China Telecom IPTV workshop
Just over a week ago I attended the above workshop, in the ancient imperial city of Nanjing in China, and also in the vibrant city of Shanghai.
The event was organised by the national telco, China Telecom, and its supplier ZTE. Situated in the Yangtze Delta, Nanjing is the capital of Jiangsu Province, the third most prosperous province in China. It is a pretty city; it has seven million inhabitants but doesn’t have the chaotic atmosphere of Shanghai or Beijing. Also, the old culture is still evident through the cracks in the overwhelming modernisation processes.
Shanghai continues to grow, officially placing its population at close to 18 million people. Including ‘íllegals’ and commuters, it is estimated that on week days the city has some 23 million within its boundaries.
I think I can also safely say that it is the most capitalistic town on earth. GDP of the city is US$114 billion and the city rivals the USA in the amount of advertising money that goes around in its market.
The use of digital media is all-pervasive. On the Hangpu River there are now gigantic floating HDTV plasma screens, and flat screens, with or without multimedia, are in lifts, cabs, on all major roads intersections and so on.
Adult entertainment is emerging also. Who would ever have thought that this could happen in China?
The economy continues booming and, while some people question how long this will last, to me it looks pretty unstoppable; and it is essential if China is to improve the lives of the one billion or so rural population. In any case, there are plenty of people that can be ‘fed’ into the economy and many companies have their own college or university to guarantee supply.
Under this blatant capitalism much is being sacrificed to maintain this growth. The social structure, in metropolitan China at least, is fairly uncaring on a personal level; one could argue that the government’s unfeeling attitude is a bad example. I also believe this is partly the legacy of the Mao period (which is still largely not a welcome topic for discussion in China).
I have reported from previous trips that the level of social welfare in healthcare and education remains poor (too expensive for the average person) and pollution is rampant – not just from cars and factories, but also because of the throw-away society.
However, the main problem for rural China is that, for the sake of progress, local and state governments can basically do what they want. This means that millions of people are thrown off their land, all justified in the name of economic development, while land and property developers are becoming overnight millionaires.
Because of poor landownership laws rural people have practically no rights. In what I see as yet another half-hearted attempt the central government has again warned that this is illegal, but I have heard them say that before.
Structural changes are needed in the government, which is currently very heavily influenced by corruption. I see these elements as the major problem for the government.
The joys of a morning jog
Nevertheless, when I go out on my usual morning jog, China is a special place. I enjoy taking my morning exercise in different countries, but China really is special. In any park, early in the morning, you can mingle with the people doing tai chi, sometimes with swords and shawls. There are drummers and people that style dance. A few jog as well, but that is quite unusual. Mingling with all these people provides a natural connection that, using smiles and nods, crosses languages and cultures.
Pollution fueled by Australian coal
Pollution in Shanghai was still bad – I don’t think it has got any better over the last few years, which is a bad omen as , in the not-too-distant future, China will probably be the world’s largest polluter, happily fueled by Australian coal.
While Beijing has Olympic fever, in Shanghai they are talking about the World Expo in 2010, and I saw a fabulous virtual multimedia presentation in a round cinema in the Museum of Urban Development. For those who read my ‘Second Life’ blog last week, this virtual presentation was just another development of the same trend, and I wouldn’t be surprised if that virtual presentation is turned into a Web 2.0 application on the Internet.
China’s digital media leadership
The city has well over two million broadband users and close to four million cable TV users. From a business point of view this trip was all about IPTV and video broadband. I have written two reports on those topics.
New Report: China – IPTV and video broadband market in 2007
China’s first IPTV services were launched by Shanghai Telecom in 2005. Some of you might recall that I reported on this subject during my visit to China around that time.
Jiangsu Telecom is set to become the next major player and both companies are subsidiaries of China Telecom. Shanghai’s IPTV system now has around 150,000 users, of which at least 80% are commercial users. However, the platform used here is a standalone IPTV service, concentrating on TV services.
The licence-holder for IPTV in this service is the Shanghai Broadcasting Corporation, and, as well as the Shanghai service, it operates nine other IPTV systems, including the service in Shanghai. The media company has 300,000 IPTV users.
I also visited their impressive control centre from which all ten systems are operated.
Table of contents:
China in global IPTV top five
Jiangsu IPTV project
Exhibit 1 – Jiangsu IPTV application
Shanghai Telecom and BesTV
Working with the Chinese bureaucracy
Forever changing technologies
Finding the right business models
IPTV In the global context
The ‘April crisis’
4Mb/s for regional users
The mobile problem in China
Tight content control opportunities for Web TV
See new report: China – IPTV and video broadband market in 2007
New Report: Global Digital Media – IPTV and video broadband analysis 2007
Various trips during 2006 and 2007 have provided us with a unique insight into the developments in this market.
In only a few instances do we see an opportunity for IPTV – the reality is that the telcos will find it pretty tough competing with cable and pay TV operators. However, as PCCW has shown, it can be done.
Most of the others will have to look for broadband video opportunities. Fastweb is leading the market and we expect interesting developments in China as well. Business models will also depend on NGN/IMS infrastructure and these networks are still a few years off.
We estimate that the current market of five million will grow to 25 million users by 2010. Separately, we expect a much more rapid growth for web TV.
In the consumer electronic market a quarter of all new TV sales (40 million sets a year) are now flat screens, and HDTV is 2.5% of all sales. There are 52 million broadband (70% DSL) users. The figure for DVD usage is one of the highest in the world and 150,000 households are already connected to fibre-to-the home networks. So the country is not only ready to play a key role in the global digital media market – it is, at the same time, positioning itself as a global leader.
Table of Contents
The future of IPTV
Table 1 – Global overview of key IPTV players
Table 2 – Top 5 IPTV providers by subscribers – 2007
PCCW Hong Kong
Table 3 – Rapid growth of NOW subscribers 2003 -2007
No one size fits all solutions
The pay TV business model
Event staging opportunities
Telcos vs. media companies
Value added multimedia
Choices to be made
See new report: Global Digital Media – IPTV and video broadband analysis 2007
Can we keep pace?
I visit China on a regular basis, and it never fails to amaze me how quickly things change there. In many instances I feel that we in the western world just keep mulling things over that we have been discussing for decades. We talk a lot, but in China they are doing a lot.
China was celebrating the Spring Festival (another massive commercial activity) and one of the snack manufacturers (with a name you would only see in China – The Want Want Group) was issuing a coupon that allowed customers to download a game onto their mobile phone. This has been an overwhelming success and is being featured in many newspapers. Just think of the advertising value of this PR alone!
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