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"Your TV is an idiot box", which delivers only what it is programmed to deliver by the broadcaster and does not understand the need of the hour. Does this statement make you recall something?

Pre-cable explosion era viewership was controlled by DD in a way. DD would beam its signals in the sky and the viewer had a choice to leave it or watch it. So, his choice was extremely limited. Post 1992, the cable era, witnessed invasion of some 40-50 channels, which increased to 200-250 channels including regional and local cable channels within a short span of time. Today, the viewer has choice, but he is still restricted only to the selection of channel. He still cannot exercise what and when he wants to view, which is increasingly becoming a consumer desire ever since Internet came in. In the last few years, Internet has commanded huge respect due to availability of on demand content as per the user's choice and convenience.

Intelligent Box
Recent commercial trials for delivery of high bandwidth applications like TV signals and other Internet applications over IP (using a STB) are all set to transform the idiot box into an intelligent device, performing basic utility applications. IPTV is capable of providing genuinely useful applications that enhance the overall user experience. Interactive services need to be seen as part of the overall infrastructure of delivering television–not just a bolt on. Though getting the right interactive services to meet consumer demands will require efforts and experimentation, the opportunity is huge.

A much more startling feature is that 35% of India's population is under the age of 15. The Indian youth is spendthrift-thanks to the burgeoning incomes from the services segment-impatient and has different time pattern to watch TV, unlike the elders. So, prime time for these viewers will be different.

Internet Protocol TV (IPTV) refers to the transmission of digital television signals and related entertainment services and applications over a broadband network, using the same protocols, which support the Internet. Improvements in digital video compression standards as well as increased speed in broadband connections over digital subscriber line (DSL) technology and fiber access technologies have made possible the delivery of high quality video over the telephone line. This means that telecom operators are all set to enter the television distribution market and offer what is known as triple play: offering telephony, data access, and entertainment over the same access.

The suite of services and applications comprised within the concept of IPTV is quite broad and globally varies according to the operators' network capacity and the solutions offered by vendors. As the name of the service refers to, the main application is the distribution of digital television signal over the IP network. It is enhanced by characteristics inherent to a broadband connection. Typical service enhancements enabled are on-screen programming information, channel selection and navigation. The two-way communication capability given by a Braodband connection allows for true interactivity between the subscriber and the network, while the point-to-point connectivity makes possible for each viewer to watch individual broadcasting, such as video on demand. Interactive services may include gaming, on screen prompts related to other programs matching the viewer's behavior, accessing on-line content complementary to the program watched, and so forth.

The Indian Scenario
Today, India has 110 mn plus TV households and 60 mn plus cable TV homes. India is world's 3rd largest TV market with projected 18% Y-o-Y growth for the next 5 Years. Though the Indian telecom industry leap-frogged from analogue wire-line to GSM-CDMA wireless duo and witnessed a huge wireless growth, it is seriously dented the wire-line growth. India boasts of 48 plus mn fixed line homes with almost negligent wire-line growth. India is possibly the only country where the numbers of cable homes are more than the fixed phones. Majority of the 48 mn plus copper wired homes are owned by the incumbent operators BSNL/MTNL. The BSNL/MTNL deployed network asks for huge refurbishing of its copper lines in a way asking for a large investment and deployment. In such a situation the cable operators are strongly positioned with the last mile access (though overhead at most places). In-fact a significant percent of LCOs has invested in building a Fiber-Ethernet network for Internet access. On the flip side, cable operator face a serious image issue as they are fragmented and lack technical expertise to pull up its product. For telcos it is a choice between the devil and deep blue sea. Operators do not know whether to co-opt or to compete.

Cable operators are not restricting themselves to the Fiber–Ethernet mode. They have a two-pronged strategy to combat new technologies like IPTV and DTH – which is digitizing the entire network and offering consumers more channels and content at the same cost. They intend to offer set-top box on an easy-payment basis. It is also pushing high-speed broadband Internet into the homes and bundling the same with cable TV. Thus, Hathway plans to offer in its universe analog cable TV services, digital cable TV services and bundling with high-speed broadband Internet. Today, the cable operators are competing in high risk, but low brand value environment.

Interactive walled garden services can provide a boost to IPTV business case for broadband and wire line telecom operators. STB development has come a long way, preliminary IP boxes had low RAM, low processing power and low end browser. Today, an odd $150 box can support and work like a mini computer with 32-64Mb RAM, 500+ MHz processing power, has high end browser to support best of animations, flash, Java and the much needed plug-in support. Effectively meaning that the changing STBs will allow the user to browse Internet, play videos, define his play-list for songs like the PC, do mailing applications, will provide a USB drive to store content, share pictures, attach a keyboard or a gaming console and what not. On a very positive note as the operators start moving up on the deployment scale the odd $150 figure will definitely come down.

In a country, which is gasping for that sweet point on the broadband explode graph, IPTV may just help in providing the much-needed thrust. Internet users in India reached 37 mn in September '06 up 54% from 25 mn in March 2005. India today has 110 plus mn TV sets in the country. In contrast to this, the number of PCs (laptops and desktops) is a meager 5 plus mn figure. Though the total PC market grew over 27% in 2004-05, the household segment contributed for only 12%. The immediate implication being that huge percentage of those 60 plus mn cable homes in India do not have an Internet connection. There is for sure a significant target addressable opportunity market that may be wiling to use their TVs as basic computing machines for basic Internet applications like ticketing, browsing, emailing etc. Though the total Internet users may not look appealing but the real indicator is the total online active users estimate: 100 mn by 2007-08.

The fact that even though total internet users are increasing at 50 plus % rates, PC growth is limited at 27%, is a clear indication that people don't want to spend extra money over the PC.

The Hitches
Even though IPTV continues-and will continue-to be a difficult decision for telcos, particularly in the Indian context (limited usable wire-line penetration), it makes perfect sense to take the logical next step of delivering media service over the established network.

Most of the telcos are attempting to manage their business by themselves without any content partner, but it makes perfect sense to have a content partner to garner an edge. Once the content partner is in place, it is only the delivery of content using any of the various mediums on wire-line and wireless. In fact the content acquisition model should move around the availability of entertainment delivery platforms and the real estate. Most of the successful IPTV operators across the globe-be it PCCW, France Telecom, Belgacom, Fastweb and others-have thrived on the exclusive premier content strategy to reap the benefits. It also makes sense to have integrated content strategy to target distribution rights, which can cater to multiple platforms like broadband 3G, Internet portals and of course IPTV.

Having said that, one has to confess that the situation is no better on the IPTV front either; the numbers aren't big on IPTV, and the business case is weak. In a typical ADSL2+ network architecture, the pay back period can be anywhere between 4-5 years. The number would considerably change with low deployments. It is a me-too service and introduction of new functionalities will not only deteriorate the business case, but also turn hygiene in a short period.

But, it is the uniqueness in the convenience and on demand nature of service which will drive the IPTV business. The topping would come from the bundled offer for voice, Internet and entertainment. Though the subscriber will raise questions on single point of failure, a poor cable operator's image will overcome that suspicion. The add-on interactive services may just provide that extra topping, on the service to make a strong impact in the connected home.

The IPTV story definitely looks up keeping in view the larger picture of high loyalty, low churn, greater broadband acquisition rate and high perceived innovative value in the minds of the subscriber-surely for the Indian subscriber. Profit is definitely not the sole motivation for IPTV service; it goes beyond that towards increasing customer stickiness, increased customer loyalty, high on brand perception/technology innovation index.

Consumers are all set to have king size experience with entertainment to be made available over the broadband network.

Piyush Upadhyay
Asst Manager, IPTV Projects, Airtel Broadband & Telephone Services
vadmail@cybermedia.co.in