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Chinese Broadcasters Cry Foul over Telcos' IPTV

21st Century Business Herald, 12/30/11

Shenzhen Media Group's chief engineer, Fu Fengchun, has told reporters that before network convergence trials began, China's telecom operators had only around 5 mln IPTV users. However, this figure has significantly increased to 15 mln users, causing an impact on many locations' radio and television operations. In addition, sources say, IPTV services in many locations are also now offering high-definition (HD) programming, many covering nearly the exact same HD content as what is available on digital cable.

Previous attempts by the State Administration of Radio, Film and Television (SARFT) to penalize unauthorized IPTV developments have had little effect, with few penalties ever exceeding RMB 30,000. Recently, in Hebei Province, a few areas were penalized for similar IPTV offenses, with the grand total of the penalty at just over RMB 100,000. Penalties like these do not impede telecom operator's expansion of IPTV services. IPTV is frequently bundled for free with broadband services, which has a major impact on cable digital television (DTV) operators that charge RMB 26 per month for services.

An employee with Shaanxi Broadcast & TV Network Intermediary (600831.SH) stated that after network convergence, because of the growth of IPTV subscribers, there is beginning to be a substantial decline in the growth rate of DTV subscribers. In some cities, there is even a general decline in the number of DTV subscribers. At the end of November 2011, nationwide there were 119 mln DTV subscribers, however in late 2010 there were already 97 mln. An annual increase of only 20 mln is the lowest increase in DTV subscribers that China has seen in three years.

According to other industry sources, the IPTV trial run by telecom operators and Shanghai Media Group IPTV subsidiary BesTV (600637.SH) in 12 trial cities has seen major subscriber breakthroughs, especially in Jiangsu and Guangdong Provinces. In these two provinces alone, there are now over 4 mln subscribers. On the contrary, according to sources with the IPTV division of CCTV's China Network TV (CNTV), CNTV has seen no major development in its number of subscribers over the last 18 months. In cooperation with several local TV channels, CNTV has invested nearly RMB 200 mln in eight trial cities to construct IPTV broadcast and control platforms and sub-platforms. CNTV was able to persuade local TV stations to join its internal network for its IPTV project, however the telecom operators refused to join the network. This has caused all the investment and equipment to go unused. However, CNTV has seen increasing development in uptake of its IPTV service in non-trial areas of Yunnan Province.

Editor's Note: BesTV and CNTV use different cooperation models in developing IPTV business. For more background on this topic, please see "Rumor: Telecom Operators Lose IPTV Revenue Share to CNTV" MD 12/16/11 issue.

Keywords: cable TV convergence growth rate IPTV telecom television users DTV SARFT IPTV subscribers Fu Fengchun 600637.SH

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