The global financial downturn has not affected mobile subscriber additions in the Indian telecom market. But what is likely to take a hit is the development and growth of new technologies and valueadded services such as internet protocol TV (IPTV) and mobile TV. With the crunch affecting the market, there will be significant challenges in converting the buzzword of convergence into reality.
IPTV and mobile TV are yet to take off in a big way in India. In the case of IPTV, Indian operators are lagging far behind integrated global players like China Telecom and France Telecom which reported IPTV subscriber figures of over 1.5 million and 1.74 million respectively as of November 2008. The deployment of mobile TV has hit a hurdle as the mass rollout of 3G services is still nowhere to be seen.
IPTV
The advantages and opportunities associated with IPTV are numerous, and the service is a part of the growth plans of most major telecom operators. For the consumer, IPTV offers a far superior user experience than other forms of digital and analog TV. IPTV is different from internet TV, which essentially provides a PC-based experience. IPTV is a TV-like service with additional features such as subscription-based video-on-demand (VoD), ability to stream TV programmes to mobile phones, and personal video recoding, which allows TV shows to be recorded in a digital format. Recordings can be made either on the client’s end (on a hard disk in the set-top box) or on the video server at the head-end.
For telecom operators, IPTV services are key to achieving higher average revenue per user (ARPU). This can be done by bundling value-added services such as VoD, movie-on-demand, videophone calling services, etc. with IPTV. IPTV also enables operators to reduce their fixed line subscriber churn and acquire new customers. Moreover, since the networks are already in place, the service can be offered without incurring significant additional capital expenditure.
At the same time, the technology does require investments on network upgradation and service rollout. It is estimated that operators may take as long as two to three years to break even, with sufficient revenues likely to start flowing from early 2010. According to analysts, telecom companies must also ensure that adequate marketing is done for IPTV.
The following are the major issues regarding IPTV in India…
Implementation challenges
There are many implementation issues associated with IPTV. There are problems with the last mile connectivity infrastructure as the wires, both underground and overhead, often get twisted and cause disturbances in the flow of traffic.Moreover, all available digital subscriber line (DSL) cables cannot be used to provide IPTV, while only about 25 per cent of the digital subscriber line access multiplier (DSLAM) capacity can be used to deliver the services due to the lack of backplane.Moreover, the broadband network needs to be configured for multi-cast and VoD in case of service expansion, which can be problematic.
Content
It is often difficult for IPTV service providers to enter into tie-ups with content providers. While some content providers are simply not willing to part with their content, others charge huge prices for their channels. In comparison, broadcasters are mandated to provide content to direct-tohome (DTH) and cable operators.
Further, the regulatory framework for IPTV content has not been firmed up. As a result, many broadcasters have doubts regarding providing content for IPTV as they are not sure whether the service is legal.
Low broadband penetration, insufficient bandwidth
Low broadband penetration and the lack of low-cost bandwidth are hampering IPTV uptake. The technology requires 33 per cent more bandwidth than cable networks. A minimum speed of 2 Mbps is necessary to support IPTV applications such as VoD, whereas the majority of Indian broadband users have access to speeds of only 256 kbps.
Moreover, the bandwidth offered by DSL decreases as the distance from the telephone exchange increases. This causes complications for users in remote areas. Mahanagar Telephone NigamLimited (MTNL) and Bharat Sanchar Nigam Limited (BSNL) can offer the service only within 3 km and 2 km respectively of their exchanges. Insufficient bandwidth adversely affects quality of service, causing freezing of signals and high lag time.
Policy hurdles
Sometime ago, operators including Bharti Airtel, Reliance Communications, BSNL and MTNL approached the Telecom Regulatory Authority of India (TRAI) to fix prices for channels on the IPTV platform.According to operators, since IPTV is a good platform to deliver services like DTH, regulations are required for IPTV with regard to fixing of channel prices.However, little has been done on this front.
In India, for IPTV to take off, unbundling of the local loop must be undertaken to enable all operators to have access to the fibre laid by the incumbents.According to analysts, this was a key ingredient in France’s recipe for successful IPTV uptake. The country has the largest IPTV subscriber base in the world.
Lack of awareness
There is not sufficient awareness amongst people regarding IPTV services. Though IPTV offers advantages like time-shifted TV over normal cable or DTH services, consumers are not fully aware of the offerings and their benefits.
The lack of awareness can be overcome by adequate marketing. For instance, Bharti Airtel, which recently launched its IPTV service in select markets, has outlined a strategic marketing plan that starts with press advertisements, followed by roadshows and demos in residential areas.
According to Yongsub Lee, technical solutions manager, Asia Pacific, Cisco, the following strategies can make the IPTV business model viable:
Mobile TV
Mobile TV is at an initial stage in India, with only Doordarshan having launched limited services. The service can be provided using mobile telecom networks or broadcasting technologies (like digital video broadcasting-handheld [DVB-H]) or a combination of the two. In India, several operators including BPL Mobile, Vodafone Essar and Reliance Communications offer mobile TV services in the form of video clip downloads. However, here, mobile TV is defined as the service that is provided using DVB-H technology, as is done by Doordarshan.
Though mobile TV is still far from take-off, there is considerable market potential. Industry estimates indicate that the Asian markets, starting with Korea and Japan, will drive the global mobile TV market, taking the subscriber base (using mobile as well as broadcasting technologies) to 472 million by 2013. In India, the potential market for mobile TV is expected to be worth over $400 million in 2009. A Springboard Research report has predicted that within the first year of full-fledged launch, mobile TV could reach a penetration level of 5-6 per cent of the total mobile subscriber base in the country. This means that there could be as many as 12 million mobile TV subscribers.
The following are the important issues regarding mobile TV…
Content
The biggest challenge for mobile TV is content provision as the content developed for the large screen does not suit the small mobile screen. There is a need to develop content specifically for mobile TV, such as mobisodes, which are relatively short mobile episodes of popular TV shows.
Handset capabilities
Manufacturing mobile devices suitable for mobile TV has its own challenges.
For instance, the battery technology for mobile devices still requires improvement. The current memory capabilities of mobile TV devices are also not suited for long hours of viewing. Potential future applications like peer-to-peer video sharing through mobile phones and consumer broadcasting will only add to the memory requirements.
A large number of mobile phones currently available in the Indian market do not support mobile TV. Users will have to purchase new handsets with improved LCD display and user interface that support the service. The new handsets must hold sufficient appeal for the end-users.
The cost of mobile TV-compatible handsets is another constraint in India.Despite the fall in prices of chips, handset prices remain too high for mobile TV to achieve wide penetration.
There are clearly issues to resolve regarding handset size, screen size, battery life and, perhaps most importantly, cost.However, recent handset launches in the South Korean market indicate that manufacturers are beginning to come to terms with some of these challenges.
Policy hurdles
The Telecom Regulatory Authority of India made its recommendations on mobile TV in January 2008. However, more than a year later, a clear policy guideline from the government is still pending. A fix on the policy framework for mobile TV is essential for companies to launch the service commercially.
Spectrum
For mobile TV, spectrum is a key issue. In India, in contrast to other countries, 3G spectrum has not yet been allocated (except to the incumbents). Analysts expect mobile TV to have strong prospects in the country once 3G in launched. According to Frost & Sullivan’s estimates, by 2012, about 11 per cent of the operators’ data revenues will come from mobile TV once 3G is deployed.
All in all, perhaps the most important need is to speed up policy-making and ensure a playerand technology-neutral framework. With the effects of the economic crisis starting to spill over to the telecom sector, it is imperative that the policy-makers remove all hurdles to ensure that companies are allowed to thrive and maintain higher margins afforded by new services such as mobile TV and IPTV.
