, both the Telecom Regulatory Authority of India (TRAI) and the Department of Telecommunications (DoT) have attempted to smoothen out all the regulatory and policy creases in implementation of the service. Taking a cue from this, private operators too are giving the final touches to their IPTV plans.
Reasons for slow uptake
Simply put, IPTV delivers digital television services using IP over various broadband access technologies including copper loop, optical fibre and other wireless technologies. The IPTV platform is also equipped to offer services such as video-on-demand (VoD) and gaming.
To date, it has been mainly telecom companies that have shown interest in launching IPTV services. Not only are the capital costs for launching operations lower for them (as their networks are already in place), but they stand to benefit from a new source of revenue. For instance, operators offering fixed line services, which have been seeing a downturn in the past few years, can hope to reduce subscriber churn and acquire new customers by providing IPTV services.
However, cable operators see the launch of IPTV by telecom operators as an encroachment into their area of operation and a threat to their business model.While broadcasters are governed by the Cable Television Network Regulation Act, 1995, telecom operators are offering IPTV services under their unified access service licences (UASLs), which allow them to offer triple-play services. While IPTV is an additional source of revenue for telecom operators at very little extra cost, cable operators have to make heavy investments to offer the service.
Moreover, telecom companies benefit from a higher cap on foreign investment, 74 per cent compared to the 49 per cent FDI cap for cable operators. Telecom companies are also not accountable for the content that they provide. All these issues have sustained the longstanding tussle between broadcasters and telecom operators.
Adding another agent to the fray, DoT has recently permitted internet service providers with a net worth of over Rs 1 billion to offer IPTV services.However, the Internet Service Providers Association of India has protested as the Rs 1 billion stipulation automatically rules out a large number of ISPs.
One of the major impediments to the growth and proliferation of IPTV services is the low broadband penetration in the country. There are currently only about 2.5 million broadband subscribers in India. Though TRAI projects the number to rise to about 20 million by 2010, so far, India still hasn’t met its broadband targets ?? it is yet to achieve its 2005 target of 3 million subscribers. In this respect, last mile availability is instrumental in determining the future of broadband in India.
There is also a dearth of bandwidth availability. IPTV technology is extremely bandwidth hungry, utilising 33 per cent more bandwidth than the radio frequency used by cable networks. Consequently, the available broadband speeds are inadequate for delivering many of the services that IPTV offers. A minimum speed of 2 Mbps is necessary to support services such as VoD and video conferencing. The majority of Indian broadband users currently have access to speeds of up to 1 Mbps.
Insufficient bandwidth availability adversely affects IPTV’s quality of service.Users may experience freezing of signals and high lag-time. Also, the bandwidth offered by copper wire infrastructure decreases as the distance of the home from the telephone exchange increases, causing further complications for users in remote areas.
Interestingly, analysts argue that the IPTV business model adopted by operators is flawed. In developed countries, IPTV is just one additional service for driving broadband growth. In India, operators are attempting to make IPTV services the sole driver of broadband. In the US, for instance, service providers focus on offering personalised services such as VoD and video conferencing rather than providing IPTV as a replacement to the existing TV service.
In India, the lack of infrastructure combined with the confusion surrounding the technology hinders its adoption.IPTV is also relatively expensive at present for the average Indian consumer.While VoD costs Rs 50-60, it is possible to get a pirated DVD in the market for a mere Rs 35.
Moreover, the majority of households in India have low disposable incomes, especially in the semi-urban and rural areas. Taking broadband and IPTV to these areas will be a difficult task.
Recent initiatives
Nonetheless, service providers are now gearing up for the task. Bharti Airtel, which has been carrying out IPTV trials for the past one year, seems to have finally given shape to its IPTV plans. It has tied up with UTStarcom to offer customers a wide bouquet of IPTV services including live broadcast TV, time-shifted TV and VoD.
The company expects to offer this new service bundle to customers in the National Capital Region (NCR) by the end of 2007. The service will also be rolled out in a phased manner across eight additional regions in the country.
BSNL is also taking bold steps in the IPTV direction. Following its successful launch in Pune, Bangalore, Kolkata and Hyderabad the company plans to commence IPTV services in Chennai. It is reportedly targeting 70,000 customers for its multi-play service over the next year.
Other operators such as Reliance Communications and HFCL Infotel are also carrying out pilot tests and expect to launch services shortly.
On the equipment front, in May 2007, Sun Microsystems India, Tech Mahindra and Adavanced Micro Devices announced a strategic alliance for the rollout of IPTV services in the Indian and Asia-Pacific markets. The trio intends to jointly set up a next-generation IPTV lab at the Tech Mahindra facility.
All in all, the future of IPTV looks bright. Analysts expect that before the end of 2007, IPTV will take off in the country. Already, telecom operators such as BSNL and MTNL have drawn up elaborate expansion plans. With DoT encouraging the PSUs to expand their IPTV services in small towns and rural areas, BSNL and MTNL plan to add over 100,000 IPTV subscribers in the next 18 months.
BSNL and IOL Broadband reportedly intend to initiate services in 59 more cities. While seven cities are expected to come into the IPTV fold during this fiscal year, 21 cities are lined up for the next fiscal year.
MTNL is also targeting 50,000 IPTV subscribers by the end of 2008. To attract more users, it is planning to increase the number of channels it offers to 100.
All this is enough to restore analyst confidence in the Indian IPTV market.IDC expects India to become the fifth largest IPTV market in the Asia-Pacific region (excluding Japan). It predicts that there will be nearly a million IPTV subscribers in India by 2011.
As long as operators and the government work together to iron out the issues and concerns, there is nothing stopping the widespread deployment of the technology.
TRAI initiates consultation process
In a bid to remove regulatory hurdles in the adoption of IPTV services, TRAI has initiated a consultation process based on the following observations:
