SHANGHAI, China. Last week's cancellation of an IPTV trial in Beijing by one of the country's major telecom operators is the latest indication that unclear government policy still plagues IPTV in China.
A government agency closely aligned with the cable industry shut down a trial by China Netcom, saying that the telecom operator did not cooperate with local license holders that it regulates.
'Due to the policy problem, the future of IPTV is unclear and hard to predict," said Xiongyan Tang, vice chief engineer of China Netcom. "We are still exploring."
China Netcom has been upgrading its broadband network with the goal of airing the 2008 Olympics via IPTV. Tang said the government agency aligned with the broadcast industry and cable operators, known as SARFT, is wary, believing it will canabalize its audience.
Despite Netcom's setback, China Telecom, the country's second largest telcom, is planning to expand its IPTV trials by another 60,000 users this year and is targeting one million users in two to three years. Shanghai, with its 2.2 million broadband users, will be a major source of new users.
The goal is to sign up 40 to 50 percent of users for IPTV, said Dazhong Zhang, vice president of the Shang Media Group, a major content supplier for China Telecom.
However, a lack of compelling content will continue to be an issue. For instance, Zhang acknowledged that IPTV will offer similar programs to cable TV. That won't give users a strong reason to change. Ironically, if IPTV were too good, then it would face greater resistance from SARFT, Zhang said.
SARFT is locked in a turf battle with another government agency that regulates telecom operators. For telcos to get a license, they must work with SARFT, and that enables the agency to control the success of IPTV.
China Telecom's IPTV trials will be based on H.264. ZTE Corp., China's second largest telecom equipment maker, said it will supply IPTV equipment for 49,000 lines that can support 25,000 concurrent users. China Netcom's research lab is focusing on using a Chinese codec, known as AVS, for IPTV development and application promotion. But in a market dominated by H.264, Netcom said it will cost too much to switch systems from H.264 to AVS.