Chinese Web TV a bonanza
beyond reach By Indrajit Basu
KOLKATA - Contrary to a popular belief
that China's foray in Internet protocol TV (IPTV),
or Web TV, could enable foreign media to grab a
slice of the huge number of Chinese eyeballs in a
tightly controlled media environment, experts say
IPTV would hardly open doors for them and winning
the authorities' approval could be easier said
than done.
Last month China introduced
IPTV by allowing the Shanghai
Media Group (SMG) to beam TV
programs over the Internet. An industry executive
said China's IPTV market is expected to take off
next year as fixed-line telecommunication
operators seek ways to grow.
"IPTV could
get a head start next year in China," Huang Dabin,
vice president of the network division of China's
No 2 telecom-equipment maker ZTE Corp, told China
Daily. Huang predicted that the number of IPTV
subscribers in China could exceed a million next
year.
This has raised the hopes of the
foreign media that now view this new development
as a precursor to Beijing's gradual easing of
media rules for the 2008 Summer Olympics (to be
held in Beijing) and an ideal route to gain
nationwide access in China.
In that hope,
a few foreign media companies such as the Rupert
Murdoch-owned National Geographic channel and Hong
Kong-based Phoenix TV, a China-focused broadcaster
backed by Murdoch's News Corp, are rushing forward
to work with SMG. A unit of China Telecom, the
largest fixed-line operator, SMG is a telecom
company that has limited expertise in producing
content, say experts, whereas the foreign
companies, which are still limited to small
pockets of the country's pay-TV market, have been
trying unsuccessfully for years to gain a foothold
in the Chinese market.
"But getting a foot
in the door via IPTV for international
broadcasters is nothing more than just a
possibility," said Vivek Couto, of Media Partner
Asia, a Hong Kong-based media-research outfit.
"Since IPTV is broadcasting after all, the foreign
companies would face the usual restrictions
applicable to them for some time to come.
"If a regulator shuts out large-scale
global media from free-to-air and pay TV and just
restricts them to Guangdong and a bunch of hotels,
I do not know a reason why the regulator would
suddenly get them in on IPTV. It doesn't add up."
Fearing social unrest and revelation of
its often-secretive functions, the Chinese
government has a notorious reputation of censoring
the country's media for politically sensitive
content, which has emerged as a sore point for
foreign and domestic media companies alike. But
ever since China realized that the country has to
open up its media sector wider before global
events such as the 2008 Olympics and the World
Expo in 2010 in Shanghai to ensure that all
hurdles regarding "propaganda" are removed,
foreign media companies have hoped that the
introduction of newer technologies in China would
also enable easier access to its market.
And according to Joe Lin of Streaming21, a
Beijing-based provider of broadcast and
media-on-demand software applications, IPTV has
emerged as a viable "killer application", since it
offers the advantages and characteristics of
telecom, TV and Internet and a great multimedia
communication tool. He said the Chinese government
is keen on Web TV because "it has the potential to
maximize publicity and garner huge money from
sponsorships".
But even as IPTV has
appeared on the government's communication radar
screen during the past year, the going has not
been easy. For one thing, although technologies
have been converging fast in that country,
regulators haven't. "A key obstacle for growth of
IPTV in China is the regulatory environment, which
is unlikely to improve in the short term," said
Fang Meiqin of BDA, a Chinese telecom advisory
firm.
"Convergence of media and telecom
regulatory bodies in China - SARFT [State
Administration of Radio, Film and Television] and
the Ministry of Information Industry - will take
at least three to five years. Until then, IPTV
will continue to face strict controls," he said.
BDA says the strong resistance by vested
interests such as local cable-TV operators is
another hurdle. "Most cable-TV networks in China
have been floated by local the governments, which
had little consideration for the market
environment," said Fang. Consequently, there are
now huge numbers of operators - about 300 in all -
that typically act as extensions of local
governments to provide cable-TV services that are
often below cost. This has eroded the finances of
these players, many of whom have started offering
cable modem Internet services for higher revenues.
For instance, most cable operators in
coastal areas such as Shanghai and Shenzhen offer
cable modem Internet services, and such operators
would not like the introduction of cable TV at
all, says BDA. "Seeing the potential threat from
IPTV, cable operators are fighting back hard,
impeding IPTV rollouts," said Fang. "Lack of
content and interference from cable operators will
be key issues for IPTV in the near term."
Still, there is hope. "In about two years
China is expected to become the biggest market in
the world," said Lin. "Look at the size of its
economy and the fact that it is the biggest
broadband market - with 30 million subscribers and
growing."
Small wonder, then, that
Analysys International, a Beijing-based provider
of technology business information, predicts that
"despite obstacles" IPTV has potential because
"user experience in China is changing from passive
experience to real time interactive experiences.
Since Web TV or IPTV has these interactive
characters, it can help bring on the convergence
of traditional and interactive media."
And
BDA says, "Driven by fixed-line operators
aggressive triple play strategies as well as the
Olympic Games, IPTV users will surge to 6.3
million by 2008, and 13.1 million by 2010,
translating into a five-year growth of about
149%."
But more important, the 2008
Olympic Games should propel IPTV user growth given
nationwide attention on the event as well as the
advantages offered by IPTV in terms of interactive
capabilities. "In China, sports events such as the
recent football World Cup in Germany and the
Olympic Games are extremely popular," said Fang.
Indrajit Basu is a Kolkata-based
journalist.
(Copyright 2006 Asia Times
Online Ltd. All rights reserved. Please contact us
about sales, syndication and republishing.)
