IPTV in India – Just a Myth?

Affordability factor and weak penetration have begun affecting the growth of IPTV in India.

Most of the leading operators that have started launching IPTV services have yet to complete launches in their top cities. If IPTV prices can match the prices of DTH and cable TV services, IPTV will come out of the current doldrums.

India offers huge potential for IPTV, considering the appetite of the TV viewers in the country. More than 70 million homes have cable and satellite (C&S) TV and 13 million homes are connected through DTH. DTB homes are growing, as around 1 million homes are switching to DTH every quarter. More than 120 million households in India have TV sets.

Despite the aggressive marketing plans of leading telecom operators such as MTNL, BSNL and Bharti Airtel, the number of IPTV subscribers has not crossed 100,000 in India.

IPTV's potential is huge. It not only offers entertainment, but also provides Internet data services, telephony, e-government and video streaming. IPTV provides a number of advantages over cable or direct-to-home services, and provides a wholly new consumer experience. It bundles three services - data, video-on-demand and voice - and can be far more interactive and personalized than other forms of television.

The poor performance in the last year means targets forecast by leading agencies on IPTV growth will not be met.

Gartner says around 48.8 million households worldwide will subscribe to IPTV services by 2010. In the Asia-Pacific region, Gartner expects that number to hit 8.7 million in 2012, generating $3.5 billion in revenues.

According to IDC, the IPTV user base in India will touch 966,000 by 2011, expanding at a compound annual growth rate of 156.8 percent. It expects 15.9 percent of all the residential broadband subscribers in the country to switch to IPTV by the end of 2011.

Bharti Airtel was one of the aggressive operators to launch IPTV with much hype. The company is still betting big on broadband and IPTV. But its user-base is yet to grow.

Airtel launched the service in January 2009 in Delhi, Noida and Gurgaon. The company also announced plans to offer IPTV services in eight metros including Mumbai and Bangalore.

The company's IPTV launch was in line with its plans to offer triple play service - telephony, broadband and television - over a single line to customers in the NCR.

Airtel tried to leverage the advanced MPEG4-10 compression technology to ensure more content and better quality images as well as services like live broadcast television, network based time-shifted TV and real video-on-demand among others. The service is delivered through a fiber backbone of the Carrier Ethernet Network with the last mile of delivery on copper using ADSL2+ technology, which enables high-speed broadband connectivity, superior digital video and audio quality.

Reliance Communications was one of the major players to hop on the IPTV bandwagon. Reliance announced its IPTV plans in November 2007 by joining hands with Microsoft. The IPTV service, which is still in the pilot stage, being powered by the Microsoft Mediaroom platform, will include features such as such as VoD, digital video recording (DVR), instant channel changing and personal media sharing.

Does It Make Sense?

Telecom service providers in the Asia-Pacific region must invest in IPTV services in order to gain subscriber market share, despite the massive cash outlays required for technology and content procurement, according to Pyramid Research.

Though the APAC region has the most successful IPTV operators globally, and rollouts continue throughout the region, operators continue to face challenges in three key areas, according to the report. "Typically, regulatory issues come first, then the mammoth challenge of valuing and procuring content along with technology issues - both of which can affect subscriber take-up and bottom lines," said Charles Moon, analyst at Pyramid Research.

"One of the most glaring problems surrounding IPTV has been the lack of any framework around the service, putting it in a grey area, with neither the telecom nor broadcasting regulators having clear oversight of the sector," he added.  "To make matters worse, the entrenched position of cable companies in markets like Japan and South Korea make it even more difficult for new IPTV players to negotiate for content rights.  In addition to the lack of adequate infrastructure and the high cost of STBs hindering adoption, the fight to defend market share is intensifying."

The Asia-Pacific region is, however, believed to provide good lessons for operators faced with developing a business case for IPTV services and determining an appropriate strategy for long-term success. "We believe the long-term opportunities that IPTV brings outweigh the short-term risks," said Moon.  "The promise of media, and the escape it provides from dumb-pipe business models, is encouraging carriers to take risks and make grabs for market share.  Further, the benefits associated from capturing customers - such as lower churn, new service provisioning, and higher cash flows - provide a case for short-term sacrifices."

Vendor Opportunities

Multimedia Research Group, in its latest Global IPTV Market Leaders Report released in March 2009, ranked UTStarcom as the leading IPTV provider in Asia, leading the Access, Video-on-Demand, Set-top-Boxes, Middleware and Content Protection categories.

As the recognized leader in broadband and Internet Protocol TV in India, UTStarcom is a proactive contributor to industry growth. By building an ecosystem for IPTV, it aims to aid faster adoption of this revolutionary technology among Indian audiences by helping telecom operators create a compelling pull factor built on technologically robust and tested applications.

UTStarcom partnered with Aksh Optifibre in 2007 to deliver the first commercial IPTV service in Delhi through MTNL. With UTStarcom's continued partnership, Aksh set an agreement with BSNL to offer its iControl IPTV service in 20 cities across India and additionally in Mumbai with MTNL. UTStarcom also has a long-standing relationship with Bharti Airtel in Delhi NCR. Additionally, UTStarcom's RollingStream platform is being used by Sri Lanka Telecom to deliver IPTV services in the city of Colombo, Sri Lanka.

For a company like Smart Digivision's MyWay, selecting the right partners is a critical issue. MyWay has entered into long-term contracts with MTNL and BSNL for providing co-branded interactive video services to their customers in 54 large cities across India. These cities account for approximately 50 percent of the urban population, giving Smart TV Group the largest coverage footprint for IPTV services. Its presence across 54 cities makes MyWay the largest service provider of IPTV in India. At present, MyWay operates in 29 of 54 cities where IPTV is operational, and the company is planning to launch "online transactions on the service, enabling users to book movie tickets and purchase airline tickets," among others.

BSNL brings to the table an IP network infrastructure with the highest levels of service quality. Initially the service will provide 140 TV channels, while there are future plans to offer free access to the movie libraries of Hollywood and Bollywood. On demand video, music, games and education can also be made available.

MyWay has also partnered with MTNL, the leading telecom (fixed-line) company in India, which has grown rapidly by modernizing its network, incorporating state-of-the-art technologies and adopting a customer-friendly approach. MyWay and MTNL would cater to customers in New Delhi, the capital city of India with its IPTV services.

MyWay has partnered with world-class technology leaders to bring a state-of-the-art television service to Indian viewers.

For instance, MyWay has tied up with Scientific Atlanta (a Cisco company), a leading supplier of transmission networks for broadband access to home, set-top boxes, cable modems, digital interactive subscriber systems for video, high-speed Internet and voice over IP (VoIP) networks. The company offers worldwide customer service and support. Scientific Atlanta would bring its expertise to provide MPEG4 (H.264) Headend equipment to MyWay.

SeaChange, a partner of MyWay, is a world leader in VOD systems, bringing with it extensive experience of setting up the largest two-way STB-based middleware deployment. SeaChange has been engaged to design the MyWay middleware system to ensure interoperability of a complete video service operation.

Another partner, Verimatrix is designing its Digital Rights Management (DRM) System. The Verimatrix Content Security Manager (CSM) enables and supports all features and options within a VCAS-secured pay-TV system and VOD with secure, real-time key distribution for the full spectrum of content services. MyWay has selected Cisco, the world's leading company in providing IP equipment and solutions, as its IP solution partner for providing video services.

MyWay has selected AirTies to provide set up boxes for users to access next generation interactive digital television service over IP Broadband connections. AirTies is the market leader in broadband and wireless network products.

Aksh Optifibre, which has partnered with BSNL, has recently completed the rollout in 20 cities across Rajastan, Punjab and Uttar Pradesh.

Aksh Optifibre launched icontrol, India's first IPTV, in association with MTNL in Delhi and Mumbai, revolutionizing the TV viewing experience. The icontrol brand is a service that helps to control the TV as per the viewer. The company plans to add about 5 lakh subscribers for its IPTV services in Delhi and Mumbai in next three years. Aksh is investing close to $37 million in its services business on IPTV and VoIP platforms.

China is always ahead of India in technology adoption. UTStarcom pioneered IPTV in China when it introduced its RollingStream end-to-end IPTV system in 2005. As of March 2009, UTStarcom's RollingStream supported more than 1.32 million live IPTV subscribers globally. In 2008, UTStarcom partnered with Guangxi Telecom Company, a wholly-owned subsidiary of China Telecom, to deploy the first IPTV-based digital signage solution in 14 Guangxi cities. UTStarcom was also among the first to deliver the Olympic Games via IPTV to China viewers during summer 2008. This April, the company was selected as the only technology supplier for the first mobile television system across Hainan province, driven by China Telecom's Hainan branch.

Though we must appreciate the operators for making investments for IPTV services, there is a long way to go before we start enjoying the benefits that IPTV can bring to the Indian economy.

SCHEMES GALORE, BUT NOT TAKERS

Launch Offer for BSNL Customers

Installation free of cost (with free installation up to 20 meters in length and beyond 20 meters the customer will be charged extra on an actual cost basis.)

Upfront payment for DVR-Ready Set Top Box - Rs. 2,000

Super Value Pack worth Rs. 280 (126 channels) free for three months

Free view of all On-Demand content like Movies (Welcome Pack plus selected Pay Per View), Games, Karaoke, TV Shows, Infotainment, Fitness, Radio and iServices (Learning, Rail Info, etc.) for three months

Rental Model

• Installation free of cost (with free installation up to 20 meters in length and beyond 20 meters the customer will be charged extra on an actual cost basis.)

• Security deposit of Rs. 1,500 (Refundable) and a monthly rent of Rs. 50 per month for DVR-Ready Set Top Box

• Super Value Pack worth Rs. 280 (126 channels) free for three months

• Free view of all On-Demand content like Movies (Welcome Pack plus selected Pay Per View), Games, Karaoke, TV Shows, Infotainment, Fitness, Radio and iServices (Learning, Rail Info, etc.) for three months

Launch Offer for MTNL Customers

Purchase Model

• Installation free of cost (with free installation up to 20 meters in length and beyond 20 meters the customer will be charged extra on an actual cost basis.)
• Super Value Pack worth Rs.280 (126 channels) free for three months
• Free view of all On-Demand content like Movies (Welcome Pack plus selected Pay Per View), Games, Karaoke, TV Shows, Infotainment, Fitness, Radio and iServices (Learning, Rail Info, etc.) for three months

Registration Charges: Rs.200 (One time charge on landline bill by MTNL)

Set Top Box charges:

Upfront payment for (DVR-Ready Set Top Box): Rs.2,000 (with free installation up to 20 meters in length and beyond 20 meters the customer will be charged extra on an actual cost basis.)

Buy Back Offer:

Smart Broadband Service will buy back STB for the full amount if returned within 30 days for any reason.