Stealing a march on its rivals, Mahanagar Telephone Nigam Limited (MTNL) recently launched interactive internet protocol television (IPTV) in Delhi and Mumbai. Private operators like Bharti, Tata and Reliance as well as stateowned BSNL are still testing the waters.
In India, IPTV is envisaged essentially as a wireline service. MTNL has an inherent advantage here with its extensive network in the two metros. The company initially plans to target its existing broadband customers to subscribe to the new technology. As chairman and managing director R.S.P. Sinha puts it: “We have a large subscriber base of broadband customers and have already received sizeable inquiries on IPTV. We would like to target these first and then the fixed line users.”
MTNL will offer IPTV services for a basic monthly rental of Rs 125 for free-toair channels, and Rs 500 as registration charges. Further charges will be on the basis of the content or service used by the subscriber. On a monthly payment of Rs 250, the subscriber can view about 30 paid channels and all free-to-air channels.
A range of other services will also be offered, including video calling, gaming, video-on-demand, each at a flat rate of Rs 30 per month. There are special plans for business and enterprise users. These include time-shifted TV ?? a technology that enables subscribers to watch the previous week’s TV content aired by any available channel. Also, being an open platform, IPTV will at a later stage allow multiple third-party applications such as trading of stocks and tele-medicine while watching business news broadcast channels. The only requirements for such applications are an MTNL line and a TV set.
The deposit for the IPTV set-top box is being charged in an innovative manner. There is a one-time deposit, which will be converted into an interest-bearing fixed deposit for a five-year term. The entire amount (with interest) will be paid back to the consumer upon maturity/termination of service and return of the set-top box.
MTNL will function as the service provider, and will be responsible for operations and revenue collection. The software, hardware, service set-up and content delivery will be managed by Aksh Optifibre. Aksh will offer these services to MTNL using the RollingStream proprietary technology developed by UTStarcom. MTNL will issue a common consolidated bill for all three services ?? phone, broadband and IPTV ?? in January 2007.
Kuldip Singh, director, technical, elaborates: “What we are currently utilising is a revenue-share model where a content provider is setting up a content delivery network, while our broadband network is already in place. Thus, Aksh is using our broadband network and we are sharing the revenue. At a later stage, we might opt for our own content delivery network.”
MTNL’s IPTV service is also conditional access system (CAS) ready. Hence, it does not require a separate set-top box.
However, though heralded as a giant leap towards media convergence, MTNL’s IPTV service is facing a serious hurdle.
The Telecom Regulatory Authority of India (TRAI) has put a damper on its plans by deeming the services illegal as per the Cable Television Networks (Regulation) Act. TRAI has requested the Ministry of Information and Broadcasting to give legal opinion on the issue. “We have looked into IPTV and are appealing to the concerned ministries to get a legal view on it,” says Nripendra Misra, TRAI chairman.
The main problem is with the set-top boxes, which cannot be provided under the Cable Television Networks (Regulation) Act unless the CAS regulations are complied with. Also, only a unified access service licence (UASL) allows a company to offer triple-play services, a licence that MTNL does not have. The company has acquired a cable TV licence to offer IPTV services and therefore comes under the purview of CAS.
While the MTNL issue unfolds, tele.net takes a closer look at IPTV in the Indian context.
IPTV in India
A number of legal, technical and regulatory issues still need to be sorted out. Still, the general view is one of cautious optimism. Industry watchers and analysts believe there is tremendous scope for the service. “There is huge potential,” says telecom analyst Mahesh Uppal. “Broadband services are much cheaper now and competing cable services, though widely available, have problems of quality, lack of transparency and competition. They are also less versatile than IPTV. However, cable has already demonstrated its ability to offer entertainment, information and news services, which can be provided equally ?? if not better ?? by IPTV.”
According to Singh, “The key driver of IPTV growth in the country will be content. It is a customer feedback situation whereby, when the subscriber base grows, there is greater demand for content. What is key is that content providers should be able to deliver programmes of interest to subscribers, to provide content on demand or specific content that is not easy to get.
An important point to consider is the sizeable cable and satellite TV infrastructure in the country, with nearly 50 million subscribers. Private telecom players are working out business models with content providers and equipment/software partners to penetrate this market.
For instance, Bharti Airtel has been testing the IPTV service in certain locations in India for some time now. Global networking equipment provider Nortel Networks is also planning to run IPTV set-top boxes on a trial basis in India. It has tied up with LG and will import set-top boxes from Korea.
BSNL is set to launch commercial IPTV service in January 2007. The service will initially be available to broadband subscribers in Delhi, Mumbai, Kolkata, Chennai and Bangalore. The telecom major had begun IPTV pilots in Pune earlier this year.
The success of IPTV in India will depend on the unique value proposition it offers as compared to the existing cable TV fare. It also hinges on the successful implementation of last mile strategies and on successfully ironing out glitches in the new technology, as well as support services like billing.
According to a study conducted by ABI Research, the total global subscriber base for IPTV may exceed 120 million by 2010 with the Asia-Pacific constituting roughly 47 per cent of the total subscribers worldwide. China and India are being seen as major markets.
All telecom players are also under pressure to generate new revenue with minimal incremental investment, protect the installed subscriber base, compete with satellite and cable TV providers, access new advertising revenues and increase ARPUs (average revenue per user). In this scenario, IPTV is a promising new channel. “ARPUs for fixed line telephony services are declining every year. Telecom companies want to provide value-added services (VAS). Operators and content providers are also coming together to deliver VAS, but the industry is still evolving the standards in India,” says Vijay Yadav, managing director, UTStarcom, South Asia.
From the subscriber’s perspective, IPTV offers a digital-quality TV experience with the added advantage of “pay per view”. According to Alok Shende, director, ICT practice, Frost & Sullivan, traditionally, the TV experience has been one way ?? from broadcasters to consumers. IPTV holds the potential of fundamentally transforming the experience of watching TV by bringing in two-way interactivity, with storage facility and greater control over content.
Price-wise too, IPTV makes sense. Industry analysts point out that customers are currently paying Rs 900-1,200 a month for cable TV, fixed line telephones and broadband. With IPTV, all three services can be clubbed together for a monthly rental of Rs 450-500, thereby cutting costs by about 50 per cent.
Issues and concerns
One of the biggest hindrances to the largescale deployment of IPTV in India is the fact that broadband is the backbone of this technology. India has fallen woefully short of its broadband target which was one million broadband subscribers by 2005-end, although TRAI projects the number to rise to about 20 million by 2010.
Second, there is lack of regulatory clarity due to the disparity in telecom and broadcasting regulations. As Uppal says, “There are several disconnects between the telecom and broadcasting regulations. For example, the rules for FDI favour telecom players who could offer IPTV before others. Some homework therefore remains to be done on the regulatory front.
Also, availability of the last mile is instrumental in determining the future of broadband in India, points out Shende.
Another hindrance is the fact that the available broadband speeds are inadequate for delivering high-definition videos. Moreover, the technology utilises 33 per cent more bandwidth than the radio frequency used by cable networks. Industry analysts believe that in many areas, availability of IPTV and broadband internet is limited by the bandwidth offered by the copper wire infrastructure, which decreases as the distance of the home from the telephone exchange increases.
Uppal offers a balanced perspective: “Clearly, the fact that PCs are more expensive and not as easy to operate as TVs weighs favourably for the TV industry. Complex all-in-one services such as a phone-PC-TV combination that is possible with IPTV have had mixed success. The single bill that a customer would receive for multiple services would make life easier. But dedicated or separate devices for telephony, computing and TV could be cheaper if you do not want the full package and can even provide greater choice. Separate devices also tend to require little skill to operate.”
Conclusion
There’s much to be gained if telecom players make efforts towards overcoming the hurdles. According to an In-Stat study carried out by Gartner, the number of IPTV households in the Asia-Pacific market should be nearly twice those in Europe, topping 30 million and generating $8.1 billion in revenue by 2011. China and India are expected to drive this growth.
