Shanghai IPTV Service

Light Reading has published a video of an interview with BesTV, the joint venture between China Telecom and Shanghai Media that runs the IPTV service in Shanghai. It describes the services, including interactive services, that are available in Shanghai.

This interview discusses the advanced IPTV services that make Shanghai one of the most advanced IPTV offerings in the world. The U.S. and Europe is generally lagging behind Shanghai in terms of interactive TV services.

China Telecom Advertising Agreement with UTStarcom

Best Tone Information Service Corporation Ltd., a wholly-owned subsidiary of China Telecom Corporation Ltd., with the intent to deploy a video information distribution network in the Hunan province of China. This is the second large-scale interactive advertising system that UTStarcom’s RollingStream® IPTV platform will support in China.
Best Tone is working with UTStarcom to build and operate a Chinese-specific, building-based video system, with 3,500 iPAD1000 terminals scheduled to go live in office buildings, government facilities, supermarkets, hotels, hospitals and schools in the Hunan Province this year. The network, intended to stream commercial advertisements throughout Hunan Province, is expected to support a total of 10,000 terminals in the region upon completion of the project. The iPAD1000 is a complete advertising system that is akin to a kiosk.

This is an interesting application of IPTV technology to mass advertising. I expect that this approach should be adopted on a broad basis globally.

IPTV Subscribers Increasing in China

The number of IPTV users in Jiangsu Province China increase to more than 200,000 by the end of September 2008, compared to 35,000 at the end of 2007. This is an increase of 471 percent in the first nine months of 2008, the sharpest rise in IPTV use in the country.

Jiangsu Province started offering IPTV services to residents in the second half of 2006. China Telecom's local branch operates the service, in collaboration with content providers Shanghai Media Group, the state-run Xinhua news agency, and ZTE.

Shanghai now has more than 600,000 IPTV users as of the end of September, up approximately 150 percent from the end of 2007. At the end of 2007, Hangzhou City had the most IPTV subscribers of any IPTV subscription region with 250,000, while Shanghai Municipality had 240,000 users and Henan Province ranked third with 200,000 users. Jiangsu Province ranked just ninth at the time with 35,000 users, far fewer than the top five regions. The pace of growth has slackened in some regions where IPTV once developed rapidly, such as Heilongjiang Province and Henan Province.

China is on its way to becoming the leading IPTV country as it has done with broadband. However, its IPTV success is still concentrated in only a few provinces. Its ultimate success depends on expanding this success to all provinces.

China Telecom Selects Vendores

China Telecom announced the companies that its provincial operators should use for their IPTV services. For systems contracts, ZTE , UTStarcom, and Alcatel-Lucent were chosen.

For standard-definition set-top boxes ZTE, UTStarcom, Coship, Motorola, Huawei, Postcom, Sunniwell, Alcatel-Lucent, Yuxing, 30 Kaitian and Changhong. The provincial operators should give preference to these companies in the order that they are listed.

For high-definition set-top boxes ZTE, UTStarcom, Alcatel-Lucent, Postcom and Changhong.

The prices for terminal equipment have been set and the provincial operators are not allowed to renegotiate prices.

This should clear the way for China Telecom's provincial operators to ramp up their IPTV efforts. This is likely to significantly accelerate the IPTV services in China, which has basically been limited to the Shanghai area until now.

Olympic IPTV Boom in Shanghai

Due to its replay function that provides access to programs aired in the past 48 hours, subsciptions to IPTV, are booming in Shanghai ahead of the Beijing Olympic Games. China Telecom has received about 3,000 IPTV subscriptions every day, the most in its history.

The number of IPTV users in Shanghai has reached 510 thousand and is expected to hit 800 thousand by the end of 2008. BestTV, the IPTV unit of Shanghai Media Group, said it would promote a new service during the Olympics that enable viewers to watch different sporting events on different windows on one screen.

Shanghai Media Group provides two HDTV programs that are being viewed by more than 20,000 users. About 300 thousand Shanghai broadband users can receive this HD service,''

The company is facing the problem that the installation of wiring to support IPTV can sometimes damage the interior of people's.

This is another example of how sports content can significantly increase the subscription of IPTV services. It is interesting to see that HD has started to penetrate in Shanghai.

UTStarcom Video Advertising System in Guanxi

The Guanxi Telecom Company, a subsidiary of China Telecom, will use UTStarcom's RollingStream IPTV platform for a new interactive advertising system. The UTStarcom system will provide 3,600 concurrent IPTV streams in 14 cities initially. Set-top boxes will be deployed in supermarkets, department stores, office buildings, and in Guanxi Telecom's facilities.

UTStarcom stated that this system has two fundamental advantages. One is its ability to scale to a large number of screens. An IPTV system is designed to support hundreds of thousand of concurrent viewers, many more than the likely number of advertising screens.

The second advantage is its ability to provide unique streams to different groups of screens. Each stream is like a broadcast channel or a set of on demand content. IPTV systems are built so that each viewer can watch different programming, which enables the delivery of targeted content to each screen. This could be organized by store or even by department within a store.

UTStarcom has pointed out to the past that this kind of advertising is a big business with significant revenues attached to it.

UTStarcom is doing a lot of good work identifying other applications for IPTV systems. These applications can significantly enhance the revenue potential for these services.

UTStarcom Sees High On Demand Usage

UTStarcom is seeing on average that 60 percent of the IPTV viewing in its Shanghai deployment uses unicast video on demand content. It expects that this percentage will grow next month due the availability of on demand viewing of all of the events at the Beijing Olympics.

The network it has deployed in Shanghai supports both multicast and unicast, but there are some areas where only unicast is available. There are areas that are served only by an ATM network that is not well suited to multicast. Shanghai Telecom often does not deploy IPTV services in these areas, but when it does, it will provide both broadcast as well as on demand content using unicast. There is no problem offering multicast IPTV in areas served by an IP netowrk.

UTStarcom acknowledges that the extensive use of unicast will generate a significant load on the metro aggregation network. It stated that this has not been a problem as yet.

Shanghai is the largest IPTV that I have found with such high usage of unicast on demand IPTV services. My guess is that the traffic loads that this service has generated have not been a significant problem yet because the percentage of broadband subscribers using IPTV services is still quite low. I believe things will change as IPTV penetration grows.

China Telecom Wants 574K IPTV Set-top Boxes

China Telecom launched a unified bidding process for 574,000 IPTV set-top boxes. The bid covers 536,000 SD and 38,000 HD units all with H.264 . China Telecom set this figure after consulting with its provincial branches on their growth plans for IPTV . The bidding is taking place through a unified framework managed by China Telecom, while each province is involved with its own procurement. Only Guangdong Telecom will not be ordering any terminals, as its IPTV platform will not be upgraded to the latest version of IPTV this year.

This bodes well for IPTV in China in 2008 and marks the start of HD services. It will be interesting to see if this rate of growth continues beyond the Beijing Olympics.

Shanghai Telecom at 420K IPTV Subscribers

Shanghai Telecom now has 420 thousand IPTV subscribers in the city compared to 230 thousand one year ago. Shanghai's IPTV service is adding value added products and developing new services. For example, its relaxation games, which were launched on May 31, attracted 34 thousand users in four days, which illustrates the popularity of interactive products.

China's IPTV subscribers is expected to grow at a significant pace this year due to the Beijing Olympic Games. The service is expected grow rapidly during the next five years and is expected to reach 35 million in 2012.

Shanghai has the most successful IPTV service in China and is experiencing rapid growth. IPTV has not been as successful in the other deployments in the country.

Guangdong Telecom Investing in IPTV

Guangdong Telecom, a subsidiary of China Telecom, will invest $US700 million more on its IPTV network. The result of bidding will be opened by the end of 2007.

Two years ago, Guangdong Telecom made its first purchases of IPTV equipments. Huawei won Guangzhou and Shenzhen with 60 thousand subscribers. ZTE won Dongguan and Foshan with 24 thousand subscribers. and UTStarcom won Zhuhai, Shantou and Zhongshan with 6 thousand subscribers.

Guangdong Telecom expects more revenue from IPTV service based on this upgrade.

This is another sign of growing emphasis on IPTV in China. Guangdong includes Shenzen, which is one of the fastest growing areas of China.

Shanghai has 220,000 IPTV Subscribers

China Telecom reported that its Shanghai Telecom subsidiary now has 220 thousand IPTV subscribers and 3 million broadband subscribers. It stated that half the families in Shanghai now have broadband connections. 85 percent of these broadband lines are at 2 Mbps or above and can support IPTV services. The company is planning to upgrade to 16 Mbps (ADSL-2+ I assume) and will be capable of supporting HDTV. It charges about $20 per month for a broadband line.

Broadband and IPTV is continuing to grow rapidly in China. This is clearly a market where there are still large opportunities available for IPTV systems companies.

UTStarcom wins new China Telecom Contract

UTStarcom won a bid to deploy its RollingStream IPTV system with China Telecom for a new commercial IPTV service in China's Ningxia Hui Autonomous Region.

UTStarcom stated that RollingStream is the most widely deployed IPTV platform in China with approximately 270,000 live subscribers to date in commercial deployments in more than 13 provinces throughout the country.

With a total population of more than five million people, the Ningxia Hui Autonomous Region is located near the geographical central northern edge of China. The initial deployment, which has the capacity to support 10,000 subscribers, will offer 52 live broadcast television channels, 48-hour time-shifting capabilities, 3,000 hours of video-on-demand content and valued-added services including karaoke, online gaming, TV-based SMS and other interactive applications. UTStarcom is providing the video on demand servers through the set-top boxes in the subscriber's home.

UTStarcom has a strong presence in China with both China Telecom and China Netcom. Its success in China is likely to make it one of the leading IPTV system providers as these deployments in China continue to grow.

China Telcos Wants IPTV Deregulation

China Telecom and China Netcom called for the deregulation of the IPTV market in China. They stated that there is a worldwide trend to deregulate IPTV; however, they stated that it is not happening in China. For example, regulators have only allowed China Telecom to offer IPTV commercial services in only six cities.
The two firms hope that IPTV can provide them with a major source of broadband revenue, but broadcasting authorities are concerned that IPTV could hurt cable TV operators. In December 2005, the broadcasting authorities in Quanzhou, in East China's Fujian Province, ordered the closure of an IPTV service jointly run by China Telecom and the Shanghai Media Group, despite the fact that the Shanghai Media Group had been granted a license to operate the service by the State Administration of Radio, Film and Television.

A new law is being developed to address this issue but is not expected to be passed before March 2008.

China Telecom has 210,000 IPTV subscribers with 150,000 in Shanghai. China Netcom has more than 140,000 IPTV subscribers.

The short term prospects for IPTV in China are cloudy at best. There is still a lot of uncertainty that is based on how the government will sort out the conflict between the cable and the telephone companies. It is likely that this will be sorted out in the next year or two, but it is wise to take a conservative approach for now.

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.