IPTV, which offers digital TV to subscribers via internet protocol over a broadband connection, is expected to drive further expansion of the telecom market. The recent launch of the service in Delhi and Mumbai has triggered interest ?? and debate ?? on its effectiveness, potential and cost implications. Sector experts comment…
What are the advantages and disadvantages of using an IP-based platform?
Pulkit Bhatnagar: There is relative ease in deploying triple play networks ?? something that was not available two-three years back. This will help in providing multiple benefits ?? reduced costs, scalability options, and future-proofing for applications hitherto unidentified. Better quality of services and efficient network management are two other advantages from the service provider’s perspective. Customer tracking, profiling, communication optimisation, customer churn reduction are pluses which double as drivers for telcos and other service providers. A major disadvantage is the lack of standardisation of protocols and varying market regulations and conditions in different regions.
Kailash Choudhari: There are many advantages. First, it is cost effective due to being bandwidth efficient and providing unlimited content. Moreover, internet protocol ensures full security. And finally, for users, the medium is highly interactive. The only real disadvantage is that operators would need to incur new capital expenditure.
Paresh Shah: A major benefit of an IP-based video/content delivery platform is the interactivity it provides to the user. IP also offers inherent security. However, the flip side is that operators would need to upgrade their networks to be able to deliver good quality IPTV services.
Kuldip Singh: The quality of digital TV is far better than normal TV. Not only is there a difference in clarity, but digital TV is also less susceptible to noise and other kinds of disturbances. The second main advantage is that it is interactive, offering two-way communication. Regular TV, through direct-tohome (DTH) or other sources, can only offer one-way movement of information. Two-way interaction, in comparison, offers several other value additions. One can play interactive games and watch “time-shifted TV” through which one can even replay an already telecast programmes at a convenient time.
There aren’t any disadvantages as the quality is far superior. However, if a household has multiple TV sets, each will require a separate connection. This may lead to higher costs, but these will still be comparable to those of the regular options available.
Mahesh Uppal: The main advantage of using an IP-based platform is that it is converged, which enables it to utilise the full functionality of internet technologies. The viewer currently enjoys little or no control over TV signals that can be watched. With IPTV, however, the viewer can store, forward and process signals in a variety of ways. Services such as video-on-demand (VoD), pay TV, digital TV, customised advertising and many others will be much easier to access.
What is the potential for IPTV in India? Will it lead to a substantial increase in revenues and subscriber base
Pulkit Bhatnagar: The business case is as follows:
Kailash Choudhari: In India, there is potential for 50 million landline IPTV users. For companies, it will lead to a substantial jump in revenue and subscriber base. The technology is expected to increase demand for landline connections. Also, there will definitely be an increase in ARPUs.
Paresh Shah: There is immense potential for IPTV in India. But operators would need to make the technology accessible to the masses. Therefore, it is vital that the subscription rate is affordable for most. IPTV offers flexibility of package creations allowing users to buy different services. Operators would be able to increase their ARPUs with the help of VAS and other applications.
Kuldip Singh: With IPTV, one can receive many services on one platform. Convergence is possible. For instance, with TV viewing and telephone calling on the same platform, caller line identification on TV is possible. So one can decide whether to take the call or not. To take the call, the TV can be paused for the duration. Or if a pizza company advertises on TV, one can immediately place an order on the phone while the TV is paused. The product is certainly market friendly and will enhance the subscriber base and revenues.
Mahesh Uppal: Though IPTV has huge potential, devices like PCs or mobile phones are not as abundant or cheap as regular TV. This could prove to be a bottleneck. Low broadband access is also a hurdle.
What is the international scenario in IPTV? Has the technology been successful in the emerging markets?
Pulkit Bhatnagar: There have been over 50 commercial rollouts of IPTV services by traditional telcos; over a 100 others are in various stages of testing and deployment. While European and US carriers have been earnest about their initiatives (Verizon, SBC, British Telecom, Swisscom, etc.), a number of Asian (excluding Japan) and South American operators are still trying to evolve their business models, considering their vast middle-class populations. BSNL, Reliance and MTNL are the Indian operators eyeing the Indian market space. However, replicating the international cycle, the Indian companies are adopting a “wait and watch” policy to see who takes the first plunge, and what strategy will succeed ?? an “early bird premium charges” service or a “mass appeal, push-based lowcost” service.
Established players have now realised the fact that advertising-based revenue models are better accepted than subscription-based models. In the US, for 2004, the total subscription fee paid to cable and satellite providers for receiving TV programming was $54 billion. However, TV advertising generated over $67 billion. Another global issue that needs urgent addressing is of content protection and digital rights management. In order for IPTV to succeed in emerging markets, localised content creation gains further prominence.
Kailash Choudhari: It is expected that there will be about 120 million IPTV connections by 2010.
Paresh Shah: In China, there has been phenomenal acceptance. The technology does make a lot of sense for the emerging markets and greenfield deployments.
Kuldip Singh: I am uncertain whether the service can be said to have been launched in the emerging markets just yet as we are the pioneers. However, IPTV has been quite successful in Hong Kong and Korea. It has been commercially available for a long time now in Italy and enjoys popularity in France and the US.
Mahesh Uppal: IPTV use has, so far, been limited. The worldwide subscriber count is likely to reach 32 million in the next two years. The Asia-Pacific markets are leading the way in IPTV. South Korea and Hong Kong, which have among the highest broadband coverage in the world, have seen considerable movement. However, at present conventional terrestrial and satellite TV dominate and consumers have tended to be resistant to change.
Is the technology leading the way to quadruple play? Do you believe that IPTV on mobiles is on the cards?
Pulkit Bhatnagar: Yes, IPTV will lead the way not only to quadruple play but also multi-play. However, the primary mode for offering tripleor multi-play services will be high speed fibre optic-secure networks while complementing this with mobility for voice and simple low-data-intensive applications. Many carriers who already offer fixed and cellular services are in the process of testing IPTV services over their wireless networks.
Quadruple play is the addition of wireless capabilities to the existing triple services of voice, internet and video. Multiplay refers to the concept of adding on the possibilities of a “smart home” to the quadruple play where you remotely monitor and control intelligent devices and the security of the user’s home. Community gaming and social networking provide other avenues of converting a vanilla tripleplay service into a feature-rich, bandwidthhungry multi-play service.
Kailash Choudhari: Yes, it is definitely leading the way to quadruple play. Simply put, IPTV on mobiles will mostly be preferred by working professionals often on the move. A housewife would definitely not want to watch her favourite soap opera on a mobile screen when she can as well do so on a 21-inch colour screen.
Paresh Shah: As mobile devices are becoming more and more engaging and encoding technologies are becoming more enhanced, mobile TV is certainly in the process of materialisation. However, the primary demand would be for customised content for mobiles.
Kuldip Singh: Quadruple play is definitely in the pipeline. We have started preparing for 3G and as soon as it is made available, convergence between mobile and TV will be possible. Recently, I saw a demo in which a person watches TV at home and when he has to leave, continues watching TV on his mobile. Such services on IP multimedia will hopefully be a reality in a year or so.
Mahesh Uppal: Yes to both. With 3G becoming increasingly more affordable and versatile, IPTV on mobiles should be available soon to 3G subscribers.
What will be the key drivers of growth in the IPTV industry?
Pulkit Bhatnagar: Customisation is the buzzword in every industry today. Rapidly successful companies are those that have evolved from a customer acquisition approach to customer retention and now to a customer optimisation mode, where you tailor your product according to the user’s needs and then cross-sell and up-sell your remaining products to optimise your revenue per user while minimising the cost per user.
IPTV allows service providers, content creators, advertisers and broadcasters to customise their offerings according to the interests and requirements of a user. Imagine that a teenaged boy aspiring to be a fast bowler will be able to view Brett Lee from any camera angle he chooses; BCCI will then reposition its cameras, ESPN will readjust the brightness and picture quality to where the images can be best transmitted, and Nike will advertise its latest shoes for fast bowlers. Hence, customisation will be the biggest driver for IPTV.
Other drivers for growth in the IPTV industry will be the enhanced standard of living and increased disposable income combined with a young, trendy population which is technologically aware of global trends.
Kailash Choudhari: The key drivers of growth will be:
Paresh Shah: IPTV has to be planned for the masses. Easily affordable basic service plans and set-top boxes are a must. Value-added services such as VoD, movies on demand, educational services and video calls will differentiate IPTV from passive delivery platforms like cable and DTH.
Kuldip Singh: The key driver for growth of the IPTV industry will be content. However, it is dependent on customer feedback. When the subscriber base grows, content providers come in. So, the two complement each other. Content is a real driver because the provider must be able to deliver interesting programmes. It is essential to provide content on demand and inputs that are otherwise not easy to access.
Mahesh Uppal: Appropriate quality of broadband ?? wireline or wireless ?? followed by availability of content and application that users find sufficiently attractive and convenient will be the determinants. User price will also be vital and operators would devise creative business plans and pricing packages. If they don’t, the venture could be a nonstarter. Regulation, especially regarding content and FDI, will also be important.
What type of investment is there in IPTV? How is it likely to impact operator economics under the current regime?
Kailash Choudhari: In terms of investment, the hardware and software required will be easily available; deployment is also not an issue. In monetary terms, the total investment is $150 per subscriber. Yes, IPTV will have a major impact on telecom operator economics as ARPUs will increase. IPTV will lead to cent per cent increase in the same.
Paresh Shah: IPTV would require enhanced bandwidth to deliver quality services. Operators would need to upgrade networks and face expenses related to customer premises. Changes in billing software will have to be integrated.
Kuldip Singh: Currently, a revenue-share model is in place. The content provider sets up a content delivery network. Our broadband network is already in place. So, the providers use our broadband and we share the revenue. Later, we may opt for our own content delivery network. This model will translate into profits as people will use it extensively once they get acquainted with it. ARPUs will rise. Gradually, revenue will shift from the long distance segment to VAS. The concept of distance and time will lose value. Future revenue will come from value-added services like IPTV. There will be a merger between telecom, data and entertainment needs ?? it will be a source of revenue.
Mahesh Uppal: I do not have the exact numbers. However, with an incremental strategy, broadband operators would probably realise that investment in infrastructure, though high, is not disproportionate to the size of their businesses. Content, however, will be considerably more expensive. Buying rights for TV, video and other content could be prohibitive on a large scale.
