IPTV : Tough Road Ahead For Telecom Companies

The success of IPTV in India will critically depend on the unique value
proposition it offers in comparison to the existing cable TV programs; on
successful implementation of last mile strategies; and on successfully ironing
out bugs in the new technology, as well as support services like billing

Can the hype surrounding Internet protocol TV (IPTV) in India live up to its
expectations? Are the Indian consumers ready for IPTV? That is a million dollar
question. While telecom companies enjoy obvious advantage in rolling out IPTV,
penetrating the local market will not be a cakewalk for them. The road ahead is
laced with tough challenges, which call for stability and sustainable players.

The first block, as far as launching the service in the market is concerned,
was the state owned telecom service provider MTNL. As part of this initiative,
MTNL entered in a strategic partnership with IOL Broadband for providing content
delivery network. At the moment MTNL's IPTV service beams in 25 channels, which
include the channels from the Star TV network and some free to air channels as
well. MTNL charges a subscription fee of Rs 199 per month and in addition to
that, Rs 100 for set top boxes.

IPTV: Delivering entertainment content over broadband

Explaining the road ahead for the company Piyush Agarwala,
Director-Broadband, MTNL said, “We plan to roll out 100 channels in next six
months with an increased focus on content.”

He also added that while the initial response from the consumer was a bit
low, they are hopeful that it will pick up once more channels are added to the
service. However, he also mentioned that once MTNL adds in more channels to its
bouquet the subscription rates are also likely to go up.

Thus, as competition increases, pricing will be the most contentious issue
which service providers will have to deal with, while keeping in mind the
already well established network of cable operators eating into their subscriber
base.

Talking about the future of IPTV in India Agarwala clarified, “Before
starting we carried out  a survey on the acceptance levels of IPTV with the
Indian consumers and around 82 percent of the people surveyed wanted to migrate
from cable to IPTV.”

Another major challenge for the telecom companies would be that of providing
content for IPTV, as service operators will be entirely dependant on content
generating companies. “We are working on a reasonable pricing model where we can
offer maximum content to the subscriber along with quality,” added Agarwala.

MTNL's biggest strength in IPTV is its ability to provide bandwidth on copper
cabling networks and its vast base of fixed line subscribers which no other
service providers possess. Agarwala is however skeptical about the video on
mobile service. “Television on mobile is a subjective issue and how far it will
be successful is still a big question,” he said.

IPTV enjoys the benefits of traditional cable television but with the added
ability to let users watch what they want at their convenience. While it is
similar to what traditional cable companies offer, the selection isn't limited
to movies or special titles. Everything on the screen, including television
shows, is on-demand. IPTV offers a world where the concept of a TV channel no
longer exists; meaning branding channels will no longer have meaning.

In East Asia, the government's cyber initiatives, as well as TV-over-DSL,
gaming, adult content, music and gambling were the key drivers of broadband. It
is still to be seen if this mix works for India.

The market for TV and video in India is not exactly empty. There is a huge
cable and satellite TV infrastructure (with nearly 50 million subscribers) to
contend with. The private telecom companies are working out business models,
with their content providers and equipment/software partners, to penetrate the
market. The incumbents have chosen the franchising route, looking at the
franchisee as a 'strategic partner' to market the concept and organize supply.
Service providers have to work overtime to dish out a completely different
content to the subscribers in order to take the viewers away from traditional TV
viewing.

Software like MS Windows Media Server, and IPTV equipment brought out by
Cisco, UT Starcom etc are part of the building blocks that will help in bringing
the concept to reality. “Delivering entertainment content over broadband
networks (IPTV) will truly empower the user to gain control of their content
according to the times pre-set by them” said Vijay Yadav, MD-South Asia
Operations, UT Starcom, a company that provides interactive broadband solutions
to the telecommunica-tions industry.

According to a study done by ABI Research, total subscribers for IPTV may
exceed 120 million by 2010 with Asia Pacific constituting roughly 47 percent of
the total subscribers worldwide. With China and India emerging as major markets.

The hype about IPTV is not understated and can be gauged from the fact that
all the major telecom players have joined the bandwagon. “With average revenue
per user (ARPU) for fixed line telephony service falling every year, telcos want
to provide additional value-added services to their customers. Operators and
content providers are coming together to deliver value-added services, but the
industry is still evolving standards in India,” said Yadav.

Reliance Communications Ventures (RCoVL) plans to roll out IPTV services in
India by the end of 2006, and it has already roped in Microsoft funding. RcoVL
has in place 80,000 km of fiber optic network for IPTV services, and according
to sources the company intends to spend Rs 1,500 crore annually to expand this
network further.

Through their IPTV network RcoVL plans to reach five million customers in 200
cities across India. In addition to negotiating distribution partnerships, the
telcos have been buying TV and video production facilities over the last few
months. Reliance taking a 51 percent stake in Adlabs, a film production and
distribution company, is one step in that direction.

The success of IPTV in India will critically depend on certain things like
the unique value proposition it offers in comparison to the existing cable TV
fare; on successful implementation of last mile strategies; and on successfully
ironing out bugs in the new technology, as well as providing efficient support
services like billing.

Courtsey: V&D Connect