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Save Hong Kong, IPTV still is in infancy in Asia Pac

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CIOL Bureau
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Kevin Lee Ka Wa

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Asia is still an infant market for IPTV, although services have been launched or are being planned in 11 out of 14 of the territories Ovum monitors. Higher levels of activity are seen in developed markets with strong broadband penetration such as Hong Kong, Japan and Taiwan. However, the scale of rollout is small compared to the established cable or satellite industries, with many IPTV deployments limited to a single city. Apart from Hong Kong, where IPTV is approaching market dominance, uptake of IPTV is still insignificant in this region as a whole.

Fixed carriers are leading IPTV deployment

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Fixed incumbents and integrated operators are the major driving force for IPTV rollout in Asia. Telstra is the only incumbent yet to announce an IPTV plan in this region. ADSL is the most common delivery technology, although FTTH is also used in some advanced markets such as Japan and Hong Kong, and terrestrial UHF has been adopted in Malaysia.

IPTV drivers are strengthening

Asian telecoms carriers are developing IPTV in the hope of defending their declining core business, reducing customer churn and creating new revenue streams. Facilitated by improving broadband networks and service uptake, operators believe IPTV can help them to fend off triple-play competition from cable players and other carriers. For operators that already have investments in the TV business, IPTV provides an alternative distribution channel for their pay-TV services.

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IPTV barriers are still present

Regulatory barriers are amongst the biggest impediments to IPTV development in Asia, particularly in China and Korea. The development of the pay-TV market in many Asian countries is undermined by the dominance of traditional free-to-air TV services. In others, a fragmented cable industry such as in Taiwan, Korea and China is hindering IPTV expansion. As well as regulation, content acquisition costs are growing as competition for premium content increases. Poor copyright protection and piracy make content providreluctant to strike licensing deals in some markets.

Positive outlook, but we expect modest IPTV growth

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With a relatively low pay-TV penetration rate, Asia has plenty of room for IPTV providers in the years ahead. However, growth will be limited by formidable cable and satellite  competition. Hong Kong, Taiwan, Japan and Korea have brighter prospects, while the two biggest markets (China and India) face serious regulatory issues and poor infrastructure respectively. We expect operators to use interactivity features in their IPTV services to differentiate themselves from cable and satellite, but customer acceptance and demand will only increase gradually.

 
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IPTV interest is widespread

Interest in IPTV is not limited to developed countries; there is growing interest in developing markets in Asia. While major commercial IPTV deployments have taken place in Hong Kong and Japan, a number of smaller-scale services have been rolled out in Taiwan, Thailand, Malaysia, Korea, Australia, China and India. Singapore and New Zealand are likely to introduce IPTV services in 2007 with trials already underway. Countries such as Indonesia, Vietnam and the Philippines do not currently have definitive plans for IPTV, although some minor activities have occurred.

The developed countries in Asia with high broadband penetration have been more likely to either deploy or trial IPTV. Higher levels of IPTV activity are seen in Hong Kong, Taiwan, Japan, Korea and Singapore. But more recently, a number of countries with low broadband penetration, such as China, Malaysia, Thailand and India have also seen IPTV activity.

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IPTV is led by fixed incumbents using DSL

Fixed incumbents and integrated service providers are leading the way in IPTV deployment in Hong Kong, Taiwan, Korea and India. In other markets such as Japan, Thailand and Australia, alternative broadband service providers are the driving force. Pay-TV providers are taking the IPTV lead in Malaysia and China (where Chinese telecoms operators are supplying network transport).

The markets in Hong Kong, Japan, China, Korea, India and Australia are facing tougher competition as multiple IPTV providers are battling for a share of the market.

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Telstra is the only incumbent among the developed Asian markets without a plan for deploying IPTV.

The majority of existing IPTV deployments are delivered over DSL broadband networks, with some providers in Hong Kong and Australia having upgraded to higher speed ADSL2+. Two rollouts, in Japan and Hong Kong, use optical fibre. In Japan, fixed incumbent NTT distributes the IPTV service via its fibre network and looks to expand to copper line customers. In Hong Kong, alternative broadband provider HKBN uses a metro Ethernet core network to offer broadband and value-added services.

Unlike other deployments worldwide, the Malaysian pay-TV operator provides its video service using the IP over UHF technology that was developed by MiTV’s founding members.

The writer is a senior research analyst at industry research firm Ovum and tracs telecom market in Asia Pac

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