China Telecom to test AVS

EETimes has reported that China Telecom plans to test AVS video encoding at its Shanghai Telecom subsidiary in this article. China Telecom denied the report but a vice director of a state owned research group confirmed it.

China Netcom plans to use AVS-based IPTV in 20 cities by the end of 2007,.

AVS is one of several domestic standards that China is promoting in order to reduce its dependency on foreign intellectual property. If the strategy is successful, it will shift the flow of royalties and fees to local, rather than foreign, companies and help to build up domestic technology.

Using AVS will require unique encoders and set-top boxes in China since the rest of the world is going to MPEG-4 AVC. This will significantly raise the cost of IPTV deployment in China, since the set-top box typically accounts for 3/4 of the capital investment in IPTV services.

China is very serious about developing its own technology. It finds that the return from building low cost hardware is low be case so much of the margin goes to technology patent holders outside of China.