SHANGHAI, China China Netcom, one of China's major wired-telecom companies, will implement a homegrown A/V codec in its fledgling Internet Protocol television (IPTV) network this year. It will also conduct a trial of the technology in a 3G-based test network based on TD-SCDMA.
China Netcom said positive results from testing the Audio Video Coding Standard (AVS) in the coastal city of Dalian persuaded it to fully implement the codec this year in 20 more cities. It will also transfer current H.264-based IPTV trials in four cities to AVS, although there's no schedule for that. China Netcom is running IPTV trial in five cities, one of which uses AVS while the other four use the more popular H.264.
Netcom's decision is a much-needed boost for AVS, which lacks the commercial scale to compete with H.264. Yet even this may not be enough to help AVS jump beyond niche status, said Meiqing Fang, a telecom analyst at Beijing-based BDA China Ltd. The country's IPTV market is still in the nascent stages, and Netcom's larger rival probably will not use the domestic technology.
"Chinese operators are profit-oriented. They choose the standard according to their maturity and scale," Fang said. "Besides, some local operators have a global market prospect so they prefer to use global standards."
With Netcom swinging in behind AVS, chip makers will have to consider supporting the codec more seriously. Until now, the number of developers has been small. There are several firms in China designing for AVS, including Celestial Semiconductor, Grandview Semiconductor, Longjing Microelectronics, Fudan Micro Nano and Beijing USC.
In addition, Broadcom Corp. said it will release a chip supporting AVS this year. STMicroelectronics has been waiting to see if AVS will be used in the satellite set-top box market, but because that's still unclear, ST has not committed to developing chips.
Envivio Inc., provider of MPEG-4-based IP video convergence solutions, recently released a telco-grade encoder that supports AVS for broadcast and IPTV deployments.
It's likely that Netcom's decision wasn't entirely based on technical merits, said Loren Zhao, an analyst with iSuppli Corp. He believes the pressure from the government, which controls Netcom, played a significant role. That would trump concerns over its higher cost as well as the penalty for switching over from H.264.
China Netcom hopes for 2 million AVS-based IPTV users in two years and 6 million in five to seven years, or 40 percent of its current broadband users. Market researcher iSuppli estimates that by 2008 there will be 3.6 million IPTV users in China and by 2010, the figure will be 17.4 million. Last year, there were 436,000 IPTV users.
AVS is a domestically developed audio/video codec that is being considered as part of a global IPTV standard being drafted by the International Telecommunication Union. A recently released broadcast mobile TV specification, known as CMMB, also uses AVS as its codec. Still, China Telecom, the largest domestic telecom company, favors H.264 in its IPTV offering.
AVS backers say the codec is similar to H.264 in terms of technical performance. Unlike MPEG-4/H.264, however, the AVS group probably will not charge "participation fees" to use the codec for subscription-based services, over-the-air free broad- casts or duplication of content on a title-by-title basis.
The codec is among a handful of domestic standards that China is promoting in order to lessen its reliance on foreign intellectual property. If the strategy is successful in the long run, it will shift the flow of royalties and fees into the coffers of local, rather than foreign, companies and help to build up domestic technology.
Netcom added it will also test AVS-based TV over a TD-SCDMA cellular network. Currently, there are no plans for commercialization since Netcom doesn't have a cellular license yet, said Xiongyan Tang, vice chief engineer at Netcom.