network convergence policy in china july 2012. introduction in china, the regulation and development...
TRANSCRIPT
Introduction
In China, the regulation and development of telecom/internet networks and broadcasting networks remained largely separate until 2010
3-network convergence trials, now underway, will have major impact on how China’s IT infrastructure develops
Outcome of China’s final choices for convergence will impact global equipment vendors, systems and applications developers, and content providers
Key Points
China may merge regulators or require cross-investment to break regulatory and competitive log jam
Key obstacles to convergence in China are political rather than technical
Broadcasting and telecom regulators locked in long-standing turf war over convergence
Telecom operators currently enjoy multiple advantages over cable companies in terms of convergence-readiness
Reaching TV screens key to reaching the masses
Convergence in China
Key obstacles to convergence are more political, less technical
• Power struggle between telecom and broadcasting regulators
• Cable TV network not yet ready as nationwide integrated interactive platform
• Cable network still 2~3 years from ready to compete with telecom network
• Telecom operators curbed by State Council policy
Regulators: Broadcasting vs Telecom
SARFT also regulates video content on internet. MIIT also issues certification for STBs, TVs.
SARFT MIIT
Broadcasting Regulator Telecom /Internet Regulator
• Issues broadcasting related licenses
• Video content control • Broadcast network planning
• Issues telecom, internet and IT licenses
• Telecom and internet network planning
SARFT protects cable operators under “safeguarding government mouthpiece” rubric
MIIT has repeatedly lost to SARFT in struggle for power in convergence
Convergence Key Battleground in Long-standing Turf War between SARFT, MIIT
Future Business Scope
Fixed Line VoIP Phone
Mobile Voice No Immediate Plans
Internet Broadband Cable Broadband
IPTV, Internet TV IPTV, Internet TV, Cable TV
Mobile Video CMMB, Multi-screen
Telecom Broadcasting
• Telecom operators fully commercialized• Broadcasting companies propaganda focused
• Telecom networks have nationwide scale• Cable networks localized, fragmented
Telecom Operators More Commercialized and Consolidated
Broadcasting Companies Enjoy Control of Video Content Production and Distribution
Maintain control over all video content to TV terminals
Produce bulk of domestic film and TV programming
• SARFT issues IPTV, Internet TV licenses only to broadcasting firms
4G Promise for Developing TV Services
• Existing mobile video users exceed CMMB users
• 4G speeds promise broadcasting-quality mobile video
4G Impact on Convergence Limited in Short Term
Key obstacles to broad 4G commercialization in China
• Limited TD-LTE chips and terminals
• China Telecom, Unicom first need to recoup 3G capex
• MIIT wants slow transition to 4G to keep competitive balance
4G?
Reaching TV Screens Key to Reaching the Masses
• Why TV?
- 97% TV penetration vs. 38% Internet penetration (by 2011)
- Priority and price: TV or STB first, then PC
• 3 ways to get to TV: Cable DTV, IPTV, and Internet TV
Cable TV Must Evolve to Remain Competitive with IPTV
• Cable TV network operators suffer from TV stations’ betrayal
• IPTV threat: content, VAS, marketing
• IPTV user base small compared to cable, but growing fast
Mln
2012 2015 Future
Interactive Cable TV Network Development Plan
Cable TV Network Still a Long Way to Go
• 26 of 31 provinces have completed or almost completed cable TV network consolidation by H1 2012
• Bi-directional nationwide cable TV network still more than 3 years away
Bi- cable DTVusers 8%
Cable broadband users 2%
Cable TV Households 201 mln
Cable DTV 59%
Bi- cable DTV coverage 34%
Ideal IPTV Model Still Evolving
• 7 IPTV license holders work with local telecom operators
• BesTV leads IPTV development
Old Model
New Model
• CNTV controls sole national IPTV platform
• Local TV stations must connect their platforms to CNTV national platform
• Telecom operators must work with both CNTV and local TV stations
• BesTV lost leadership role to CNTV, and current role not yet clear
Internet TV: Born an Original, May Die a Copy
• Internet TV originally had no operator, relied on pirated content; now 7operators and only legal content
• Internet TV lacks a clear, sustainable business model
• IPTV vs. Internet TV
- IPTV provides a dedicatedcontent line
- Internet TV doesn’t offer live broadcasts
Possible Solutions to Break Regulatory and Competitive Log Jam
• SARFT, MIIT to merge ? - Multi-screen technology complicating convergence turf battle and policy-making
• Cross-over investment
- China Mobile may invest in CMMB operator
- China Mobile may invest in national cable operator
- China Mobile to obtain fixed-line license
Global Impact of China’s Convergence Choices
Video Content
• Pace of converged network development key demand driver for domestic and foreign content
• Chinese content demand already influencing Hollywood global releases
Equipment, IT solutions
• Convergence drives demand for smart terminals creating opportunities for:
- Terminal makers
- CA providers
- Video/Audio codec developers
Conclusions
Commercial roll-out of 4G at least 3 years away
SARFT will continue to limit IPTV growth until a bidirectional national cable DTV network is complete or the regulators are merged
Internet TV likely to die, as lacks sustainable business model
China’s convergence choices will have global impact on related industry players
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