SHANGHAI China Telecom, the country's largest fixed-line operator and the leader in the IPTV market, is planning to run field trials of a domestic codec that could lead to it dropping support for H.264.
The trials will begin next month in Shanghai, the largest IPTV market in China, using the Audio Video Coding Standard (AVS). It's unknown how big the trial will be. But if Telecom decides to standardize its IPTV platform on AVS, it would be a blow to suppliers of H.264 gear.
China Telecom denied the news.
However, Huawei Kong, vice director of the Institute of Computing Technology, a leading state-run research group, confirmed the trials will happen. In addition, Leping Wei, chief engineer of China Telecom, indicated last month that Telecom was considering AVS after seeing positive results from tests in Dalian by China Netcom, its rival.
China Netcom plans to use AVS-based IPTV in 20 cities by the end of 2007, and hopes for 6 million AVS-based IPTV users in five to seven years, or 40 percent of its current broadband users.
However, in a market dominated by H.264, some observers believe it doesn't make much sense to switch to AVS, which may carry higher costs because of its immaturity. However, there is a sense that political pressure rather than business sense is driving the decision. All of China's telcos are state controlled.
AVS 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.
In the first quarter of this year, IPTV users in Shanghai increased to 220,000 according to a report from Analysys International. The researcher said the city's IPTV use shot up 150 percent in the first quarter.
IPTV users in China increased to 612,000 in the first quarter, driven 36 percent higher than the quarter before. Market researcher iSuppli Corp. estimates that by 2008 there will be 3.6 million IPTV users in China and by 2010, the figure will be 17.4 million. But those targets may be optimistic.