The Future of Television
By Sameer Padhye
India, Mar 24, 2008

The technology that delivers television and value-added video services using Internet Protocol is called IPTV. A changing regulatory landscape, new technologies and delivery models, and the promise of ubiquitous broadband access have sparked new business opportunities among media and telecommunications organizations.

As traditional voice and Internet service providers consider offering TV and integrated video services over broadband infrastructures, current "TV providers," such as cable & satellite operators, are also looking to the Internet as another distribution channel to expand the types of services they can offer. IPTV is expected to be the real killer application in the telcos' broadband services portfolio that will increase ARPU (average revenue per unit) and help preserve user stickiness. IPTV is interactive because of availability of return path - therefore, it is capable of providing Video on Demand (VOD), time shifted television, gaming and many other innovative applications.

In recent years, telecom operators have successfully launched broadband access that became a viable replacement for the declining voice business, impacted by mobile substitution. However, with increasing competition and price declines, telecom providers are turning towards IPTV services as a way to support broadband penetration and increase their ARPUs. Though more operators are moving to commercial IPTV launches, adoption is developing slowly. Currently there are 10M+ subscribers worldwide with approximately half of them in Europe. France is the global leader in IPTV deployments, with Illiad leading the pack ramping to over 2 million subs, followed by France Telecom approaching a million and Neuf Cegetal at 600,000 IPTV subscribers. In APAC, Hong Kong's PCCW is the largest IPTV provider, with more than 800,000 subscribers. Taiwan's Chunghwa Telecom and China Telecom are the other two Asian SPs that make the top ten list with most spots taken by the European carriers. In US, AT&T has launched its IPTV service in multiple markets and Verizon has announced significant expansions in fibre to the home for its FiOS TV service. As per the latest forecast from Infonetics, the total number of IPTV subscribers is expected to increase to 65M over the next three years. This is very realistic and achievable as the deployments start to ramp up in US & APAC markets.

According to IDC, IPTV subscribers in the Asia-Pacific region, excluding Japan, is expected to increase at a compound annual growth rate of 89%, from 1.2 million in 2005 to nearly 30 million by 2010. China, in particular, holds immense potential as it has the largest broadband subscriber base in the Asia-Pacific region. Residential subscribers constitute about 70% of China's 47.8 million broadband subscribers, according to latest figures from market research company Frost & Sullivan.

In India, all major SPs have announced plans for IPTV deployments. However, rollouts have been hampered by regulatory issues, content availability and the need to upgrade access networks. The market is expected to gain pace in the future as the Indian government has set a target of having 20M broadband users by 2010. Mahangar Telephone Nigam Limited (MTNL) was the first carrier to offer commercial IPTV services in Mumbai and Delhi over a year ago. This was followed by Bharat Sanchar Nigam Limited (BSNL) initially offering IPTV service in Pune, and later adding Bangalore and Kolkata. BSNL is in the midst of upgrading its nationwide broadband network, targeting 1M ADSL2+ lines. Reliance Communications has announced a plan to provide IPTV services in the country by early 2008. Reliance intends to leverage its optical fiber network to deliver the value added portfolio of video services. Bharti Airtel is also currently undergoing trials for IPTV services. India being big on entertainment, consumers are willing to pay more for value added services. And, since video business is heavily subsidized, SPs could generate additional revenue by targeted advertisements. Also, the local content can easily be integrated given the diversity of the Indian market. Subscribers can take advantage of the PVR capabilities by recording their favorite TV programs and watching them later at their own convenience. Finally, educational services could be enabled using this IPTV technology.

Not only is the video delivery through cable and satellite being challenged, IP has enabled streaming video over Internet. Owning networks and supplying set-top boxes are not a pre- requisite for delivering content over IP networks. According to iSuppli, internet downloads will claim more than one-third of the market for on-demand video by 2010. Uptake is fastest in those markets where competition amongst operators has resulted in aggressive marketing and pricing. Competition to telcos and ISPs is stiffening as media and software companies are marketing video content available online. User Generated Content (UGC) is a reality today with portals like YouTube serving 100 million videos per day.

IPTV solutions should deliver the three key building blocks that providers need to enable enhanced video experiences for consumers:

Defining the IPTV experience: First, service providers have to define the experience which differentiates them from competitors. This encompasses many dimensions including standard and high-definition content, choice of compression techniques, and variety of next-generation video services like interactivity, time-shifted video, Video on Demand (VoD), Network-based Personal Video Recording (nPVR), and targeted ad insertion.

Preserving the IPTV experience: Next, experience needs to be preserved as video traffic is transported across IP infrastructure. Service providers need IP-based Next Generation Network (IP-NGN) infrastructure solutions that are intelligent and video aware.

Realizing the IPTV experience: An outstanding video experience requires excellent solutions in the customer home to decode, decrypt, share and display the content the way it was intended.

For IPTV services to launch and operate successfully, IPTV should be able to offer a new, more compelling model for advertisers to reach and influence consumers and also give consumers a richer viewing experience.