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Telecom giants enter fledgling IPTV market

Indian telcos intend to ride IPTV into the entertainment sector with the twin goals of raising their revenues while at the same time utlilizing their existing broadband infrastructure. By Kushal Shah

India has witnessed tremendous growth in the telecommunications sector and has the third largest network after the US and China. TRAI had stated that India had more than 225 million subscribers by end-June 2007. On an average, seven million subscribers are added every month. Further analysis of the telecom scenario indicates that unprecedented growth in mobile subscribers has reduced the average revenue per user (ARPU). Telecom operators feel the need to market additional value-added services to ramp up revenue generation.

Both public as well as private telcos have been continuously introducing services (for instance, broadband and sundry value-adds), which are becoming the primary modes of revenue generation for these companies. Be it private giant, the likes of Reliance, Bharti and Airtel, or public behemoths MTNL and BSNL—all of these players are scouting out new avenues to provide all possible services that they can in order to satisfy their customers and fatten their bottom-lines. It is this search, coupled with growing broadband penetration, that has propelled telcos to introduce yet another new service known as Internet Protocol Television (IPTV).

IPTV reached Indian shores courtesy MTNL into an already competitive market with entrenched players from the traditional cable TV industry, as well as CAS and DTH players such as Tata Sky and Dish TV. First implemented in Japan, the technology is becoming popular in many parts of the world in countries such as France, South Korea and Germany. Its growing popularity is being matched with development in technology, and after a few years we will witnesses a large number of deployments across the world, including in India. “There are two major reasons for telecom companies to jump into this business—firstly, to reduce churn by proving additional services; and secondly, to make up for low ARPU in a highly competitive telecom market,” said Neha Gupta, Senior Research Analyst, Gartner.

The growth predicted in Asia is substantial. According to Gartner, subscriptions to IPTV services in this region are poised to rise from 1.9 million in 2006 to over 18 million in 2011 at a 56 percent compound annual growth rate. For India, the only major concern is broadband penetration, which is currently low, but the service providers are quickly mitigating this roadblock by introducing new strategies and technologies. On one side, telecom providers are looking at this business as an opportunity for inorganic growth, while on other, cable operators are making a hue and cry over the emergence of IPTV saying that telcos are encroaching on their territory and they perceive it as a threat to their business model. “It is not going to be a smooth ride for IPTV players. It’s an expensive affair to start off with and has barely been successful in other parts of the world,” said Gupta.

Yet another buzzword

IPTV is yet another technology for broadcasting, the difference here being that it is delivered over the Internet. Basically it a digital transmission is piped to your analog television which will need a new kind of set-top box called an IP Set-top box (STB). Coming to the technology part, just like you send data through the Internet, the broadcasters use it as a medium to send you content. It does not have to leverage the Internet, large private networks using IP technology work just as well. So each and every TV system in the network will have an IP address.

Shankar Allimatti, Vice-President, Next Generation Networking, Tech Mahindra, compared IPTV with traditional TV broadcasts, “The traditional cable TV medium is Unidirectional Multicast media, and the end-user has little control over the content that is delivered, except for selecting channels. IPTV, in contrast, is Bi-directional Unicast media and provides for complete interactivity for the end-user to choose the content that he prefers to see and he only pays for that.” So IPTV can enable a new era of interactivity, where consumers can directly shop while viewing advertisements and the entire experience can be made that much more engrossing.

There are buffer requirements in IPTV. Buffering occurs at the set-top box, and the typical buffer is of the order of milliseconds. If the buffer proves insufficient jitter results when packets do not arrive in order. A congested connection can also create problems. Service providers will have to improve their access networks to ensure a decent quality of service.

Movers and watchers

As of now there are few players in this business in India, the reason being that it requires substantial infusions of capital and lots of infrastructure. Unsurprisingly, only the biggies such as MTNL, BSNL, Airtel and Reliance are entering this domain. Early confusion over technology and other issues had forced most of these players to start with pilot models and only MTNL could think of starting a full-fledged service. In the middle of all this confusion, MTNL launched its service last year in Mumbai and Delhi. “We have launched the first commercial IPTV service providing Triple Play to our customers, namely voice, high speed data including VoIP, and video services, on a landline, demonstrating the convergence of telecom and entertainment,” said Peeyush Agrawal, Chief General Manager (Wireless Services), MTNL, who was also the project head for broadband and the first IPTV deployment in India by MTNL. It started off charging about Rs 200 for a bunch of channels keeping apart the initial cost of STBs.

In an effort to attract more customers, IPTV offers various services which are probably possible only through this medium. One interesting and useful feature is that of Time Shift TV. With this feature you can pause a channel whenever you want and when you return, you can pick up from right where you left off without missing the action. IPTV also provides on-demand content, which can be either video or audio and can be selected from a catalog provided by the operator. All of this comes at a price, though.

The next operator to enter this market segment was BSNL—another state-owned entity. It has recently started offering similar services in some cities and is looking at expanding the same across more locations. Among the private players, Airtel and Reliance are in the process of testing, and pilots have been deployed across the country. Airtel is fully equipped to enter this space, at least in terms of infrastructure. It recently launched an 8 Mbps broadband service and is calling itself ‘IPTV Ready’.

Companies such as Airtel and Reliance are probably waiting for the technology to stabilize before launching nationwide operations. As of now, they would be happy sitting on the fence and looking at the progress of the early movers, and with the learnings from that, formulate their own strategy. “High content acquisition cost with no clear regulatory framework is forcing operators to wait and watch at this stage. They are keeping their delivery platform ready and we may see fierce competition in the IPTV domain shortly,” said Agrawal.

Partnering for support

All these service providers are entering the business with the assistance of technology partners, and are largely franchising. To start with, MTNL launched the service with Time Broadband with the help of Optibase’s IPTV MGW 5100 platforms for its digital IPTV head-end operation at the company’s Network Operating Center (NOC). Time Broadband is geared up to deploy IPTV services for both TV and PC delivery, through network and Internet service providers across India.

“IPTV has great potential in India. Any market which uses the wired method for providing services needs a strong topology to support it and we see a big opportunity there,” said David Godfrey, Director Operations, NDS Asia Pacific, technology providers for CAS, IPTV and similar offerings.

Further, Tech Mahindra and Sun Microsystems have a partnership to enable the roll-out of cost-effective and efficient IPTV services in India and the Asia Pacific (APAC) region. “Sun comes in with many other partners such as Digisoft, Envivio, Harmonic, I-Make, Verimatrix and Mototech who bring their own expertise and components to make our solution offering stronger,” explained Allimatti.

The problem areas

IPTV has witnessed only limited success across the world and is a risky business for most. The biggest hurdle preventing widespread roll-out is low broadband penetration. “Another big challenge is that of technology infrastructure. IPTV requires a Content Distribution Network (CDN) to be laid over an existing broadband deployment. These technology deployments, including STB, are an expensive affair,” explained Gupta. The content delivery platform is quite complex with many integration challenges. “Keeping performance parameters of jitter, packet loss, zap time, latency, etc., within permissible limits to attain good Quality-of-Experience (QoE) is also a challenge and requires Quality-of-Service (QoS) implementations and the latest switch upgrades on all aggregation nodes of the broadband network,” said Agrawal.

Apart from these technical hiccups, the technology is facing opposition from cable guys and CAS or DTH providers who offer similar services—with superior quality, at least for the time being. For Indian consumers, options are few even in this area, but the latter have an early mover advantage. Tata Sky and Dish TV have been providing services on a much larger scale than the IPTV providers and assuring quality. Despite this, IPTV players are quite bullish about their technological advantage. “Satellite TV is also a Multicast medium, and empowerment is only enabled at the set-top box level. With IPTV, the user choice and the way the user interacts with the programming completely changes,” said Allimatti.

Gupta asserted that there are some recommendations which can help the Indian television industry in a holistic manner. Providers should try to look at more hybrid solutions rather than complete IPTV solutions as of now. In this, they should divide services into two categories—satellite and IP-based. Normal channels should be delivered to homes via satellite while interactive services should take the IP path. This will curb expenditure and be a better deal for consumers. Another way to deal with IPTV, felt Gupta, was to wait and watch and go slow on this technology.

No matter where the IPTV business heads in India; increasing competition will only benefit consumers in the same way that the ongoing telecom revolution has. The only thing that IPTV providers need is to brush up their services and improve QoS to survive.

kushal.shah@expressindia.com