December 8, 2008

IPTV: The Hong Kong Model

By Monta Monaco Hernon

IPTV numbers worldwide are on the rise. New research from Informa Telecom & Media puts global subscribership at 57 million by 2013. That is nearly triple today's figure, but still represents only 4 percent of TV households.

The report indicates the strongest growth for IPTV in the Asia-Pacific region with 22.2 million subscribers predicted by 2013. The success of the technology in that region is evidenced by the fact that telecom provider PCCW in August reported an installed base of 927,000 homes for its IPTV service, now TV, making it the largest local pay-TV operator in Hong Kong.

"PCCW is an innovative company," said Edwin Ko, senior manager, solutions marketing, Harmonics. "They make bold moves to stay ahead of competitors." PCCW uses Harmonics DiviCom Electra 7000 HD MPEG-4 AVC encoders and DiviCom Electra 5400 SD MPEG-4 AVC encoders.

PCCW offers subscribers a quadruple play of telephony, video, high-speed data and mobile. The company has been innovative not only with technology, but also with pricing, bundling and content, Ko said.

To get customers interested, PCCW has provided a basic TV package for free, allowing customers to add premium channels and a la carte channels for a monthly fee. As subscribership has grown, the company has been able to invest in more premium content, including broadcasts of English Premier League soccer matches. "Just because of that, Hong Kong Cable subscribers switched to PCCW," Ko said.

PCCW also offers live TV via mobile phone, VOD and network PVR. "Hong Kong Cable doesn't offer a two-way communication network - no on-demand services," Ko said.

Success replication?

Will the Hong Kong example work elsewhere? In a paper focused on the India market, UTStarcom cited the example of PCCW's success to suggest that IPTV providers in India have a greater potential for growing ARPU than direct to home (DTH) satellite entrants into the market.

UTStarcom is a provider of IPTV solutions for broadband, telecom, cable and satellite providers.

"PCCW was able to grow ARPU in excess of what could be achieved by the pure play DTH providers because of enhanced HDTV viewing experience and interactivity ... (and) the widest selection of content, with over 155 local and international channels," the paper states.

The video market in India includes a "fragmented" base of 55,000 local cable operators, as well as satellite TV providers, which only recently entered the market. UTStarcom recommends that integrated service providers - such as Bharti-Airtel, Reliance Infocomm, Tata Inicom, BSNL and MTNL - consider both DTH and IPTV technologies.

DTH makes sense in cases where: (1) broadband and physical backbone networks are not available; (2) there are "economies of subscriber scale"; (3) and regions are sparsely populated or the population in an area is dispersed, for example. On the other hand, the report includes consumer demand for interactive services, highly populated areas and desire for bundling as the drivers for IPTV.

- Monta Monaco Hernon

Read more news and analysis on Communications Technology's Web site at www.cable360.net/ct/news/.