Broadbandindia Magazine

There are many doubts about the IPTV in general and Indian market in particular; major ones being :-

•  Whether IPTV is really going to a big success story like mobile phones or DTH?
•  Is there enough push from the telcos/operators for the IPTV to flourish?
•  Does India have the required infrastructure for IPTV deployment?

Let us explore some of the answers to the questions above :

IPTV

IPTV is TV-style content delivered via internet protocol directly to the consumer via a closed network – a walled garden.

Current Status

Indian IPTV market is at a nascent stage where it is being deployed over DSL, ADSL and ADSL2+ network infrastructure owned by operators like BSNL, MTNL & Airtel. Indian market has witnessed an interesting battle where for the first time state owned companies are aggressively promoting IPTV when private players have kept a low profile. Till now state-owned telecom companies BSNL and MTNL were not considered formidable competitors to private telecom companies.

But interestingly these two are aggressively marketing IPTV in India. Recently BSNL and MTNL along with Smart Digivision (Official franchisee for IPTV) announced ‘My Way’ will be launched in over 54 cities, the largest IPTV launch in the country. Smart Digivision plans to offer IPTV services to 1.6 million to 1.7 million broadband subscribers of BSNL and MTNL in these selected 54 cities which comprise 80 per cent of the country’s broadband subscriber base. Private players like Airtel and Reliance have not aggressively promoted their IPTV services. Infact Reliance has quietly launched their services in some areas in Mumbai without much fuss. While on the other hand Airtel has been going slow on IPTV, they are still in the process of evaluating more cities (Bangalore, Mumbai and Chennai) before launching aggressively. Private players believe DTH is for masses and IPTV is for the classes.

However private players do realize that IPTV in the long run can become ARPU driver. Some of the other interesting developments that took place in the Indian IPTV market in the last few months was the roll out of wireless STBs (hardware essential for accessing IPTV, digital cable or DTH services) for its Internet Protocol TV (IPTV) services by Aksh Optifibre. Aksh has plans of commercially rolling out its wireless STBs for IPTV services. This will enable consumers to access IPTV  services in any part of their home without having to physically make wire connections from the STB to the TV sets.

Thought this is very expensive right now (three times costlier than the a normal box for accessing digital cable or a DTH, IPTV service) but we believe if this is commoditized just like mobile handsets it can penetrate throughout India creating a mass consumption drive eventually resulting in price reduction. Researcher believes that India is not only potential market for IPTV but can also become a hub for innovation and next technological breakthrough in global IPTV market. Indian IPTV market has the potential to bring new innovative technology, breakthrough business models and world class content just like the Indian wireless telecom.

This is clearly evident from the amount of interest shown by biggies like Cisco, UTStarcom, CopperGate etc. UTStarcom opened their IPTV Technology Center and Center of Excellence in India to develop and enhance standards for IPTV deployments in India and support global development. CopperGate is also keenly looking at India as a huge market in the near future. CopperGate sets up one IPTV connection every seven seconds somewhere in the world.

India’s first IPTV deployment was in 2006, when MTNL rolled out its IPTV service in Mumbai followed by BSNL. Other major players like Bharti Airtel and Reliance Communications were given the go ahead to launch their IPTV services in the Indian market in Feb-2008 by TRAI. Airtel has launched its service in Jan-2009 while Reliance has quietly launched their services in Mumbai Scenario for IPTV market in India is driven by certain factors like:

•  Interactivity
•  Value added services
•  Customer-end benefit
•  Fuelling broadband demand

However India still has a long way to go before IPTV can pick up momentum like wireless communication or DTH services. India has a lot of problems that exist as a barrier for growth of IPTV in India. Some of key issues are listed below:

• Physical Infrastructure

One of the biggest challenge India faces is the required infrastructure for growth of IPTV. India lacks required highspeed wiring and copper cables and still dependent on copper or co-axial cables for deployment of IPTV network. Some parts of the world have successfully shifted to optic fibre for deploying high quality IPTV services.

•  Broadband penetration and n/w capability

One of the biggest and most important factor for success of IPTV in any country is its infrastructure for broadband services and broadband penetration. The existing broadband infrastructure would have to be substantially upgraded, India’s broadband penetration is one of the lowest in the world and success of IPTV is directly dependant on Broadband penetration. India’s broadband penetration rate is 2% (Rate of internet penetration of the total households) however it is expected to pick up pace in the coming years. However advanced technologies like VDSL, WiMAX or LTE can save the day for IPTV in India.

• Network Capability

IPTV requires at least 1.5 Mbps line (with MPEG-4) for basic services at a good QOS and 8 Mbps line (with MPEG-4) for HDTV services. Some part of the broadband networks especially MTNL and BSNL networks are not ready yet. Most of the major cities like Delhi, Mumbai, Pune, Bangalore, Chennai, etc. are SDTV compatible this is largely due BSNL and MNTL network and these are the cities where BSNL and MTNL first launched its IPTV in India.

•  QOS (Quality of service)

India lacks the required infrastructure to support IPTV. Current subscribers have criticized the quality of services offered by these companies.

•  Content Readiness and cost

Content is critical for success of IPTV & to compete with DTH and cable operators IPTV service providers will have to provide high quality innovative content. With respect to content there are various costs which are involved and it totally depends on what route does the player take. It can be either fixed fee deal with broadcaster or Ala carte price per channel. Operators will have to offer services that are not being already provided by their competitor including live TV, Video on Demand (VOD) and Digital Video Recorders (DVRs).

•  Cost of service for user

The cost of IPTV services offered are quite competitive but the cost of IPTV STBS is still very high. Cost of IPTV STBS will have to fall further, as they are more expensive than traditional DTH or Cable set top boxes.

•  Regulatory framework

Some of the potential regulatory issues identified includes:-

•  Advertising

Targeted advertising and advertisement-less content delivery to allow next-generation business models

•  Time Shifted TV

Legal framework to support content storage, redistribution and super-distribution (e.g. access from multiple devices)

•  Privacy

Protect privacy of user content (with consideration for lawful intercept)

•  Piracy

Provide a framework for detection and prosecution. Alternate models: watermarking, crawling, etc.

•  Multimedia Communications

Triple play: voice, video and data regulations

• Content Classification

Larger scale production

• IPTV Ecosystem

When we dig deeper into specific infrastructure and ecosystem required for IPTV we find that IPTV Infrastructure is not at par or as required for areas like Broadband/transport infrastructure and technology, Favorable Regulations, Customer understanding of product proposition, Content readiness and cost, Unified standards development and Pricing and Promotions.

Some of the key IPTV Service Providers

• BSNL

BSNL has been offering IPTV services in over 50 cities of India, some of these includes Kolkata, Bangalore, Chennai, Ahmedabad, Gurgaon, Jaipur, Chandigarh, to smaller cities like Thiruvananthapuram, Ernakulam etc. BSNL Kolkata started its services in Aug-07. Company is providing triple play service featuring telephone, broadband internet and TV. Additional services like pause, fast forward VOD (video on-demand).

• MTNL

MTNL is offering IPTV services in Mumbai and Delhi so far. IPTV services in Delhi started in Oct-06.

•  Bharti-Airtel

In its first phase Bharti-Airtel has started providing IPTV services to customers of NCR (Delhi, Gurgaon, and Noida). Bharti Airtel started its services in Jan-2000.

•  Reliance

Reliance IPTV service is currently available in select areas of Mumbai.

Is India ready for IPTV?

This is one big question everyone has on their mind. Operators are aggressively promoting DTH services and not IPTV services. Based on expert survey’s and expert interviews we sense from the stakeholder’s response that IPTV is going to take some time to gather critical mass. Based on expert interviews and research surveys we have gathered following facts

• Telecom players (read carriers) are not very aggressively pushing IPTV right now. They are heavily involved in their DTH service promotions.
• Companies are playing safe and waiting to see the results of IPTV launch of some of the existing companies
• Operators are waiting for the broadband infrastructure to grow and be IPTV ready

Based on expert analysis it is believed that IPTV will take some years to gain scale and will directly depend on telcos push, infrastructure and broadband penetration. Its success would depend on how seriously the top 4 telcos (with broadband infrastructure) take it up. Their involvement and creation of push would depend on the rate of return and the point of break even. Also possibility of global IPVT giant entering the Indian market cannot be ruled out. Despite low internet penetration rate of 2% it is predicated that India will have 2.5 million IPTV subscribers by 2018 with just 6% broadband penetration rate making it fourth highest in Asia.

Threat of substitutes?

Question of substitute does not arise here as IPTV would have to go beyond people’s imagination. “Just providing video Programs/video on demand through IPTV does not seem to be a viable business model in India since cable and DTH have already established a very large viewer ship base for themselves. Telcos and IPTV service providers have to come out with innovative services newer applications that can catch the attention of consumers. Unless IPTV establishes a unique selling proposition (USP), it will not be a popular choice or a substitute for DTH or Cable operators.

Pricing

Indian market is extremely sensitive to price and to successes stakeholders will have to carefully price their services to win in a competitive environment. Currently IPTV Packages are aggressively priced infect some of the packages are at par with prices of DTH packages. However cost of STBS (Set Top Boxes) are extremely high and needs to come down drastically to attract more subscribers. This can be the potential make or break for success of IPTV in the Indian market. Expert believes that the Indian market offers great opportunity for set top box manufacturers for long term growth. Set top box manufacturers can look at innovative design models with low cost manufacturing capabilities to support mass demand from the Indian market.

Companies would have to draw inspiration from mobile/ handset manufacturers like Nokia, LG, and Samsung etc who churned out low cost customized devices targeted at the Indian market. Expert’s interviews also reveal that globally companies are trying to integrate High Definition Television (HDTV) with a built in set top box which acts as a multi compatible device that can support Cable, DTH & IPTV. One such initiative in India is taken by Aksh Optifibre which is currently testing an integrated television set in which IPTV has been integrated so that consumers do not need any extra box expert believes this is just a beginning of various innovative business models to push IPTV into the hands of consumer the next wave of development in highly competitive markets like India and China might bring global innovation for IPTV. Below is a snapshot of some of the available packages and pricing models for IPTV in India.

Consumer intake

Expert has interviewed IPTV subscriber’s across the country and finds that consumer reaction is very mixed. Subscribers are about the concept but we they find it difficult to differentiate between DTH and IPTV. We believe this is largely due to quality of service, lack of user generated content and high cost of digital set top boxes.So far IPTV in India has not been able to make great impact and we suggest understanding Indian consumer needs and aggressive marketing strategy to successfully grow the IPTV subscriber base.

Future

• Wireless IPTV

Expert believes that wireless IPTV also called ‘Quadruple Play’ is going to be a revolution in India. Launch of LTE and WiMAX technology in the future can bring about a huge change in the Indian market.

• User Generated Content

IPTV is much beyond DTH when it comes to user generated content. Exclusivity of content and differentiation will be key requirements for IPTV to be successful has gone beyond DTH potential to go beyond DTH when it comes to brining user Interactivity believes that wireless IPTV is going to be a revolution in India. Launch of 3G and WiMAX technology will bring about a huge change in the Indian market.

• Interactivity

IPTV is all about Interactivity, services from a cable operator are “pushed” into your home. The user has limited choice and has to keep on surfing channels for variety. Cable TV is a one-way communication where as IPTV provides for a two-way communication. User has complete control over the content he wishes to view. IPTV provides range of interactive services like customized channel views, programme flow, instant content sharing (News, videos, programmes, advertisement, music etc), email, betting, games, shopping, information, Internet access and even customized advertisements. You request a program from the TV guide and the program is delivered to you. Also content providers and operators will have to come up with more innovative interactive services to capture the imagination of Indian consumers.

Also one school of thought feels that Windows Embeddedbased solutions will enable more flexibility and versatility in offering services ranging from IP-based broadcasting to video-on-demand, IP telephony, gaming, and vertical markets such as

• Media: Internal content distribution within news broadcasting, movie and video production services
• Hospitality: Hotels, resorts, cruises, and luxury apartments such as Leopalace21
• Interactive point-of-sale advertising
• Edun
• Corporate
• Government
• Competitive Environment

IPTV is not just restricted to telecom operators globally leading cable operators have aggressively marketed IPTV services to reach out to new customer segments. Cable operators can leverage their existing cable network infrastructure; existing customer base and customer reach to offer comprehensive and high quality services at affordable prices.

One of the recent examples of IPTV deployment by cable operator is by Butler-Bremer Communications, which launched Cable IPTV services with Harmonic (On demand video’s Direct-2 Edge solution) and Falcon IP/Complete Solutions (For “bird to box” video solution).