Idiot box goes digital

The country has about 130 million television households, including 96 million Cable & Satellite (C&S) homes. As per TAM, average time spent watching television per day was 153 minutes in 2008

Direct-to-home (DTH): DTH consumers receive digital TV channels’ signals through satellite on their dish antennae which are then transmitted to TV through a set top box (STB)

There are seven players and an estimated 20 million subscribers. Dish TV is the market leader; the others are Tata Sky, Sun TV, DD, Big TV, Airtel digital television and the latest entrant, Videocon’s D2H.

The industry expects at least 40% C&S homes to turn DTH subscribers by 2015

DTH offers pay per view where consumers get access to the latest movies for just Rs 75-100

Conditional Access System (CAS)& digital cable: Cable operators use CAS to compete with DTH, where content is beamed to consumers through STBs. But it is limited to parts of New Delhi, Mumbai and Kolkata. The government is yet to come out with a policy to extend it to other cities

The cable industry remains fragmented. Large multi system operators include WWIL, Hathway and Incablenet besides new generation firms, DEN and Digicable

The government recently announced a headend-in-the-sky policy, allowing MSOs to send signals to local operators through satellite. While it will expedite digitalisation, there are still some loose ends

IPTV: Internet Protocol Television allows subscribers to get television content through broadband internet. MTNL, BSNL and Bharti Airtel are offering this service. IPTV is also a digital service offering more channels and interactive services. It is yet to catch up in India

ET Comment

Connect the dots

Several countries have switched to digital television signals, which is where India still has a long way to go. The government needs to encourage faster digitalisation with clear policies on technologies like CAS. The television viewer will eventually benefit as he will get access to better picture quality, a larger number of channels and more control over what he wants to watch. But the big question is, how long will DTH and cable companies survive on the relatively lower levels of ‘average revenue per user’? Indians’ average monthly spend on pay television services is $3.5 compared to $15 spent by Americans.

Source: The Economic Times

MUMBAI: The subscriber base of IPTV in the Asia-Pacific region is expected to grow by 51 per cent this year closing at 9.4 million users and accounting for 37.6 per cent of the global subscribers, reveals research and consulting firm Frost & Sullivan.

A new analysis from Frost & Sullivan titled ‘Asia-Pacific IPTV Update’ finds that the IPTV subscriber base in the region would grow at a compound annual growth rate (CAGR) of 24.6 per cent between 2009 and 2014 and, by the end of 2014, would climb to an estimated 23.5 million subscribers.

In 2008, only eight Asia-Pacific territories had commercial IPTV offerings namely India, China, South Korea, Hong Kong, Taiwan, Japan, Thailand and Singapore and subscribers stood at 6.27 million.

Vietnam launched IPTV services this year while countries like Malaysia, Indonesia, Australia and New Zealand are expected to roll out IPTV services in the next 12 months, with a launch in the Philippines slated for 2011.

Says Frost & Sullivan industry analyst Adeel Najam, “”The key considerations for IPTV’s success are broadband penetration levels and low pay-TV presence.”

Najam believes that as much as 62 per cent of the IPTV subscriber net additions from now until 2014 will come from emerging markets like India, China, Indonesia, Vietnam, Thailand and the Philippines.

INDIA–IPTV may have failed to garner significant market share in the country, but lower pricing and better last-mile connectivity could drive this sector to 15.9 percent of all residential broadband subscribers in India by end-2011, experts say.

It has been six months since Bharti Airtel, India’s largest telecom operator, first launched Internet Protocol Television (IPTV) in selected cities. The technology was also deployed by state-owned Bharat Sanchar Nigam Limited (BSNL), Mahanagar Telephone Nigam Limited (MTNL), and multi-system operator (MSO), Atria Convergence Technologies, in some cities.

Other players are also keen to jump on the bandwagon, including existing telecom operators and MSOs such as Hathway. Reliance Communications (RCom) has been holding trial runs of IPTV for over a year, but has not commercially launched the service.

Unlike direct-to-home (DTH) TV, IPTV has failed to garner mainstream adoption.

According to Anil Prakash, IPTV India Forum’s secretary general, only some 10,000 to 15,000 homes in the country have IPTV. In contrast, 70 million homes have cable and satellite (C&S) TV and 13 million homes are connected via DTH. Around 1 million homes are switching to DTH every quarter, Prakash revealed. In all, over 120 million households in India have TV sets.

However, analysts and industry watchers are not prepared to write off IPTV just yet.

Arpita Pal Agrawal, associate director at PricewaterhouseCoopers told ZDNet Asia in a phone interview: “IPTV will work in India if the pricing is competitive, and offered at around the same price point as technologies like DTH and conditional access system (CAS).”

Chandan Mendiratta, vice president of service provider and system engineering, Cisco Systems India and South Asia, said: “IPTV has a great potential in the Indian market, since it not only offers entertainment, but can also provide Internet data services, telephony, e-government and video streaming.” Cisco offers services such as network service assurance, aimed to enable service providers to efficiently offer IPT.

According to IDC, India is expected to clock some 966,000 IPTV subscribers by 2011, expanding at a compound annual growth rate of 156.8 percent. The research firm expects 15.9 percent of all the residential broadband subscribers in the country to switch to IPTV by end-2011.

Mendiratta said in an e-mail interview: “Even if 10 percent of C&S subscribers migrate to IPTV, we are talking about 6.5 million to 7 million IPTV homes in India. And, this figure doesn’t include adoption in the enterprise sector.”

The last-mile challenge
“IPTV is a bandwidth-hungry application,” Prakash told ZDNet Asia in a phone interview. He noted that IPTV players are facing a host of challenges, the biggest of which is last-mile connectivity.

“IPTV players don’t have the right of way to bring the service to your home,” he said. “And often, getting that right of way can be prohibitively expensive.”

IPTV service providers are fast realizing that last-mile connectivity is a challenge in both rural and urban India. Bharti Airtel is targeting its landline and broadband customers to drive IPTV demand, but the same approach may prove challenging for BSNL and MTNL as both providers are witnessing a consistent drop in landline connections.

“The penetration of cellular phone networks in India has made fixed phones redundant,” N. S. Murty, director of new business initiatives at NXP Semiconductors, told ZDNet Asia in an e-mail interview. The company offers products targeted at IPTV service providers.

Prakash said: “The shrinking base of landline phone subscribers doesn’t help players like MTNL and BSNL.” The IPTV India Forum, he added, is looking to address these challenges for industry players. The non-profit group was set up to develop an ecosystem for IPTV ad mobile TV services.

Despite these challenges, PricewaterhouseCoopers’ Agrawal believes triple-play services will find ground in India, if broadband penetration increases in rural India.

“Simultaneously, services like e-government and remote education have to develop,” she said. “More government services need to come on to the electronic platform so that the masses can enjoy the real benefits of triple-play.”

Mendiratta said: “IPTV is a strategic application in the service provider’s portfolio of consumer entertainment, communication and online services.” Globally, IPTV has gained immense popularity and India should catch up soon, he said.

According to Gartner, some 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 US$3.5 billion in revenues.

Low price, simple interface
Today, IPTV is still significantly more costly than CAS and DTH. Viewers need a dedicated set-top box, modem and broadband connection. They will also need to install a camera to make it an interactive TV.

Once installed, however, IPTV can support some work processes usually carried out on a computer. The TV can receive phone calls, stream Web videos and provide digital TV channels.

“IPTV has the distinct advantage of a back channel that can be used for deploying services like video-on-demand more effectively,” Murty said.

Agrawal added that the business case for IPTV will be stronger if the technology is more easily available and at lower price levels.

However, helping people understand the importance of IPTV and its usage remains a big challenge, she said. “The user interface (UI) should be simple,” Agrawal said, noting that the UI–along with the overall experience–will help market players garner subscribers on a wider scale.

In addition, service providers also have to deal with challenges such as broadband penetration and building an ecosystem for data transmission.

Murty explained: “Players must integrate applications like browsers in an IPTV solution, and deploy services like online commerce and Web TV. Online game is also an application that players must consider.” However, he noted, the quality of service and overall experience will prove to be IPTV’s “make or break” point.

Mendiratta said: “Service differentiation and time-to-market are critical for the success of IPTV.

“To reach those goals, players must achieve and maintain quality of service, build an open system so that third-party applications can be deployed easily, and achieve the necessary scale,” he said.

Consumers’ reluctance to change coupled with market competition is making it tough for IPTV to capture the Indian imagination

Even after 6 months of using the much-hyped Internet Protocol Television (IPTV) service, Abhishek Verma, a 32-year old software engineer, isn’t too kicked about it. He has no qualms about admitting to the teething troubles he had to endure when he started with IPTV, where television channels and interactive services are delivered via high speed internet.

But he quickly adds that IPTV is not to be written off. Then there are consumers like 29-year old homemaker Neeta Shukla who are clearly unimpressed with the technology. “The installation took forever and now at times, I find it very difficult to use.” As they say about the Indian consumer, the resistance to change is pretty high — a bullet that’s getting harder to bite for most IPTV service providers.

The oldest IPTV player, Aksh Optifibre, along with BSNL and MTNL, provides IPTV services in about 22 cities in North India, including New Delhi, and is not oblivious to the customer’s apathy. Namrata Sengupta, deputy general manager, Aksh, in fact acknowledges the presence of consumers like Shukla, who are a big challenge for any service provider. She says, “People assume it’s too complicated and as soon as you say internet protocol, half of them get put off.” After 8 gruelling months of ground-level marketing, Aksh claims to have pocketed more than 30,000 subscribers in, and Sengupta insists that subscribers are only growing. Yet, the firm has posted losses of Rs 67.32 million for its services segment, comprising of IPTV and VoIP services to Indian consumers.

A similar subscriber base is being put together in southern India by ACT Interactive TV, another IPTV service provider. But its Managing Director, Sunder Raju, is more than optimistic about IPTV services. Ask him whether IPTV providers have been too slow to come off the blocks, in terms of advertising, promotion and marketing and he gives a calculated reply, “You will see a lot of activity in this space in the next few months.”

He could be right. Larger media houses like Airtel and Reliance have entered the digital TV market, making it a crowded place. For instance Airtel’s Triple Play Service provides subscribers within New Delhi and NCR region services like telephony, internet and entertainment services and plans to take its offering country-wide soon.

“TV consumers who are migrating to new hardware are the ideal targets for IPTV-based services. These consumers will see a level of convenience and personalisation in IPTV that cannot be delivered otherwise. For operators that provide a good quality of experience, IPTV will bring customer loyalty — crucial at a time of increasing churn — by offering a more enjoyable and interactive user experience, feels Kapil Dev Kumar, chief operating officer of MyWay, the latest entrant in the IPTV market. The company has an ambitious target of reaching three million customers by 2012.

Sengupta is positive that it’s just a matter of time for IPTV to take off. “Right now, perhaps there are too many bottlenecks,” she admits honestly. And the bottlenecks start at broadband cables. Like in case of ACT or Aksh, subscribers need a BSNL or MTNL connection in place, in order to use the service. Thus laying down cables can sometime take a lot of time. But ACT’s head honcho, Raju is confident that these are temporary problems.

For now, to take their subscriber number from a few thousands to lakhs, IPTV service providers are offering everything that DTH players have and at competitive price points. Airtel’s offer packs in broadband and IPTV services at just Rs 599 per month. A 117 channel bouquet along with 256 kbps broadband speed (download limit of 2.5 GB) completes this combo package.

According to K Srinivas, joint president (Telemedia Services), Bharti Airtel, the company is positioning its service as a niche offering targeted at specific customers and markets. He explains, “Our strategy is to go slow and then target the other top 5 cities in the country — Bangalore, Chennai, Hyderabad, Kolkata and Mumbai — in a phased manner by the end of this calendar year.”

Aksh subscribers can view on-demand movies at as low as Rs 10. They could even shop, order pizzas, play games on their TV sets. Compared to DTH, the providers are keeping their subscription and installation costs very affordable. For instance, Aksh offers to install its services at just Rs 999 (refundable) and at Rs 199 per month, and users get to view 126 channels. MyWay is promising interactive services at tariffs at par with those of DTH operators and also plans to introduce value-added services like train reservations, online banking, maps, SMS and karaoke along with reminder services, all from the comfort of your television set at home.

IPTV might have evolved from a fringe technology adopted by a few to an alternative digital pay-TV platform. However, what remains to be seen is if it could emerge as an equitable competitor to the DTH medium? Let’s wait and watch.