IPTV in India-Final Part

7 06 2009

The main benefit for BSNL/MTNL by offering IPTV service is that, they will start earning revenues from fix lines which they deployed long back and whose utility remained to be exploited since their deployment. The launch requires no additional infrastructure investments. This business model is more effective. Think of private players, who are thinking of launching IPTV services, they need to invest hefty amount for rollout of infra which doesn’t exists for them. As said earlier, this would create monopoly of state owned operators which might be harmful for any industry to survive longer. Without competition or very less competition, you are going nowhere. But in case of IPTV, it will flourish with monopoly, as it is competing directly with DTH service, which is a highly competitive market.

What will be future pricing model for IPTV services? Once rollout & initial launch is over, service provider needs to launch new tariff plans to keep existing customer base intact or to add new customers. But due to lack of any competition virtually, IPTV services pricing will be directly follow the competition in DTH domain. The future pricing will be comparable to DTH services, as always it is.

What will be the scope of IPTV services in India? Will it be limited to homes only? Not actually, but yes major chuck of subscribers will be from home segment. Taking IPTV to Corporate environment is possible by launching videoconferencing & training services to enterprises. We can also have internal communications in enterprises based on IPTV platform. In short, the scope isn’t limited to particular segment of market. But initially service providers will focus on grabbing home subscribers which forms major base of subscribers.

One more advantage of IPTV services could be sight in reducing carbon footprint, if we are talking about corporate services. Through Videoconferencing & training, we could bring good benefits to enterprises.

One interesting fact of IPTV services is that, it will push the concept of Broadband Home Network, where different devices like PC, Smart phones & Television will communicate on home network. Not only they will communicate but they will also enable file sharing among them. So future homes will be equipped with Broadband home networks or at least future looks rosy for it.

Here are some market research details which forecast the growth in IPTV market:

  • Strategy Analytics estimates over 80 million subscribers by 2011 (but with only 40-41 million paying).
  • Multimedia Research Group projects 72.6 million subscribers by 2011.
  • Research and Markets forecasts 103 million subscribers in 2011.

While the forecasts vary widely, the overall agreement is that high growth is expected in this market area for the next several years.  Heavy growth is anticipated around the world, and will remain especially high in Europe, Asia-Pacific, and the Americas.  While the Americas is expected to continue to lag the other regions in total deployment, it is expected to become a highly competitive market in terms of revenues, especially as deployments increase and the service offerings are expanded.

Over the next few years, the leading service providers will continue to focus on expanding their coverage areas, increasing deployments and adding new customers and content to their offerings (especially more high-definition content).  Once subscriber levels are at a higher level, the focus will include more differentiating features and services (bringing in the interactive and convergent nature of IPTV technology), with increased emphasis on the concept of the fully integrated digital home network and the expanding role of the social network.

In the residential market, IPTV will provide a level of interactive service never before possible with traditional cable TV.  Capabilities to allow the user to directly contact advertisers or businesses offering products, to view locally inserted advertisements, order goods and get product information, all while watching TV.  This can open up many opportunities for both small and large businesses to reach a much larger audience or to reach a smaller, more targeted audience.  Acceptance of IPTV will also lead to a greater expansion of the digital home market, to the use of social networking, and to the use of videoconferencing.  And while many applications will be initially utilized in the home, they will eventually propagate into the corporate world as more and more remote workers push for the use of these capabilities throughout the workplace.  This, in fact, may be one of the prime reasons that enterprise businesses need to monitor development in the IPTV space — so that they are prepared to implement them (or a form of them) in their corporate network.

Concluded.

(If you are looking for complete market research report by leading research firm Faulkner Services, please contact me at atulrdeshpande@ieee.org. The report is available at highly discounted price for those who are interested.)





IPTV in India-Part III

6 06 2009

Coming back to discussion on IPTV, will IPTV services be comparable in quality with those of DTH services?  Yes, they will be. As stated in earlier blogs, the basic difference between IPTV and Internet Television lies in the fact that IPTV is delivered on closed IP network (network is proprietary of service provider), where as Internet TV is delivered on public IP network. This fact ensures that the content delivered on private IP network will be of better quality & delivered with higher reliability. If someone is confusing IPTV with Internet TV, make sure that he/she is aware of the basic difference.

But the real differentiator for IPTV will be its content and price. But as we have seen, the offered services will be in the same price range as those offered in DTH category. Then for IPTV real differentiator will be its interactive nature. Apart from emails, chatting & banking what other services you could offer to consumers? Here is short list:

  • Telephone Caller ID information displayed on a TV screen.
  •  Incoming email alerts on the TV.
  •  Allowing users to view content from their home PC on the TV screen, such as photos and music. 
  •  Allowing users to control their Digital Video Recorders (DVRs) from any network connected PC or from a mobile phone

Some might foresee it for casting votes, or others for booking railway tickets, whatever it would be, there is huge potential for enhancing customer’s experience through interactivity. Remember that, this interactivity is limited to channel change onl,  in cable & satellite (DTH) television.

But during initial phase of launch the operators will be focusing on deploying new services & getting more subscribers on roll. Once the services are rolled out, then operators could think of launching these interactive services to garner more revenues. This model will be more effective in the sense that, it assures better RoI for operators without losing out to DTH on price, quality & reach issues.

Other than interactivity, as mentioned earlier there lies one more advantage of IPTV services. The Triple Play services offered in one bundle-namely VoIP, Internet & Television as compared to only television with limited interactivity in cable/satellite services. So will it really help BSNL/MTNL in establishing themselves as dominant players in IPTV space?

It is hard to predict as of now, but given the advantage of large pool of wire-line subscribers with Broadband connections, certainly they will grab major chunk of IPTV subscribers in coming months. With estimated predictions of 2-3 million subscribers by end of 2012, Indian market will amount to only 4% of total global estimated customer base. So in there any room of competition?

Yes, but limited in some aspects. On one side, while we are promoting 3G/WiMAX & 4G as future of communication converged with Internet, IPTV might be limited to only wire-line broadband subscribers. With limited mobility, it could bring lesser benefits to nomadic users, which still forms the major chunk of user pool for many operators. But yes, in countries like India where we have very limited Broadband penetration due to number of reason, brining Internet to home through television might work for many households. 

While discussing it with my seniors, I realized how big this thing could be. IPTV will bypass the need of having a Computer to get on Internet (remember many households in India still can’t afford big investments like PC and TV comes readymade at home, so only with little investment of Rs 2000 we could actually bring Internet to masses). This aspect might prove crucial in success of IPTV services in India. We also hope that this might bring some new life into increasing Broadband penetration in India, but we just can’t link success of IPTV with Broadband penetration, directly. Given the cost effectiveness of IPTV in offering triple play services (most importantly Internet and Television both), one wouldn’t be surprised if IPTV service finds some initial success in getting customers on roll. The QoS service, which is said to be guaranteed on closed IP network, will decide on revenues & churn rates after initial success. Here pricing model might not work, as QoS will have to play a major role in marinating the sub base intact with low churn rate.

In last blog in series we will discuss how operator would carry IPTV from home environments to corporate along with future market trends in IPTV space, tomorrow.





IPTV in India- Part-II

5 06 2009

Let’s continue our discussion on IPTV from earlier topic.

The main hindrance to IPTV services is need of Broadband connections (>256kbps) at home. At present India is having approx 7 million Broadband connections, Smart Digivision, to start with hopes to offer services to 1.6 to 1.7 million broadband subscribers of BSNL and MTNL. This sub base is mainly located at those 54 cities which are selected for countrywide launch. In short My Way will be targeting approx 80% sub of BSNL/MTNL situated at 54 cities increasing it to 2-3 million within three years. The company will be investing around Rs 500 Cr for its rollout services.

What will be success strategy of launch for IPTV?  According to global survey, the initial IPTV offerings basically provide a similar package as those offered by the cable TV companies, with a large number of TV channels, a reasonable amount of high definition (HD) TV content, Video on Demand (VoD) offerings, and some interactive content.  The competitive factor lies often in the price of the IPTV service offering as well as the price of the triple-play service bundles. So in short, for the first time, many cable TV customers have a real choice in full TV service, something they did not have in the past (other than the option to use satellite TV service).

Going by similar strategy, Smart digivision will be keeping cost similar to DTH providers. A subscriber has to pay Rs 2000 for installation, set top box & free channels viewing for three months. My Way offers 126 channels for Rs 280 per month or 95 channels for Rs 200 and prices of set-top box has been reduced from initial Rs 3500. So pricing model of IPTV services is kept resonably similar to that of DTH services.

But then if prices are similar, what’s the advantage of IPTV services over DTH? The advantage lies in IPTV’s two way interactivity. This means users can browse emails, chat with friends, locate places on maps and book rail tickets online along with usual programs viewing, which are not possible in traditional cable TV & satellite services. In those, users have simply no way to interact except changing channels.  

The true future of IPTV lies not in its basic television content, however, but more in its interactive feature capabilities.  Unlike cable TV service, which is a one-way delivery system to the user, IPTV is a two-directional system, allowing the user to interact with the services.  The method of delivering content to the user is also different.  Cable TV systems deliver all channels to all users over the pipeline going into the home or business, with the set-top box used to select what channel is being viewed.  This method requires a fairly large bandwidth being delivered to every user.  IPTV maintains content on the network with the system delivering only the channel selected by the user over the pipeline to that user, with the set top box still being used to select the channel to be viewed.  As bandwidth needs increase for new services and capabilities the IPTV providers may have an advantage over cable TV counterparts, but it may be short lived.  Cable TV operators can modify their network infrastructure to allow them to offer IPTV services, or new technologies supporting the Data Over Cable Service Interface Specifications (DOCSIS) could become ubiquitous, allowing for channel bonding, in which two or more network interfaces are combined to increase network throughput.

Does this interactive nature of IPTV services erode DTH shares? Not immediately!  Though Smart Digivision has tested Gmail services on television and in process of testing Yahoo mail, with the help of Mozilla Firefox which is being uploaded into set-top box, the interactivity has long way to go before it becomes reality. The clear advantage lies in the fact that both BSNL & MTNL are having huge sub base of wire lines and there will be no immediate competition for them in IPTV space.

Will this no competition in IPTV space create monopoly? What about QoS? Will it be comparable to DTH/Cable or better? Will it give rise to Broadband connection surge in India?  Let’s find out answers in next blog!





IPTV in India- Part I

4 06 2009

Latest report says that state own BSNL & MTNL will roll out their IPTV services across India, soon. By this move, BSNL/MTNL will be directly competiting with private DTH players for television space. Also, they will be looking for increasing  Broadband subscriber base through television medium, which currently stands at dismal 6.4 million. 

BSNL & MTNL are rolling out their IPTV services through Delhi based franchise named Smart Digivision. ‘My Way’ as it is called, will be launched in 54 cities-largest IPTV launch in country in period of three months. But real question lies-will the launch be a success? What are the issues involved in launch of IPTV services? Is their any immediate threat for DTH providers? Let’s explore the IPTV space in detail!

IPTV, which stands for Internet Protocol Television, is a technology for delivering digital television service via a broadband connection using Internet protocols.  Designed to compete with cable and satellite technology, IPTV is broadly deployed in Europe, especially France, and is gaining momentum in the US and Asia/Pacific markets.

Now according to ABI research, a pioneer body in market research, which says that number of IPTV subscribers worldwide will increase about 32 percent by 2014, to a total of almost 79 million customers.  ABI anticipates growth in fairly mature markets like Europe, but also in emerging — and extremely promising — markets like South Korea and China (No India?). The leading service providers in world , ‘lliad of France’ & ‘Verizon of US’, who earlier estimated that growth in number of subscribers will be around 90 million, but due to market recession the estimate has come down by nearly one million count. So in short, the market isn’t going to be very favorable for IPTV service provider, though there will be around 32% growth by 2014.

The main advantage of providing IPTV services is that Operators can offer –Triple Play services i.e. TV, Internet & Telephone services, all for one competitive price, as compared to traditional cable TV or DTH services (Also called as satellite services).  My Way launch is different is few aspects. First of all, the geography of launch is huge in one go i.e. 54 cities across India. Second the two state owned companies have large pool of wire line subscribers compared to private players. The total number of wireline subscribers of two state own entities are approx 33 million as compared to 4.5 million subscribers of private players. So the difference is huge, but still will it make a difference?

Now coming back to IPTV, it is often confused with Internet Television, but actually both are different services. IPTV is digital television service delivered over a closed IP network while Internet TV is delivered over public Internet. Though IPTV has been in existence for past few years, it took off during 2007 with fairly rapid increase in usage around the globe.

Continued: