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Follow UsBANGALORE: IPTV both as a technology as well as service is wonderful. IPTV allows operators to boost their ARPU’s (Average Revenue Per User), allows consumers to pick and choose what they want to see, advertisers the medium to reach their audiences effectively.
All the requisite ingredients to make IPTV as service that will transform the broadcast landscape of any country in few years. Not surprisingly all the major players in India have jumped into the IPTV bandwagon and are planning roll out of their IPTV on a commercial scale less than a year from now.
Content providers like Times Broadband, IOL and Aksh Broadband are giving finishing touches to their content plans before they make official their content offerings.
But how justified is the noise around IPTV? Has the Indian market reached a critical mass that it is ready for service like IPTV? Will operators be able to get return on their investments from a service like IPTV, and will existing competition from cable, DTH and satellite make life easier for the new entrant?
The answer, say analysts and industry gurus, is unfortunately negative, considering plethora of deterrents acting against IPTV both as a technology as well as service in India.
Starting with telecos strategy to push IPTV service as a stand-alone service, to low base of broadband subscribers in country, the problems are plenty. Not to forget to the uncertainty surrounding business model, serious competition from well-developed cable and satellite networks and confusion over content exclusivity.
All this put together means, IPTV will find the going tough in India over the next few years.
Broadband blues
For IPTV to become a reality and a revenue-bearing unit, very high-speed broadband access to customers is must.
In India, while the backbone infrastructure is fairly robust, the last mile connectivity to the consumer is limited. In India there are only 2.2 million broadband subscribers compared to 56 Mn broadband subscribers in China where IPTV because of strong broadband penetration has made a satisfactory beginning.
China has been able to rake in 100,000 IPTV subscribers in first few months of rollout and expects the number to reach by one million, while Indian operators have few hundred subscribers to talk about.
Analysts opine the broadband penetration in India is too low for telecos to even think of improving their ARPU’s by rolling out their IPTV offering.
Says Neha Gupta, Senior Research Analyst, Gartner, “Primary driver of IPTV penetration is broadband. A comparison of broadband penetration and IPTV penetration in various regions point out to this fact. The low broadband penetration rate in India is the biggest factor hampering growth of IPTV”
Alok Shende, Director Technology, Frost and Sullivan, ‘Given the painful progress of broadband penetration in the country, getting return on investment on IPTV service will be big challenge for the operators. If operators are remotely thinking about earning revenues from their IPTV services, the broadband penetration in the country needs a big fillip”
That Alok says is a remote possibility in the near future considering the way telecom market in India is shaping.
”The telecom market place is getting more lopsided for mobility not for the fixed line space. Fixed line is actually stagnating and stopping. If we track the subscriber’s figures in the country the real growth is negative”, explains Alok.
Chief Marketing Officer, Airtel, Broadband & Telephone Services, Srinivas Rao, says that though the Indian telecom industry has witnessed a tremendous growth but that growth doesn’t directly reflect with growth on fixed side which is imperative for IPTV success.
“Indian telecom market has leapfrogged from analogue wire-line to GSM-CDMA wireless duo and witnessed a huge wireless growth, however wire line growth has seen a slowing down leading to a situation where the number of cable homes are more than homes with Fixed Phones” adds Srinivas.
Flawed Strategy: Wrong way to go about
An accepted strategy by telecom operators across continents has to been to push IPTV as a part of bundled service (voice, data and high speed Internet Access).
Be it PCCW in Honkong (800,000 IPTV subscribers) or France Telecom or by KDDI in Japan and Fastweb in Italy or Verizon in USA, the operators push IPTV as part of packaged service to consumers and not as a core service as Indian operators seems to be thinking about.
Analysts are not is agreement with the way operators are pushing the service in India in the first place. Pushing IPTV as a core service and hoping it will push broadband penetration in the country is a flawed strategy to start off with, It has to be other way around, say analysts.
Neha Gupta, senior research analyst with Gartner, adds the business model of telecom operators is flawed in the first place, “Even in developed countries, IPTV is just one additional factor in increasing higher bandwidth broadband connections. It cannot be the sole driver for it, as it seems we are trying to do in India”
Alok Shende, Frost, adds service providers across the world don’t see IPTV as a core for adding revenues. “They see voice followed by data as the core and IPTV is seen as a value added service. The main revenue generating areas is voice followed by the Internet” Alok adds.
“The trigger point for IPTV is a consumer who needs data services along with IPTV rather than other way round. It can’t work as a service on its own unless paired with more powerful voice and data services”, says Alok.
Business Development Manager, Digital Video, Texas Instruments, Henry Wiechman has a word of advice for the Indian telecom operators.
”The IPTV service is US is an optional service along with the broadband voice service and Indian operators need to think on same lines” says Henry
“In US, we are more methodical in approach. DTH and cable have a large installed base in our country as it is in India and IPTV strategy needs to calibrated so as to be successful against traditional broadcast behemoths”.
“In US, the focus is more on the value added services” says Henry adding telecom operators should focus on offering personalisation services like Video on Demand and video conferencing to keep the interest level high with the customers rather than offering IPTV as a replacement to their existing TV service
High Speed Broadband access----really?
Business Development Manager, Digital Video, Texas Instruments, Henry Wiechman, explains that even the subscribers who telecom operators claim to have access to ‘high’ speed broadband access in India actually don’t have the requisite bandwidth that can support a bandwidth hungry service like IPTV.
“Majority of 2.2 Mn broadband customers in India don’t have the requisite bandwidth to support myriad of services that IPTV offers. A minimum of 2 Mbps bandwidth is needed to support services like Video on Demand or Video conferencing, services which have made IPTV a genuine replacement to cable or satellite services”.
This is not clearly the case in India where users have max of 1 Mbps speed available to them.
Adds Alok Shende, Frost, “Unlike US, Indian service providers don’t have the luxury of bandwidth is very poor. IPTV being a very bandwidth intensive technology is going to significantly choke their pipes. This essentially means a poor QoS for their IPTV service which will act as a big deterrent for the consumers”.
And to improve the QoS, revamping last mile infrastructure of BSNL and MTNL is the key.
However Srinivas Rao, Airtel says to refurbish the majority of the 48 million plus copper-wired homes, owned by BSNL/MTNL, is asking for large investment and deployment. This is too big a ask for telcos who are themselves struggling with falling ARPU”. adds Srinivas.
Where is the money; confusion around business model
Another bigger factor that will make the progress of IPTV in India genuinely slow is the confusion among telecos as to how to get their return on massive investments they will or have already made.
The big question is where will the money come from.
“If one compares to US, customers will pay much higher for IPTV services than the Indian customers will pay" says Praveen Ganapathy, director- business development, consumer & automotive corporate business development, Texas Instruments India.
”If we talk about video on demand, the charges during trials are Rs 50-60. It doesn’t make sense for Indian user who gets a pirated DVD in the market for 35 rupees”, says Praveen.
“Why should I need to download the video and also pay Rest 60 to the operator while I can get the same video on pirated DVD from market for Rs.35 only”, adds Praveen.
Alok Shende of Frost adds, “The decision for service providers to move ahead is not a technology decision but a financial decision. Reliance has invested a lot but after trail deployments they are going very slow for the simple reason that they don’t see a real value for ROI. Similarly other operators are also going slowly as the tangible benefits for them are too few and far between to see”.
Standing up to competition; Cable, Sattelite and DTH
The core of TV in Indian today is cable while DTH is turning out to be distant competition. DTH today close to 2.5 million subscribers, and has plans to add another 3.5 million connections in near future. Tata Sky has been able to rake 0.5 million customers.
Indian telcos faces stiff competition from cable and satellite operators that puts a risk on IPTV returns and remains unproven potential of incremental revenue streams.
Says Alok Shende, “. The two alternatives to cable in India are DTH and IPTV. DTH is much closer substitute to cable because price points are more or less the same and alternate technology is the same. It is innovative and has clearly a well established business model not only in India but across the globe”
Alok says if we talk about IPTV, it isn’t a direct substitute. IPTV is a part of data strategy and is not a part of content strategy.
”If equipment vendors are considering very low bases, there is nothing wrong is being gung-ho, but when we talk about volume of IPTV Set top Boxes (STB’s) to the volume of cable dishes being sold or the satellite dishes being sold, the number comes no where near the competing technologies” adds Alok.
Content aggregation dilemma
Then there is lack of media knowledge amongst the Telcos coupled with the challenge to make available right content and its management especially from the perspective of piracy
Further access to content in an effective manner to match the incumbent cable networks could be another challenge
“Wherever a telecom operator has gone for IPTV, they are either caught in the hands of some smart footed vendors or they have to got into little bit of tangle with the content providers” says Amit Kumar Dev, Co-founder, Director (Operations)& CTO, TIME Broadband Services Private Limited.
“Telecom companies will not be able to understand the full scope and concerns of a converged service as much as a broadcast company who will not be able to understand the technology of the delivery’, adds Amit.
“Content aggregation is will be big issue for the telecom operators. You can’t have operators go to the content providers like the STAR or ZEE to ask them for the content. In India we need players who will do content aggregation. Unfortunately good ones are few and far in between”, says Praveen Ganapathy, director- business development, consumer & automotive corporate business development, Texas Instruments India.
Going forward… IPTV to remain niche technology for some years for now
For IPTV to survive in the long run, say analysts, broadband has to be made available to most of the population, the last mile connectivity has to be solved and opened to innovation and competition.
Praveen Ganapathy, Texas Instruments India, calls for making broadband free to consumers so they can experience IPTV and then make an informed choice,
“People are very wary of what new is going to come. Unless you free the broadband they are not going to try that out. Make broadband free let people try out the service for couple of months and if the find that IPTV is much more than a replacement of their traditional TV service than it they will pay for IPTV experience” says Praveen.
Till these things are done, IPTV says Alok Shende, will remain niche technology and will be used be people who love for try out new things.
“People who go for the novelty value will go IPTV in near future. This is true for any technology. However the percentage of such people is very very low for telcos to make profits from them no matter how much they spend”.