Friday, December 21, 2007

ZTE Interview

I had an interview with ZTE yesterday to discuss its recent announcement that it won the first IPTV AVS deployment in China with China Netcom.

ZTE offers a complete IPTV system but uses video headends from other companies. It uses Envivio, USC, and Shanghai broadcast for AVS encoders. It may use other vendors for set-top boxes or may include content security from Irdeto or Verimatrix in addition to or in place of its own set-top boxes or content security software.

ZTE's China Netcom AVS deployment will start with 30 thousand subscribers. It is in a city of 2 to 3 million people, so there is room for significant growth.

ZTE believes that its AVS capability gives it a significant competitive advantage in the China market. It stated that China Telecom is testing AVS and that over the air broadcasters are starting to use AVS for digital terrestrial services. ZTE cited three advantages for AVS:
  • AVS provides similar quality to MPEG-4 with H.264 at similar bit rates.
  • AVS requires less hardware resources than MPEG-4 H.264.
  • The intellectual property fees for AVS are less. Specifically AVS does not require the broadcaster to pay royalties as MPEG-4 H.264 does. In addition, the intellectual property fees stay within China.
ZTE believes that it is the number one IPTV systems company in China. It said that UTStarcom is its closest competitor. Huawei is not a significant factor with IPTV in China.

ZTE stated that there are currently 1.14 million IPTV subscribers in China. People generally prefer IPTV over cable even though it is about 50 percent higher in price because if its interactive and convenience features.

ZTE said that the lack of consensus between MII the telecom regulator and the broadcast regulator is holding IPTV back today. It stated that China Telecom and China Netcom are made up of a set of independent local subsidiaries. ZTE stated that each of these subsidiaries will make its decisions about which IPTV system to use independently.

Keep in mind that this is ZTE's view of the world. It is clearly a significant factor in the China market even though UTStarcom would probably dispute which is number one. I do believe that AVS will be an important factor in China and one where ZTE seems to have an advantage today.


Anonymous said...

Due to its low licensing fee, AVS may be considered by other countries as well.

Bob Larribeau said...

I think this is true, especially when a service provider is considering a complete IPTV system from a company such as ZTE that offers AVS. As long as the AVS set-top boxes cost no more than the MPEG-4 AVC set-top boxes and the infrastructure components are competitive in price and performance with MPEG-4 components, then AVS will be worth considering.

Personally, I doubt that many service providers selecting their IPTV components themselves will ssterongly consider AVS.