MUMBAI: Global IT research and advisory firm Gartner Inc said Internet Protocol television (IPTV) will face a raft of problems that will hold it back for at least five years, foremost being the low base of broadband connections to households in India.
Despite being a more advanced technology capable of additional functionality, IPTV is not well placed in
Gartner senior research analyst Neha Gupta said, “The primary reason for minimal IPTV uptake is the low broadband penetration in
The Indian government has set aggressive targets for increasing broadband coverage, but even with strong growth, the penetration will stay low for the next five years. In 2006, the size of the consumer broadband market in
Moreover, 2007 is emerging as a critical year for
Secondly, under the pricing regulations imposed on the pay-TV industry, IPTV will effectively be priced at the same level as digital cable and DTH, resulting in ARPUs in the range of Rs 300 – 500, as opposed to analog cable users paying Rs 150 – 300. IPTV therefore will not be able to differentiate itself from digital cable or DTH players in terms of price.
Indian carriers are unconvinced that IPTV offers them much revenue opportunity and, as a result, the leading state-owned carriers have adopted a new style of model that brings in third-party capital and ideas to run the IPTV operations under a franchise style model. While it is the carriers who hold the IPTV license rights and the broadband access infrastructure, the third-party investors buy the equipment, source content and run the IPTV operations in a particular city on behalf of the carrier. In return they get a major share of the revenue.
The franchise style model being adopted by the leading state-owned carriers is positive for the IPTV industry and brings new private sector ideas, rigour and capital into the business. According to Gartner, this model will help speed up the deployment of IPTV in the early years compared with what the carriers might achieve on their own. For the carriers involved, this model gives them a good way to offer triple-play and value-add to their broadband offerings without spending heavily on new equipment and expertise. Though innovative, this is an untried and still risky model; much will ride on the way in which the agreements are structured between carrier and franchisee.
Gupta recommends, “Carriers should consider moving into DTH satellite to help secure customers who can later be converted to IPTV or offered interactive services through a hybrid DTH-IP broadband STB. Alternatively, carriers could partner with DTH operators to offer customers a hybrid STB capable of accessing DTH for channels and using broadband for video on demand (VOD) interactivity. The hybrid model offers an inexpensive route to triple play, while providing extra revenue through cross-selling pay-TV to broadband and voice customers. Such partnerships have collectively added around 1.5 million subscribers in the