Television via the Web — or Internet Protocol TV — gets people all worked up. Not just in arguments about whether TV that is so ubiquitous is good for anyone or because it poses a genuine threat to conventional transmission pipelines, be they terrestrial, cable or satellite. There is also a debate raging about where IPTV is most likely to succeed.
Will it be early adopter Asia, home to the world’s most successful commercial deployments? Or will the developed world overtake when Asian broadband connections limit growth?
Hong Kong’s dominant fixed-line telecoms operator PCCW has rolled out its own technology and its own brand, NOW Broadband TV, and has become the IPTV industry’s sexy success story. While the company’s TV moves might have been seen simply as a better way of selling broadband subscriptions than a plain vanilla fast Internet connection, PCCW developed its own set-top decoder and delivered a service with telephone-like reliability. That put it in head-to-head competition with three cable TV providers, and it now licenses its technology to other broadband players.
To the channel and content owners, PCCW demonstrated the Internet is actually less susceptible to piracy than cable, in part because each STB is receiving only one channel at a time. And it delivered on a sales pitch that stressed content and an a la carte channels menu, rather than technological differences.
In Japan, Softbank’s BBTV has more than 200,000 subscriber households and is adding new ones at the rate of 18,000 a month, although how many are paying is open to debate. Without the same population limitations as Hong Kong, BBTV could become the regional IPTV leader.
Asian IPTV has proved two things already, first that the technology works and second that the public is largely technology-agnostic. That is less true of regulators. Big question is whether China will join the IPTV leaders or whether South Korea will prove more fertile ground.
Korea could soon have the infrastructure needed. Korea Telecom has plans to upgrade its network with fiber-to-the-home with speeds of 100 Megabits per second. That is more than enough to simultaneously deliver a range of services including TV, radio, voice and web browsing.
Unlike Hong Kong where the cable incumbent was weak, Korean cablers are strong and protected by regulations, including a rule that prevents Internet rivals from carrying HD programming.
KT, however, is keen to launch new services as it suffers loss of broadband subscribers to cablers and bandwith resellers and as conventional phone calling is lost to VoIP. With more than 3.6 million Korean homes already capable of receiving IPTV, KT also argues that deregulation will help achieve government aim of an analog TV switchoff by 2010.
Media Partners’ Vivek Couto forecasts that KT and two others, Hanaro and Dacomm/Powercomm, soon will be awarded national TV licenses. KT is forecasting that by 2010 its IPTV service will break even with 2.3 million subscribers delivering average revenue per month of $16.
According to U.K. research firm Ovum, China’s broadband household will soar from 46 million in June this year to 79 million by the end of 2007.
Whether this will ever convert into an IPTV market is still moot. While some estimates say China has 20 licensed IPTV companies and a further 70-80 operating in a gray area, others say only Shanghai Media Group has a license.
Others say there is still ministerial infighting over which department should regulate the sector and whether IPTV should be promoted at all, given that the country is spending so much laying cable.
Further, while much of China runs as a free-market economy, culture and communications are the most regulated sector. Controls over news and entertainment are unlikely to disappear any time soon. That prevents a pay TV business model emerging and puts a massive brake on IPTV.