The TV industry has witnessed phenomenal growth in India. It is estimated that there are more TV sets than landline phones in the country. The TV industry’s revenue, pegged at Rs 226 billion in 2007, is estimated to reach Rs 600 billion by 2012, registering a compounded annual growth rate (CAGR) of 22 per cent. The number of TV households, at 115 million, has increased at a CAGR of 21 per cent over the past decade. This reflects the immense opportunity in the broadcasting space for telecom operators.

tele.net takes stock of the key internet protocol TV (IPTV) and mobile TV operators, the current status of IPTV and mobile TV, and likely future growth…

IPTV

In spite of it being over two years since Mahanagar Telephone Nigam Limited (MTNL) launched IPTV services in the country, the industry has been developing at a relatively slow pace and is still to achieve critical mass. Currently, only around 20,000 of the 120 million TV households in India have opted for IPTV services. The corresponding numbers for cable and direct-to-home services stand at 80 million and 7 million.

IPTV’s business model necessitates operators to wait for two-three years before they can break even. In the current economic environment, the outlook for the business is bleaker. According to advisory firm KPMG, India is expected to garner not more than 10,000 IPTV subscribers for calendar year 2009. This will make it difficult for the Indian IPTV market to achieve an earlier forecast of 966,000 subscribers by 2011. The incumbents Bharat Sanchar Nigam Limited (BSNL) and MTNL have already failed to meet the industry’s estimate of 150,000 IPTV subscriber additions in 2008.

However, the long-term projections for IPTV are more positive. IPTV service providers have set a target of 1 million subscribers by 2012. A recent KPMG report is even more upbeat. It predicts that the IPTV subscriber base in India will reach around 4 million by 2013. In terms of market revenue, Yongsub Lee, technical solutions manager, Asia Pacific, Cisco Systems, predicts that by 2011, the IPTV market will be worth $21 million.

Policy-makers are taking steps in the right direction. In August 2008, providing much-needed clarity to the industry that was shrouded in confusion on the policy front, the Ministry of Information and Broadcasting accepted the Telecom Regulatory Authority of India’s (TRAI) recommendations on IPTV. Among other things, the ministry stated that the uplinking/downlinking norms would be amended to enable all broadcasters to provide signals to distributors of TV channels, including IPTV operators. It was also decided that broadcasters would adopt a non-discriminatory price regime on the composition of channel bouquets and the pricing of channels on a bouquet or on an ?  la carte basis for IPTV services.

This led to further opportunities for telecom in broadcasting. So far, 2009 has witnessed some significant developments.Bharti Airtel, ACT Television and HFCL Connect have launched services after extensive trial runs. Reliance Communications (RCOM) is likely to be the next in line followed by Tata Teleservices Limited (TTSL) and other multi-system operators such as Rajan Raheja-owned Hathway.

New entrants

Bharti Airtel
The Indian IPTV industry received a fillip in the beginning of 2009 with the much-awaited launch of Bharti Airtel’s IPTV service ?? Airtel Digital Television Interactive ?? in the NCR. The company has started out by offering two main package options. In the first, customers have to pay Rs 999 as monthly rental for135 channels along with a broadband and a landline connection. In the second package, the customer is charged Rs 599 per month for 117 channels and a broadband connection. There is a one-time service activation charge of Rs 3,999.

Airtel is, however, looking to deliver its IPTV service to only a niche audience. It is targeting only seven to eight metropolitan cities and will soon introduce the service in Mumbai and Bangalore in a phased manner.

MyWay

In March 2009, the Smart TV Group, comprising Smart Digivision and Smart Broadband Services, launched its IPTV services under the brand MyWay. The group entered into long-term contracts with MTNL and BSNL for providing cobranded interactive video services to their customers in 54 large cities across India. The MyWay IPTV service includes videoon-demand (VoD), music-on-demand, education-on-demand, games-on-demand, etc. MyWay has aggressive expansion plans and intends to sign up 2.5 million subscribers in the next five years.

MyWay has recently tied up with IPTV and on-demand TV solutions provider, SeaChange International, to enhance its service offerings. It has reportedly deployed SeaChange’s VoD systems and a bouquet of set-top applications.

According to Kapil Gupta, chief operating officer, MyWay, “The entire IPTV business has taken a while to establish itself in India due to many reasons, including the fact that private operators don’t have large networks and public sector undertakings don’t offer a scale option to their franchisees.” However, according to Gupta, the market is fast transforming, the environment is right and IPTV has the ability to find success.

ACT Television
Multi-system operator Atria Convergence Technologies (ACT) Television, part of the Atria Group, has launched its IPTV service in Bangalore at an investment of Rs 4.5 billion. The company intends to shortly extend services to Andhra Pradesh and Madhya Pradesh. Its project is funded through a combination of equity, debt and internal accruals.

The incumbents

BSNL
BSNL is the largest IPTV player in the country with around 4,000 IPTV connections in over nine cities including Pune, Bangalore, Kolkata, Hyderabad and Jaipur. The company is reportedly targeting over 3 million IPTV subscribers in 93 cities over the next three years. The company’s IPTV portfolio comprises over 140 TV channels along with value-added services like movies-on-demand.

The company recently extended its IPTV services to Nagpur, Nashik, Kolhapur, Aurangabad, Kalyan and Solapur in the Maharashtra circle. In fact, BSNL launched its IPTV service in Pune, Maharashtra, in March 2007, in partnership with WICE Net, a Pune-based IPTV platform provider. With the recent extension of services, the company is setting high targets for itself in Maharashtra. By December 2009, BSNL aims to have 100,000 subscribers in this circle.

The public sector unit is also looking at expanding its IPTV services to other parts of the country. It is all set to launch services in Himachal Pradesh and will connect 254 centres of the state that have broadband. This will eventually be extended to 400 more locations. It is also reportedly planning to roll out IPTV services in Uttar Pradesh starting with Lucknow. In Tamil Nadu, BSNL has announced the extension of its IPTV services to 10 districts. It is also gearing up to introduce IPTV services in Uttarakhand, starting with Dehradun and followed by Haldwani.

To strengthen and secure its IPTV systems, the company recently deployed Verimatrix’s video content authority system. This software-based content security solution has a fully layered content protection strategy to trace illicit re-broadcasting and content copying, subsequently decreasing revenue loss for the operator.

MTNL
MTNL soft-launched its IPTV services in October 2006. It started charging for the service only around September 2008. The company uses a franchise model to deliver services to its 16,000 customers.

Aksh Optfibre
Optical fibre manufacturer Aksh Optifibre offers its IPTV platform, icontrol, through MTNL and BSNL. It is currently present in over 20 cities, including Delhi and Mumbai, and plans to expand to 60 cities over the next few months. Its services include over 100 channels as well as VoD, video classifieds and shopping.

Although there has been relatively little activity on the IPTV front by the company, it recently signed a VoD deal with Disney-ABC International TV. It has a similar agreement with Sony Pictures International Television.

Others

In an interesting development, telecom equipment manufacturer Alcatel-Lucent has entered the IPTV space with two products from its digital media suite ?? Multimedia Content Manager and Interactive Media Manager. These products support the Microsoft Mediaroom IPTV platform. Its solution is expected to increase IPTV service providers’ average revenue per user (ARPU) and generate new revenue streams through its personalised multimedia and on-demand offerings as well as interactive advertising services.

Health care information technology (IT) solutions provider Isoft is negotiating with IPTV service providers and hospitals to offer tele-consultation through IPTV.The service will enable health professionals to have interactive consultations with patients and give them access to clinical records. The organisation had launched a similar service in China in 2007.

Going forward

The IPTV space is likely to experience further competition. HFCL Infotel is It is estimated that there are more TV sets than landline phones in India. The TV industry’s revenue, pegged at Rs 226 billion in 2007, is estimated to reach Rs 600 billion by 2012.This reflects the immense opportunity in the broadcasting space for telecom operators.expected to shortly introduce IPTV services in Punjab, for which it has tied up with Smart Broadband Services. The tieup will enable HFCL to use Smart Broadband’s infrastructure by way of a rental arrangement. MTNL had similarly tied up with Smart Broadband for providing IPTV services in Delhi. In the first phase, the company aims to register 20,000 subscribers.

Apart from telecom and cable heavyweights such as RCOM, the Tatas and Hathway, multi-system operators are also increasing their footprint in the segment. For instance, Sameer Manchanda and Raghav Bahl-promoted multi-system operator Digital Entertainment Network will soon foray into the IPTV space by delivering services in Delhi, Bangalore and Pune. Like the others, the service provider will offer time-shifted TV, on-demand services, etc. The company is targeting an ARPU of Rs 450-Rs 500 and will invest over Rs 1.5 billion in the venture.

Given these developments, IPTV on mobile phones may not be such a distant dream after all. Aksh Optifibre is gearing up to offer quad-play services and has already tested the technology in Mumbai with MTNL, which has 3G spectrum in the metro circle. Aksh is also ready to tie up with other companies for the quadplay venture.

Mobile TV

Mobile TV services in India largely consist of telecom service providers offering non-live TV on 2.5G networks. This is because the government has not yet opened up terrestrial TV broadcasting for the deployment of mobile TV services in the country. So far, only state-owned Doordarshan offers limited mobile TV services using the digital video broadcasting hand-held technology.

According to Anand Sharma, minister of state for information and broadcasting, the government is currently considering a mobile TV policy based on recommendations made earlier by TRAI. The proposed policy will cover all issues such as licensing, regulatory mechanisms, crossmedia restrictions, foreign investment and sharing of infrastructure.

TRAI started off the regulatory process for mobile TV services over a year ago. In January 2008, it released its recommendations. TRAI proposed that the foreign direct investment (FDI) limit for mobile TV service providers be set at 74 per cent (the broadcasting sector has a cap of 49 per cent). TRAI also suggested barring broadcasting companies from holding more than 20 per cent stake in a mobile TV provider. However, TRAI clearly said that existing mobile operators be allowed to offer mobile TV without having to take a new licence. The companies, however, should not be given any additional spectrum for the purpose.

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). According to analysts, mobile TV will do well in the country once 3G in launched. According to Frost & Sullivan estimates, by 2012, about 11 per cent of the operators’ data revenues will come from mobile TV.

So far, only the incumbents MTNL and BSNL have launched 3G services in the country. MTNL’s 3G services, Jadoo, are already commercially available in Delhi. Earlier, the company had launched mobile TV on the 2G platform in Delhi and Mumbai, offering 20 channels for Rs 99 per month. On its 3G platform, the company is providing 200 minutes of mobile TV free for 12 channels, beyond which a charge of Rs 4 per minute will be levied. The company will extend its 3G services and mobile TV to Mumbai soon.

Meanwhile, BSNL has soft-launched its 3G mobile services in Chennai, offering a range of services like live TV, high speed mobile broadband and movie downloads. The company is soon likely to launch these services in 13 more cities, Lucknow, Agra, Ambala, Dehradun, Jammu, Shimla, Jaipur, Jalandhar, Patna, Durgapur, Haldia, Ranchi and Bhubaneswar.

BSNL has also soft-launched 3G services in Orissa in Bhubaneswar and Puri.The service will be extended to 48 locations in the state by July 2009. The company has introduced a trial offer for 3G priced at Rs 60 and Rs 120 for 50 MB and 100 MB packs respectively, and has tied up with Apalya for providing mobile TV services. BSNL will sign more such mobile TV agreements in the future.

Meanwhile, private operators are experimenting with mobile TV services on their 2G and 2.5G networks. TTSL has started exploring mobile video-related value-added services (VAS) and has initiated video streaming, video downloads and other offerings for its customers. In June 2007, the company introduced mobile internet radio, offering live streaming radiocasts in different languages. Going forward, TTSL will consider mobile TV services once 3G is launched.

Vodafone Essar was one of the first telecom operators to launch mobile video streaming services in India in December 2006. The service enabled a video to be played directly on the mobile phone without being downloaded first. As the operator has the largest number of highend subscribers, analysts expect the company to make a big splash in the mobile TV and 3G segments once spectrum becomes available.

Like Vodafone Essar, Idea Cellular is also a pure-play mobile operator. A strong contender in the 3G spectrum race, the company is likely to focus on mobile TV opportunities once it receives 3G spectrum.

Idea Cellular is focused on VAS and is amongst the early movers in offering innovative mobile value additions such as ringtone downloads and callback ringtones targeted at the youth segment. It was also the first cellular operator in India to launch Edge-based services, enabling customers to download data at a speed of 160 kbps, watch movie previews, use video attachments on their handsets, etc.

All in all, it seems like India is finally gearing up to tap the plethora of opportunities that exist in the home entertainment space, perhaps exceeding even those offered by telephony and computing. With IPTV and mobile TV looking to catch up, it seems like India is finally gearing up to tap the plethora of opportunities that exist in the home entertainment space, perhaps exceeding even those offered by telephony and computing.