IPTV can still succeed in India, if done right

INDIA--IPTV may have failed to garner significant market share in the country, but lower pricing and better last-mile connectivity could drive this sector to 15.9 percent of all residential broadband subscribers in India by end-2011, experts say.

It has been six months since Bharti Airtel, India's largest telecom operator, first launched Internet Protocol Television (IPTV) in selected cities. The technology was also deployed by state-owned Bharat Sanchar Nigam Limited (BSNL), Mahanagar Telephone Nigam Limited (MTNL), and multi-system operator (MSO), Atria Convergence Technologies, in some cities.

Other players are also keen to jump on the bandwagon, including existing telecom operators and MSOs such as Hathway. Reliance Communications (RCom) has been holding trial runs of IPTV for over a year, but has not commercially launched the service.

Unlike direct-to-home (DTH) TV, IPTV has failed to garner mainstream adoption.

According to Anil Prakash, IPTV India Forum's secretary general, only some 10,000 to 15,000 homes in the country have IPTV. In contrast, 70 million homes have cable and satellite (C&S) TV and 13 million homes are connected via DTH. Around 1 million homes are switching to DTH every quarter, Prakash revealed. In all, over 120 million households in India have TV sets.

However, analysts and industry watchers are not prepared to write off IPTV just yet.

Arpita Pal Agrawal, associate director at PricewaterhouseCoopers told ZDNet Asia in a phone interview: "IPTV will work in India if the pricing is competitive, and offered at around the same price point as technologies like DTH and conditional access system (CAS)."

Chandan Mendiratta, vice president of service provider and system engineering, Cisco Systems India and South Asia, said: "IPTV has a great potential in the Indian market, since it not only offers entertainment, but can also provide Internet data services, telephony, e-government and video streaming." Cisco offers services such as network service assurance, aimed to enable service providers to efficiently offer IPT.

According to IDC, India is expected to clock some 966,000 IPTV subscribers by 2011, expanding at a compound annual growth rate of 156.8 percent. The research firm expects 15.9 percent of all the residential broadband subscribers in the country to switch to IPTV by end-2011.

Mendiratta said in an e-mail interview: "Even if 10 percent of C&S subscribers migrate to IPTV, we are talking about 6.5 million to 7 million IPTV homes in India. And, this figure doesn't include adoption in the enterprise sector."

The last-mile challenge
"IPTV is a bandwidth-hungry application," Prakash told ZDNet Asia in a phone interview. He noted that IPTV players are facing a host of challenges, the biggest of which is last-mile connectivity.

"IPTV players don't have the right of way to bring the service to your home," he said. "And often, getting that right of way can be prohibitively expensive."

IPTV service providers are fast realizing that last-mile connectivity is a challenge in both rural and urban India. Bharti Airtel is targeting its landline and broadband customers to drive IPTV demand, but the same approach may prove challenging for BSNL and MTNL as both providers are witnessing a consistent drop in landline connections.

"The penetration of cellular phone networks in India has made fixed phones redundant," N. S. Murty, director of new business initiatives at NXP Semiconductors, told ZDNet Asia in an e-mail interview. The company offers products targeted at IPTV service providers.

Prakash said: "The shrinking base of landline phone subscribers doesn't help players like MTNL and BSNL." The IPTV India Forum, he added, is looking to address these challenges for industry players. The non-profit group was set up to develop an ecosystem for IPTV ad mobile TV services.

Despite these challenges, PricewaterhouseCoopers' Agrawal believes triple-play services will find ground in India, if broadband penetration increases in rural India.

"Simultaneously, services like e-government and remote education have to develop," she said. "More government services need to come on to the electronic platform so that the masses can enjoy the real benefits of triple-play."

Mendiratta said: "IPTV is a strategic application in the service provider's portfolio of consumer entertainment, communication and online services." Globally, IPTV has gained immense popularity and India should catch up soon, he said.

According to Gartner, some 48.8 million households worldwide will subscribe to IPTV services by 2010.

In the Asia-Pacific region, Gartner expects that number to hit 8.7 million in 2012, generating US$3.5 billion in revenues.

Low price, simple interface
Today, IPTV is still significantly more costly than CAS and DTH. Viewers need a dedicated set-top box, modem and broadband connection. They will also need to install a camera to make it an interactive TV.

Once installed, however, IPTV can support some work processes usually carried out on a computer. The TV can receive phone calls, stream Web videos and provide digital TV channels.

"IPTV has the distinct advantage of a back channel that can be used for deploying services like video-on-demand more effectively," Murty said.

Agrawal added that the business case for IPTV will be stronger if the technology is more easily available and at lower price levels.

However, helping people understand the importance of IPTV and its usage remains a big challenge, she said. "The user interface (UI) should be simple," Agrawal said, noting that the UI--along with the overall experience--will help market players garner subscribers on a wider scale.

In addition, service providers also have to deal with challenges such as broadband penetration and building an ecosystem for data transmission.

Murty explained: "Players must integrate applications like browsers in an IPTV solution, and deploy services like online commerce and Web TV. Online game is also an application that players must consider." However, he noted, the quality of service and overall experience will prove to be IPTV's "make or break" point.

Mendiratta said: "Service differentiation and time-to-market are critical for the success of IPTV.

"To reach those goals, players must achieve and maintain quality of service, build an open system so that third-party applications can be deployed easily, and achieve the necessary scale," he said.

Swati Prasad is a freelance IT writer based in India.