Profiling IPTV (Part III): Technology Challenges and Pricing in India

Technology Challenges: SDTV versus HDTV

Not all the available set-top boxes in India are scalable from standard definition to high definition technology. Most of the IPTV or DTH set-top boxes are just meant for SDTV. Customer has the choice to choose HD compatible set-top box and pay much more for it. In addition he needs to have high definition LCD, plasma TV, etc.

Validation from agencies globally that IPTV has a 4X-5X growth in the next 3-4 years.

Also one of the reasons why not many players are aggressively looking to promote IPTV services is because currently in India, TV program producers are not making programs in HD TV format.

The price drop in HDTV in India expected, as DishTV, Reliance BIG TV and Tata Sky satellite TV channel providers are having plan to start HDTV channels.

Experts say the push to HD TV has been prompted by the government’s decision that the 2010 Commonwealth Games will be broadcast only in high-definition. As a result, Doordarshan is also expected to launch HDTV on an experimental basis, has stated it will produce content for the Commonwealth in this format.

Sun Direct (DTH) is the only player either in DTH or IPTV or digital cable areas who is providing ‘Sun Direct HD’ which provides high definition broadcast service on the DTH platform in India. It provides two HD channel in India, both are movie channel and regional languages (Tamil and Telugu).

Technology Challenges: Network and Bandwidth

Challenges like robustness and scalability of IPTV technology. Choice of middleware platforms and video server architectures, changes in bandwidth requirements and availability and interoperability among enabling technology products are the key challenges to effectively delivering high-quality video services. The market is in its infancy and the more established commercial rollouts attracting limited take up. Growth of over-the-top (OTT) video consumption poses a particular challenge to the growth of IPTV, which shares many functional attributes with Internet video-such as time shifting, interactivity and on-demand program scheduling-but which currently still relies primarily on a subscription based revenue model.

Basic deployment challenges are classified as network issues like bandwidth drop offs that have a direct effect on video quality due to copper usage , operational issues like frequently updating routing tables, bandwidth issues and network management concerns and in home issues like wiring, interference, additional CPE requirements ,post installation requirement and multi-room DVR and HDTV requirement.

Pricing in India

Indian market is extremely sensitive to price and to succeed stakeholders will have to carefully price their services to win in a competitive environment. Currently, IPTV packages are aggressively priced. In fact some of the packages are at par with prices of DTH packages. However, cost of set top boxes are extremely high and needs to come down drastically to attract more subscribers. This can be the potential make or break for success of IPTV in the Indian market. The Indian market offers a great opportunity for set top box manufacturers for a long term growth. These manufacturers can look at innovative design models with low cost manufacturing capabilities to support mass demand from the Indian market. Companies would have to draw inspiration from mobile/handset manufacturers like Nokia, LG, Samsung, etc, who churned out low cost customized devices targeted at the Indian market. Globally companies are trying to integrate HDTV with a built-in set top box which acts as a multi compatible device that can support cable, DTH, and IPTV. The next wave of development in highly competitive markets like India and China might bring global innovation for IPTV.

Global 2009 and Q4,2009 Smartphone and Device Market Shares

The Global meltdown took its toll, but the silver lining is the market picking up as the crisis slowly dissolves. So while the total phone sales fell by 1% YOY, Q4 registered a strong resurge of 9%. This a swing of 13.5% versus the cumulative Quarters Q1,Q2,Q3. Contribution of Q4 sales to Total year sales hit 28% versus 25% on a normal basis.

The mobile devices market finished on a very positive note, driven by growth in smartphones and low-end devices. Smartphone sales to end users continued their strong growth in the fourth quarter of 2009, totalling 53.8 million units, up 41.1 per cent from the same period in 2008. In 2009, smartphone sales reached 172.4 million units, a 23.8 per cent increase from 2008. In 2009, smartphone-focused vendors like Apple and Research In Motion (RIM) successfully captured market share from other larger device producers, controlling 14.4 and 19.9 per cent of the worldwide smartphone market, respectively.

2009, intense price competition put pressure on average selling prices (ASPs). The major handset producers had to respond more aggressively in markets such as China and India to compete with white-box producers, while in mature markets they competed hard with each other for market share. Gartner expects the better economic environment and the changing mix of sales to stabilise ASPs in 2010.

Three of the top five mobile phone vendors experienced a decline in sales in 2009. The top five vendors continued to lose market share to Apple and other vendors, with their combined share dropping from 79.7 in 2008 to 75.3 per cent in 2009.

Nokia’s annual mobile phone sales to end users reached 441 million units, a 2.2 per cent drop in market share from 2008. Although Nokia outperformed industry expectations in sales and revenue in the fourth quarter of 2009, its declining smartphone ASP showed that it continues to face challenges from other smartphone vendors and from the white-box manufacturers in the mid and low end. Nokia will face a tough first half of 2010 as improvement to Symbian and new products based on the Meego platform will not reach the market well before the second half of 2010. Its very strong mid-tier portfolio will help it hold market share, but its ongoing weakness at the high end of the portfolio will hurt its share of market value.

Samsung was the clear winner among the top five with market share growing by 3.2 percentage points from 2008. This achievement came as a result of improved channel relationships with distributors to extend its reach and better address the needs of individual markets as well as a rich mid-tier portfolio. For 2010, the company is putting a focus on Bada, its new operating system (OS) that aims at adding the value of an ecosystem to its successful hardware lineup.

Motorola sold slightly more than half of its 2008 sales and exhibited the sharpest drop in market share, accounting for 4.8 per cent market share in 2009. “Its refocus away from the low-end market limited the volume opportunity, but should help it drive margins going forward. Motorola’s hardest barrier is to grow brand awareness outside the North American market, where it benefits from a long-lasting relationship with key communications service providers (CSPs).

Symbian dropped 5.4 percentage points in 2009. Competitive pressure from its competitors, such as RIM and Apple, and the continued weakness of Nokia’s high-end device sales have negatively impacted Symbian’s share. Symbian had become uncompetitive in recent years, but its market share, particularly on Nokia devices, is still strong. If Symbian can use this momentum, it could return to positive growth.

The key in this report is the rise of Android (mostly Q4 numbers). Android increased its market share by 3.5 percentage points in 2009, while Apple’s share grew by 6.2 percentage points from 2008. Apple with just one product has managed to dislodge WinMo which has multiple vendors. WinMo desperately needs WinMo 7.0 to hold the freefall. Android’s success experienced in the fourth quarter of 2009 should continue into 2010 as more manufacturers launch Android products, but some CSPs and manufacturers have expressed growing concern about Google’s intentions in the mobile market. This is in view of the Google Nexus One and the concerns can cause manufacturers to change their product strategies or CSPs to change which devices they stock, this might hinder Android’s growth in 2010

Profiling IPTV (Part II): Key issues in IPTV implementation in India

The IPTV Value Chain

India’s first IPTV deployment was in 2006, when MTNL rolled out its IPTV service in Mumbai followed by BSNL. Other major players like Bharti Airtel and Reliance Communications were given the go ahead to launch their IPTV services in the Indian market in February 2008 by Trai. Airtel has launched its service in January 2009, while Reliance has launched their services in Mumbai.

However, India still has a long way to go before IPTV can pick up momentum like wireless communication or DTH services. India has a lot of problems that exists as a barrier for growth of IPTV in India.

Some of the key issues in IPTV implementation in India are:

Physical infrastructure: One of the biggest challenges India faces is the required infrastructure for growth of IPTV. India lacks the required high-speed wiring and copper cables and is still dependent on copper or coaxial cables for deployment of IPTV network. Some parts of the world have successfully shifted to optic fiber for deploying high quality IPTV services.

Broadband penetration: One of the biggest and most important factor for success of IPTV in any country is its infrastructure for broadband services and broadband penetration. India’s broadband penetration is one of the lowest in the world and the success of IPTV is directly dependant on broadband penetration. India’s broadband penetration rate is 2% (rate of Internet penetration of the total households). Although, it is expected to pick up pace in the coming years, advanced technologies like VDSL, WiMax or LTE can save the day for IPTV in India.

Network capability: IPTV requires at least 1.5 Mbps line (with MPEG-4) for basic services at a good QoS and 8 Mbps line (with MPEG-4) for HDTV services. Some part of the broadband networks, especially MTNL and BSNL networks are not ready yet. Most of the major cities like Delhi, Mumbai, Pune, Bengaluru, Chennai, etc, are SDTV compatible this is largely due BSNL and MNTL network and these are the cities where BSNL and MTNL first launched its IPTV in India. Quality of service: India lacks the required infrastructure to support IPTV. Current subscribers have criticized the QoS offered by these companies.

Content readiness and cost: Content is critical for success of IPTV and to compete with DTH and cable operators IPTV service providers will have to provide high quality innovative content. With respect to content there are various costs which are involved and it totally depends on what route does the player take. It can be either fixed fee deal with broadcaster or Ala carte price per channel. Operators will have to offer services that are not being already provided by their competitor including live TV, video on demand (VOD) and digital video recorders (DVRs).

Cost of service for user: The cost of IPTV services offered are quite competitive but the cost of IPTV STBS is still very high. Cost of IPTV STBS will have to fall further, as they are more expensive than traditional DTH or Cable set top boxes

Regulatory framework: Some of the potential regulatory issues identified includes advertising: targeted advertising and advertisement less content delivery to allow next generation business models; time shifted TV: legal framework to support content storage, redistribution and super-distribution (for example, access from multiple devices); privacy: protect privacy of user content (with consideration for lawful intercept); piracy: provide a framework for detection and prosecution. Alternate models: watermarking, crawling, etc ; multimedia communications: triple play, voice, video and data regulations; and content classification: larger scale production.

IPTV ecosystem: IPTV infrastructure is not at par or as required for areas like broadband/transport infrastructure and technology, favorable regulations, customer understanding of product proposition, content readiness and cost, unified standards development and pricing and promotions

Profiling IPTV (Part I): The next gen TV!

IPTV on Global Stage

From its first deployments in 1999, IPTV has grown in strength, quality and numbers over the ten years of its existence. The estimated subscriber base was 23mn in 2008 which grew to 26.7 mn by 2009 and is expected to grow at a CAGR of 32% to 81mn by the end of 2013. In terms of service revenue, global IPTV market is $6.7 bn in 2009 and is expected to grow to $19.9 bn by 2013 as per industry estimates. Globally, there are around 120 IPTV service providers in over sixty countries, with Europe and the far eastern markets taking the top spots. Currently, Hong Kong, France, Taiwan, and Belgium are leading the pack in terms of IPTV penetration. By 2013, Europe and North America will generate a larger share of global revenue, due to low ARPUs in China and India, the fastest growing markets (and the biggest) in Asia.
Major developments over the last few years has led to IPTV foray into Asian countries. These include:
• Deployment of IPTV services over ADSL access on telephone wire or without internet/broadband connection
• Another major milestone for IPTV was approval of a new ITU standard that supports global rollout of IPTV services which would encourage many global IPTV service providers to look at the Indian market either to provide services directly or the cable operator route.

Globally, cable operators abroad are starting to deliver IPTV services over Docsis 3.0, a CableLabs platform that bursts data in excess of 100 Mbit/s.

The Indian IPTV Market

Indian IPTV market is at a nascent stage where it is being deployed over DSL, ADSL and ADSL2+ network infrastructure owned by operators like BSNL, MTNL, and Airtel. Interestingly state owned companies are aggressively promoting IPTV while private players (Airtel and Reliance) have kept a low profile. Recently BSNL and MTNL along with Smart Digivision (official franchisee for IPTV) announced ‘MyWay’ that will be launched in over fifty-four cities, the largest IPTV launch in the country. Smart Digivision plans to offer IPTV services to 1.6-1.7 mn broadband subscribers of BSNL and MTNL in these selected cities which comprise 80% of the country’s broadband subscriber base. Private players believe DTH is for masses and IPTV is for the classes. However, in the long run IPTV can become an ARPU driver.

The scenario for IPTV market in India is driven by certain factors like interactivity, value added services, customer end benefits, and fueling broadband demand. India still has a long way to go before IPTV can pick up momentum like wireless communication or DTH services. India has a lot of problems that exists as a barrier for growth of IPTV in India.
India is not only a potential market for IPTV, but can also become a hub for innovation and the next technological breakthrough in global IPTV market as is clearly evident from the amount of interest shown by biggies like Cisco, UTStarcom, CopperGate.

India’s own “desi” Apps store: Airtel App Central

The first “desi” Application store, Airtel’s App Central is live. Consistent with Apps Stores world over, App Central is an open platform for developers to create apps for any and all handsets and operating systems. While there is the Apple iTunes, Nokia’s Ovi Store and Blackberry’s App world, Airtel’s Apps Central is unique in its being platform independent irrespective of handset or OS. The App Central is a cross platform offering that will even work on ultra budget handsets that run on the JAVA OS.

There are still quite a few websites third party websites that allow content download for all mobile operating systems but the App Central is far more convenient. The system is designed to recognize the operating system and showcase apps that are appropriate for the same. For a start, the App Central features 1250 applications across 25 categories available for download on more than 550 compatible devices.Applications are available for as low as Rs. 5 and go upwards of Rs. 25. Airtel expects vernacular content to contribute 20-25% of the downloads and vernacular content would be one of its biggest differentiators against the iTune, Ovi and others.

App Central also stores all the applications a user has downloaded in a section called “My Purchases”. This makes it very convenient to change handsets. The user would simply go to the My Purchase section at the bottom of the page and download and install apps. This reduces the time of having to look for them all over again. If apps have been previously paid, there’s no additional charge for downloading it again. Airtel is also working on a downloadable version of App Central to do away with the need to access it through a web browser.

Mobile application creators have been invited by the Airtel to submit their applications at this developer platform and CellMania will be powering the entire back end – right from the applications submitted by the developers to the AppCentral storefront.Developers registering with CellMania’s platform can expect to receive 28 percent of revenue share of the total sales of the application.

Bottomline: Even though Airtel App Central may not be at par with some of the OEM’s stores just yet, it will be, given time. It will also be interesting to see how vernacular mobile content performs. An interesting move by Airtel and we shall be watching the progress of the App central through the days and months to come.

Indian Telecom Story (Part XXVI): 4G on the horizon?

Of 4G deliberations and its implications on the current 3G spectrum auction

The much awaited 3G spectrum auction which has been delayed atleast 6-7 times in the past has found a new date: 9th April 2010 is when the government intends to carry out the 3G spectrum.

Even with the mess that 3G is, Telecom Regulatory Authority of India (TRAI) issued a pre-consultation paper to deliberate on 4G early this month. TRAI’s move to leapfrog to 4G or LTE technology comes in the wake of the government dithering over 3G policy, that has been delayed by more than three years. While accepting the “Bad” delay in 3G auctions, TRAI has branded this move as timely and preemptive to deal with issues, discussions and policies that would ensure a uniform and timely roll out of 4G.4G is a serious advantage to the bandwidth starved users of the country, as it provides 10 times faster internet speed than 3G and has support for live Hi-Def TV content.

This declaration undermines the feasibility of 3G and investments planned there-of. 3G viability now depends upon what time frame is TRAI working upon. 3G already is delayed by 3 years after the initial auction date and 10 years in terms of technology. Even if 4G moves on fast track, it would take anywhere near 2.5/3 years for it to see the light of the day. With 4400 crores/per vendor at stake on 3G, it is difficult to fathom why would any Telecom Operator waste money and time on implementing the 10 year old 3G technology and rather not jump into the 4G bandwagon. That would seriously impede the 3G deployments in the country.

The best case solution is 3G being implemented as a mass vehicle to enable broadband to the nation and 4G is used as the premium data service. The financial ROI of 4G would then be a derivative of the licensing costs. It is also possible that to have inclusive participation from all vendors, if the government offers subsidy over 4G spectrum to players who have bought into the 3G spectrum. That would then enable smooth transitions into both these technologies and co-existence.

The monies from the 3G spectrum and the 4G spectrum is seen as a big contributor to the government for closing the fiscal deficit. Last year, the base price of the 3G spectrum was increased two fold from Rs.2200 crore to Rs.4400 crore. The implementation of 4G will depend on timing it versus the 3G and the cost of licenses. If 3G and 4G implementations are not spaced amply, 3G may not provide suitable returns on Investments and TRAI may have to make subsidies to involve 3G players in the 4G space. A sufficiently long gap may hamper the case of growth powered by broadband reach through the country.

Earlier related posts: A 60,000 crore lost opportunity, Round of the decade 2000-09, January Round Up

Profiling Windows Mobile (Part II): How WinMo lost it….

How Microsoft blew it with Windows Mobile….

In an earlier post on AUgust 25th, 2009, i had blogged about the feasibility/need of two WinMo platforms: WinMo 6.5 and WinMo 7.0. Winmo 6.5 was released a month later and now that Microsoft has announced the WinMo 7.0, i am revisiting Microsoft’s Smartphone strategy.

Microsoft laid the foundations of a real smartphone OS with Windows CE in 1996 which is at least a decade before Apple launched its iPhone and which predates Google’s existence. The Android and the iPhone are the newest kids in the block but it was always Microsoft’s game to loose. What then was the reason for Microsoft’s failure?

1. Microsoft’s lack of full-bore for a consumer perspective. So then, if there were smartphones and smartphones, it was Apple which created The Smartphone with design and interface innovation. Apple and Google also had the consumer eye for applications like social networking, maps and games.
2. Microsoft’s inability to go open. Microsoft is notorious for its “closed door” approach. That’s very different from Google which thrives on being “Open”. However, it is Apple which provides the contrast here. While it is still “closed”, Apple has opened the doors to developers for innovation.
3. The sad part for Microsoft is that in terms of operating systems, they have a great one, and they had it long before anyone else did. Their first problem is the built-in apps are uninspiring, so that sets a very low bar for developers who are coming to the platform.
4. Also plaguing Microsoft, is segmentation in the hardware ecosystem. Windows Mobile ships with several different manufacturers’ hardware, including HTC, LG and Samsung. The problem? From a developer perspective, that requires coding an app for several phones with different UI styles, buttons and screen sizes. Seeing the first signs of the platform segmentation set in, Google went Nexus One, a device that would be theirs and that would maintain the platform in all its pristine form.
5. The inability to recognize the new smartphone audience is another one of Microsoft’s flaws. Microsoft’s mobile OS history is rooted in personal digital assistants, which were marketed toward enterprise audiences. Today, the smartphone has shifted into the mainstream as a consumer device, and yet Windows Mobile is still largely focused on enterprise features. Microsoft needs to err more on the side of going too far into the consumer segment versus trying to achieve a good balance between enterprise and consumer features at this point

They had everything they needed to execute, to do the right kinds of carrier deals to create an app store, create visual voice mail, touchscreens and so on. They’ve been in this space since the beginning. It was theirs to lose and they lost it.

Going forward, in-spite of all setbacks, Mobility is one of Microsoft’s top investment areas and the mobile strategy is not going to change radically. The fortunes of WinMo will now rest on Windows 7 that it unveiled at the MWC 2010. From the looks, it is going to be a three-some fight to finish between Google, Apple and Microsoft and Microsoft’s cards do-not seem to be particularly strong at this time. We will see If and How would Winmo 7 change the status for Microsoft.

MasterCard gives m-commerce a fillip

Mastercard is introducing a Mobile Payments Gateway that delivers end-to-end mobile payment solutions. This is a milestone feat for m-Commerce. It will be much easier to send and receive money through the mobile device than it’s occurs currently and it will boost initiatives due to technologies like these. Anyone within the payment cycle can build quick and cost-effective customized mobile solutions which all will serve to offer a convenient and secure -mobile- payment process.

Mobile Payments/M-Commerce are heralded as the next growth frontier for Mobiles. M-PESA in Kenya has set examples enabling people to have their first banking accounts on their handheld phones. Juniper estimates the opportunity at $860 billion generated made by close to 450 million consumers with 285 billion transactions by 2013. Money Transfer is expected to generate more than $200 billion in 2013. The ticketing segment will be driven by consumer usage on rail, air and bus networks as well as sports and entertainment events This will represent over 40% of the global transaction value by 2013. In 2008, only 67 million mobile phone users accessed mBanking services, whereas in 2013 the figure could reach one billion.

Last year, <a href="“>VISA had demonstrated a NFC led mobile point of sale payment in a pilot at Malaysia spearheaded by Maxis, Nokia, Maybank under the aegis of VISA.

“The Mobile Payments Gateway will help to make mobile payments a way of life for mobile phone users around the world,” said Joshua Peirez, group executive of Innovative Platforms for MasterCard Worldwide. “Through our global, integrated payment network we are efficiently connecting financial institutions, merchants and consumers together to mobilize MasterCard payment solutions in a way that truly reflects today’s on-the-go lifestyles.”

Vivo, the largest mobile operator in Brazil along with Itaú Unibanco and Redecard will be the first ones to partner up with the gateway. Mastercard will introduce its Mobile payments solutions in select markets around the world. Adoption, usage and diffusion are important for a further development of Mobile Commerce and Marketing.

A quick Stat showing the obvious acceptance of Mobile payments as a technology to be higher within the younger agen individuals in US. The obvious inference is to catch the customers young. The Mobile payments technology has to be pivoted around the young adults. It would be interesting to see the acceptability of M-payments across the SEC categorizations.

Mobile’s First for Google

We want to have a little bit of Google in everybody’s transaction with the Internet
ERIC SCHMIDT, CEO, GOOGLE

Speaking at the Mobile World Congress (MWC), Google Inc Chief Executive Eric Schmidt urged the mobile industry not to block opportunities offered by the mobile Web and said Google and telecoms carriers could have a symbiotic relationship. Google has raised hackles in the industry by launching a smartphone platform — Android — selling its own-branded phone directly to consumers without the mediation of carriers, and announcing plans to build a super-fast broadband network. It has also been seen as a problem by some operators, which are having to invest and upgrade their networks to meet the huge demand for data services required by users spending time on the mobile Internet and sites from search leader Google and others. Eric urged that the surge in data services had to be viewed more constructively in terms of revenue opportunities.

Given Google’s increased focus on smartphone-data services it is not unusual that “Mobile First” is being put as primary focus of the company. The latest acquisition in that space, AdMob, is a result of this new strategy. The signs are there, smartphone sales are growing at a 30% year-over-year rate, which will eventually surpass the personal computer sales.Even more important, the adoption of the Mobile Web is growing annually eight times faster than the Web adoption did a decade ago. In countries like Indonesia and South Africa more searches are done via the mobile Web than via the desktop, it simply cannot be ignored.

Three areas are coming together on the mobile device, namely the Cloud, computing power and interconnectivity. All these three areas converge in the mobile device, making it a most powerful device where strategies need to be developed in order to thrive or at least, survive.

Check this Slideshare Presentation which is a simple, easy and interesting note on Google’s Mobile Strategy.

Surfing the Google Wave: Innovative or Overhyped (Part I)

Google Wave- An Iconic change or an overhyped Indifference???

In an overview of Google Wave, Dr Lars Rasmussen, founder of Google Maps and the brains behind the Google Wave likens it to the re-invention of traditional email. Quoting Lars:

“… (email was) a system that was invented some 40 years ago long before the world wide web as we know it. Email simply mimics snail mail, while instant messaging is a text version of a phone call. Things have got rather more sophisticated since then, with blogs, wikis and bulletin boards among the many other ways of communicating.”Google positions the wave as a real time communication and collaboration tool.

The working mechanism revolves entirely in and around the browser, using HTML 5 code and works in Chrome, Safari and Firefox and not in Opera and in the Internet Explorer it works only if using the Chrome environ. Following the invitation leads you to wave.google.com, where you sign into your Google account as normal. What you get is an email like prototype. Folders in the navigation bars let you organize your “waves”, with the inbox. Beneath this are lined up the contacts and one the right is the list of Waves, pretty similar to email clients like Outlook. You can create a wave by clicking on the “New Wave” and typing into a box that appears thereafter. A formatting tool helps basic changes and edits. What different is the contacts that get loaded at the same time. As you type your contact name it appears as a moving cursor , so you can see who is writing what.

Why is the Wave Innovative?

Real Time: You can see what someone else is typing, character by character.

Embeddability: Waves can be embedded on any blog or website.

Applications and Extensions: Similar to Facebook or iGoogle, developers can build their own apps within the Wave. It could range from anything from Bots to Complex Real Time Games.

Wiki Functionality: Anything written within a Wave can be edited by someone else because all conversations within the platform are shared. Thus one is able to correct information, append information and add own commentary within a developing conversation.

Open Source: The Google Wave is open Source and aims at nurturing innovation and adoption for all developers

Playback: Just like a video playback, any part of the wave can be reviewed to see what was said in the conversation.

Natural Language: Translates on the fly, autocorrects spellings, clarifies grammatical nuances and more.

Drag and Drop File sharing: No Attachments required as one can drag and drop files inside the Wave for everyone to have access.