IPTV: Me Too, Not Enough

A world of immense possibilities opens with Internet Protocol

Television (IPTV). Possibilities for the service provider who's ARPUs from

traditional voice services are dwindling. Here, IPTV provides a consumer

offering with great margins and innovative and revenue generating services.

There are possibilities for consumers who want better content and services, and

more control on what to see. It is a win-win situation for both of them. "IPTV

is fast catching up around the world.

IPTV is seen as the next step in the entertainment industry

since it technically offers a superior platform for introducing services like

Triple Play viz Data, Voice and Video" says Rajeev Mehtani, vice president

and managing director, NXP Semiconductors India.

Thus, the hype around IPTV is not without a reason. Its

popularity has grown significantly worldwide. AT&T and Verizon have launched

it in the US, and a number of service providers including BT and Swisscom have

launched IPTV services across Europe. In the Asia Pacific region, Hong Kong is

already a mature market with PCCW as the world's largest IPTV provider. It is

also deployed in China, Malaysia, Singapore, South Korea, Taiwan and Thailand.

Demand for IPTV is expected to grow significantly in the Asia

Pacific region. According to Frost and Sullivan, IPTV subscribers in this region

are expected to reach 27.4 mn by 2013 with China and India being the high growth

markets. On one hand, the Indian services providers have done pilot projects and

launched IPTV services in a limited manner and on the other hand, under the

aegis of the telecom policy, the government has recently announced that IPTV

services would be rolled out in 20 cities during 2007. All in all, there is an

immense push for IPTV services in India.

Slow and Steady



IPTV services have been launched in India but in a very limited manner. Most of
the roll outs have been happening on DSL network and some on metro Ethernet

which is now being rolled out, as people are moving towards Ethernet based

access infrastructure to the customers place. According to Prasad Babu,

director, Systems Engineering and Operations, India Juniper Networks, "The

general trend is to just go by the IPTV roll out with respect to being able to

offer the channels that are being provided by cable and other operators. There

is nothing very specific related to content that has differentiated it. It is

more of testing the waters with standard vanilla offering"

Whereas globally, most of the SPs have a strategy behind IPTV

services and have tasted success like PCCW-the world's largest IPTV service

provider that operates in Hong Kong. PCCW offers flexible channel bundles where,

primarily, a customer can choose even one channel and can add to it later. They

are very flexible with respect to offering services and have also tied up for

exclusive popular content, which is available only through IPTV, there by

channeling the viewers' interest towards IPTV.

Technologically, service providers are moving towards MPEG4 kind

of technologies where the bandwidth requirements for each channel are very

limited. Multicast optimized architectures are being rolled out where

replication of channels is done closest to the subscriber and subscribers are

given only the channels they want. So the bandwidth requirement for multicast

delivery is decreasing and the service provider doesn't have to worry about

making a large access infrastructure, and reduce capex and opex as the

replication happens in the last mile.

In India, MTNL was the first to launch its IPTV services under

the name of Triband in November 2006 in Delhi and Mumbai. AK Arora, executive

director, MTNL says, "We have four services IPTV, VOD, time shift and video

calling. Presently, we have 22 channels but by March end, we will have 70

channels. We have good broadband network and will have our own CDN network.Next

year, to start with, we plan to get 50,000 connections." The launch was

followed by a fierce regulatory war as TRAI declared it illegal, finally

clearing it as a value added service in MTNL's broadband network. Despite the

great anticipation in the air for IPTV, the uptake has been low. KS Choudhari,

MD, Aksh Group says, " We started with less number of channels, as we

wanted to check out MTNL networks and as of now, there are no problems. By

March, we will increase the number of channels, then the uptake is bound to be

more."

After its trials in August 2006, another public player, BSNL,

launched its multi play services offering IPTV and video-on-demand to its

broadband customers. It also plans to launch it in Bangalore, Chennai, Kolkatta

and Hyderabad in the next 3-6 months. Private operators such as Bharti Airtel

and RCoVL are also ironing out their IPTV plans and are expected to launch these

services soon. The question still remains, what will make it tick?

As an old saying goes "Consumers do not watch TV, but they

watch content". Having very good content is the first step to attracting

the consumers to one service. Apart from the content, the choices of services or

"Killer applications" determine the "Next Experience" for

the consumer. TV channels, VoD, music on demand, karaoke, Internet on TV,

voice/video conferencing, program guides, greetings, and home to home chat are a

few applications that can be made available as part of IPTV services, in

addition to the existing data and voice based applications. Choudhari says,

"Broadcasting will be the key driver and once it reaches

home, time shift is compelling. VoD, video conferencing and interactive TV will

be the applications that will popularize IPTV". T-commerce (television

commerce) is something the end users are not comfortable with, but soon there

will be a great surge in this area due to direct advertising in IPTV. User

generated content is something that will be crucial in increasing uptake of IPTV.

Once we bring fibre to home, the whole story will change as we will be able to

give the user a good return path, and there will be a boom in user generated

content.

Chandan Mendiratta, principal consultant, Cisco Systems says,

"Services on top of plain vanilla services will drive IPTV adoption in the

country along with bundled services, such as a full suit of services from the

service provider." Quality, VoD, interactive TV and other fancy features

will be instrumental in popularizing it among the consumers. Interactive TV is

also going to be introduced with IPTV and this becomes more feasible than cable

and DTH. "IPTV will not be driven alone but with the services on top of it.

Otherwise, it will not add to the ARPUs but just increase competition,"

says Prasad Babu, director, Systems Engineering and Operations, India, Juniper

Networks.

With respect to enterprises, all these services can be used in

campuses for employee recreation and communication. IPTV services/applications

can also be used as a productivity tool viz desk-to-desk video/voice/text

chatting, multi-site video conferencing and reviews. Choudhari says, "20%

of our customers will be enterprise and they will watch the channels, and will

be able to do video conferencing which will be the major driver."

So availability of very good content, the choice of killer

applications, right business model for deployment of last mile connectivity,

consumer friendly price points, and, most importantly forward looking

regulations will drive IPTV deployment in India. Rajeev Mehtani, VP and MD, NXP

Semiconductors India says, "We can look forward to some major alignments

between the content industry and the Telco's. This is quite essential for a

proper take-off of IPTV." The consumer is not concerned whether the channel

comes through cable or IPTV but what matters is reliability, support and the

flexibility, and that awareness and information regarding IPTV is not being

created. It also depends whether the services have some differentiated content.

Today, the service providers have the infrastructure to take

connectivity home. Telecom behemoths such as BSNL have 40 mn PSTN lines and the

other private operators are building large metro Ethernet infrastructures. This

will make them push harder to provide IPTV services as the same infrastructure

can be used to take voice, video and data to home.

Broadband Hopes



Despite all the hype about IPTV, a great lot depends on the broadband

rollout in the country. The figures are not very impressive but the industry

players have come together to boost its growth. Year 2007 has been declared as

the 'Year of Broadband', and the aim is to increase to more than two-fold

the broadband and Internet users in the country over the next three years.

Broadband Policy 2004 informs that there were approximately 6 mn Internet and 3

mn broadband subscribers in 2005. It is expected that this figure would rise to

18 mn and 9 mn, respectively, this year. By the year 2010, India hopes to have

40 mn Internet and 20 mn broadband subscribers.

BSNL has invested Rs 700 crore since 2005, in expanding its

broadband network to cover 800 cities and towns. Over the next three years, it

plans to invest the same amount each year to further expand its broadband

network to cover the entire country. By December this year, its coverage is

expected to extend to 1,000 cities, 20,000 villages and in rural areas, also

deploying wireless broadband. With this, BSNL's subscriber base of 9 lakh

connections is estimated to grow by 5 mn broadband connections this year and 6

mn broadband connections in 2008 and 2009. AK Arora, ED, MTNL says, "To

boost the demands for broadband we have a fiber in the networks so that any

bandwidth is available anytime on demand, we are introducing the requisite

equipment. We plan to give 500,000 broadband connections initially. Our tariffs

are already attractive but we plan to reduce per usage charges. Our aim is to

give 1200,00 connections in 2007-08."

Nitty Gritties



"Customer expectations for video services are higher than data and

voice services," says Rajeev Mehtani, vice president and managing director,

NXP Semiconductors India, "Customers will not tolerate poor quality of

sound and picture. Also, they will not tolerate network timeouts and other

service outages which are still there in IP backbones."

Having the right business model to deploy the service and the

consumer premise equipment is critical as price points may act as an entry

barrier for people to adapt an entertainment service especially considering the

choice of video rentals, analog cable, CAS and DTH options they already have.

AK Arora, ED MTNL, says, "IPTV provides additional services

such as time shift. In Rs 600, a customer can have a telephone broadband and TV

connection, which is real value for money. There are about 150 MTNL connections

presently with very good quality and reliability. Today, people are looking to

choose between DTH and CAS, and IPTV will give them a straightaway substitute

for it."

India has often proved that getting the right consumer price

points and the business model is extremely critical for the success of an

industry or service. Both price points as well as business model are dependent

on the regulatory aspects (license fees, roll out modalities as determined by

the government/regulators, technological (last mile wire/wireless, right

consumer premise equipment to receive the services) and arrangements regarding

content availability (owning, sharing, licensing etc). A service provider needs

to understand and overcome these challenges prior to deciding the business model

or price points.

Availability of physical infrastructure and last mile to the

consumer home is another critical factor. The bandwidth/speed of connectivity

often determines the quality of reception and the number of different services a

consumer can receive in his/her home. According to Prasad Babu, "In a way,

most of the initial networks today are built based on infrastructure for a

service using specialized devices for that particular service. The bottleneck is

that the technologies that we deploy in the infrastructure are multi-play aware

infrastructure, as the service providers have to think of the technologies which

will evolve in the future as the last mile connectivity will continue to

change." The access infrastructure will evolve but if the service provider

wants to secure his investments and be able to deliver the services

consistently, irrespective of any access infrastructure, he will have to look

for technologies that will allow a single services delivery point. Technology

and architecture that SPs choose will be a roadblock or a facilitator in

proliferation of IPTV. Rajeev Mehtani says, "There is a dilemma between

metro Ethernet and DSL, and whatever they build has to be future proof. This

also goes hand in hand with developing price points, which need to be more or

less similar to the existing price points of cable"

Differentiation or exclusivity of content will be one of the most important requirements for IPTV to be successful

The last mile has always been challenging. Deploying physical

connectivity to home is a gigantic task. The wired versus wireless debate is

still continuing. Recent wireless broadband announcements have further fuelled

the discussions. The service providers have to take a roll call if they have to

rollout services. Bandwidth prioritization, QoS issues are some of the technical

roadblocks, which also need to be solved. Last but not the least, the vision of

"Internet Meter" similar to the "Energy Meter" concept has

to be enabled so that the customer finds it easy to adopt these services. Also,

the IPTV equipment installed in homes should be very easy to maintain and

operate. MTNL and BSNL have the majority of last mile copper in the country

giving them an edge over private players. Private players don't have a large

number of landlines and to have 5,000-10,000 customers in a city is not viable

business. Yet this advantage is short-term as alternate technologies such as

WiMax are making headway into the Indian market. In the end, service providers

who provide value for money and 'Next Experience' in terms of content,

applications, quality of service, and trouble free maintenance at affordable

price points will succeed in capturing consumer mind share and hence the

business.

Another constraint is content-differentiation or exclusivity

of content will be one of the most important requirements for IPTV to be

successful. Content that is exclusive and makes it more interactive for the

viewer, doing the DRM, building an ecosystem for the content providers are the

issues which need to be worked upon. Flexibility with the viewer and clever

bundling of services will be critical for the service provider.

The Beginning



IPTV is here to stay but needs a critical mass before it really succeeds. There
is the need for service providers, content providers, technology providers, and

policymakers to come together and create favorable conditions for significant

investments and profitable tie-ups. The rules have been laid-the game has to

now begin.

Sonia Sharma





sonias@cybermedia.co.in