China's IPTV faces content bottleneck

07 Dec 2006
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China

's fixed-line carriers are looking to IPTV to grow revenues as voice revenues decline, but lack of local content may prove the bottleneck to widespread uptake, noted UTStarcom CEO Ying Wu.

Intense competition from mainland mobile operators is forcing China Telecom and China Netcom to find new services and value-added offerings to its customers. 'I believe one of the fixed operators may even see revenues decline in Q4 this year,' said Wu.

'IPTV is the obvious target, but the biggest challenge for the operators is finding enough content,' said Wu. 'Lack of local content is the major roadblock, but it's strictly controlled by media authorities and the government.'

He added that overseas content is restricted and very difficult to get approval for which even local media companies struggle to overcome.

Wu noted that UTStarcom is currently working with the government and media authorities to create more cooperation between telecom operators and media companies to generate more content and make it more available to prospective IPTV carriers.

The US-headquartered IP networking provider is the current supplier of IPTV systems to China's only two licensed IPTV operations in Harbin and Shanghai.

Operated by China Telecom Shanghai and the Shanghai media group, the Harbin and Shanghai operations have around 90,000 users and 40,000 users respectively. Harbin began signing up customers at the end of 2005 and aims to reach 100,000 by the end of 2006. Shanghai started two months ago and Wu expects uptake to be initially slow as the city's networks are still in need of upgrading.

Wu noted that most technical barriers to IPTV have been overcome but some cities will need to upgrade older ATM-based ADSL networks to IP-based ones, which can better support IPTV. He added around 80% percent of Shanghai's ADSL network is ATM-based but stressed that the upgrade exercise is not difficult but will require time.

Wu also believes 60% of China's major cities are IPTV-ready.

Market research firm In-Stat predicts that China's IPTV subscribers will grow to about 4.5 million IPTV users by 2008. Many industry observers expect 2007 and 2008 as growth years for IPTV as the industry gears up for the Beijing Olympic Games.

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