Sunday, April 27, 2008

State of worldwide IPTV deployment

As a preview to UTStarcom's iptv webinar tomorrow, I wanted to compile some historic subscriber numbers and projections going forward for the iptv industry and UTStarcom. In general, projections for IPTV have mostly been way off. The projections have been based mainly on broadband users that can be converted to iptv users (and penetration rates have often been cited to show the potential uptake in iptv). There are various impedements to iptv uptake such as the speed of connection (broadband itself), regulatory issues, negotiations with content providers, and added benefits just to name of a few. For UTStarcom, there are other hurdles such as competition in various markets. Back in 2007 when UTStarcom was trying to sell itself, there were a series of company sponsored articles to play up iptv's potential and Ying Wu was even quoted as saying the main barriers to iptv uptake in China are breaking down.

While the revenues from iptv have not returned the company to profitability, there are material developments in the last year that show a glimmer of the potential of iptv for UTStarcom. Here is a post discussing potential for UTStarcom iptv with some reference to their PAS experience.

Here are some information on previous UTStarcom wins.

Taiwan - "The Markwell contract includes system capacity for 500,000 RollingStream IPTV subscribers and 20,000 set-top boxes initially. Markwell plans to deploy an additional 480,000 RollingStream set-top boxes over the next two years."

MTNL, India - "UTStarcom, Inc. announced a three-year contract through its partnership with AKSH Optifibre Ltd. to deploy its RollingStream end-to-end IPTV solution with Mahanagar Telephone Nigam Ltd. (MTNL) in India. The contract represents the first commercial IPTV deployment in India and AKSH Optifibre Ltd. is the first company to launch IPTV in India. AKSH is the pioneer in optifibre fiber and cable technologies and their main product is a Fiber-to-the-Home solution." MTNL is adding 40-50 subscribers/day. While low, it does show progress that we can measure and track. "MT&L currently has an initial IPTV subscriber target of 500,000 subscribers over three years." (Blackmore on the Q3 Call in November).

Bharti Airtel, India - Back in August of 2007..."In China, UTStarcom started with trials of a few thousand homes at a time, building to what's now a 310,000-subscriber audience. "In India, it's different. They start you off bigger," to the tune of a 120,000-subscriber launch for Bharti, says Brian Caskey, UTStarcom vice president of marketing." "Bharti has an initial deployment of 120,000 lines and a subscriber target of 500,000 as well." (also from Q3 call in November).

Third win in India - The customer has not been announced but it could be BSNL. On the Q3 call, Peter Blackmore mentioned, "We are in the process of building BSNL’s network to support IPTV services."

Brazil - "More recently they have started their first IPTV deployment of 10,000 lines" (also from Q3 call in November).

China/Japan/India - In a previous summary post after the Q4 results, I posted, "Currently over 750k subscribers, up from 600k late last year. That is huge growth of 25% in a little over 2 months. Aside from wins/expansions in China, they won in Taiwan (Markwell cable), Sri Lanka Telecom (SLT) and a new customer in India. Rollouts will predominantly start in Q2 and there is the usual 6-9 month revenue lag so these are nice strategic wins. Market share in IPTV in China is greater than 65% and well over 80% in India." Shanghai seems to be the main driver for UT iptv with end of the year targets of 800k users (overall).

In terms of additional iptv wins that the company could announce tomorrow, Hong Kong seems to have the most promise with the recent uptick in company job listings and an article showing they have won a significant iptv contract in Hong Kong.

There may be news regarding CALA, middle eastern, and eastern european countries just based on UTs involvement with NGN, PAS, handsets, etc that could lead into iptv.

Lets look back at some overall iptv numbers and projections. The company will no doubt reference some of their own projections but its nice to see some historical projections and what has happened.

End of 2006. "Canalys estimates that the total number of IPTV subscribers worldwide reached 3.6 million by the end of 2006, with Western Europe leading the way and accounting for 2.4 million of those. The sheer number of operators in the region provides its IPTV scale, and major investments in backbone infrastructure are being made as providers rush to build substantial subscriber bases. The IPTV market is highly fragmented. The top five providers account for over 60% of all subscribers, but the rush of service launches by new entrants in 2006 means that there are numerous companies with only a few thousand subscribers each. The top three providers globally according to Canalys are PCCW on 18.2% share, France Telecom with 16.8% and Free Telecom on 14.0%. These are joined in the top five by Telefonica and Fastweb."

End of 2007. "There were 9.9mn IPTV subscribers globally at the end of last year, more than double the previous year, according to a new report from consultancy firm Telecommunications Management Group (TMG). "
The report, entitled “IPTV: The Killer Broadband Application”, forecasts that there will be nearly 60mn subscribers to IPTV services around the world by 2010, with a growth rate of over 500% expected during the next three years.

2011. - Worldwide IPTV subscribers to reach 72.6 million by 2011, says MRG.

From the subscriber numbers in various regions, Europe has taken the lead with about 2/3 of the subscribers but Asia is seen to have the fastest growth and will surpass Europe.

Sigma designs (worldwide leader in iptv chips with about 24-25 deployments)- "From this basis we believe the market for media processors into IPTV set top boxes will increase from 8 million units in 2007 to 14 million units in 2008. Nine of these telcos are based on the Microsoft media room platform while 14 use a customized LINUX based platform. For the Microsoft media room platform we believe this will remain 100% Sigma based during the rest of 2008. For the LINUX based platforms we also expect to retain our share of the market during this year. "

For those that have some extra time and want to get a good picture of worldwide deployments, read the sigma designs CC ....

Some quick highlights, AT&T is at a run-rate of 12k/week and targetting 40k/week. Korea (one carrier) is at about 100k/month. UTStarcom China is already at 40k/month but if the China market acutally opens up, those numbers will pale in comparisson and UTStarcom will shoot up on all the iptv lists.

The supplier positions constantly change but here are some snapshots on where UT is leading in some cases (even at this early juncture).

"The report found that Thomson is the world’s largest commercial IPTV middleware supplier, followed by UTStarcom."

Total worldwide IPTV and SDV equipment revenue hit $1.1 billion in 4Q07
-- The number of IPTV subscribers is forecast by Infonetics to top 97 million worldwide by 2011
-- Worldwide service provider revenue from IPTV services is expected to grow nearly 10-fold in the 5 years between 2007 and 2011
-- Worldwide pure IP set-top box revenue grew 16% in 4Q07 over 3Q07 and is set to skyrocket in 2008
-- Motorola leads the worldwide IP set-top box (STB) market in 2007, Microsoft leads the IPTV middleware and content delivery platform market, and UTStarcom leads the integrated digital headend platform market
-- In 2007, the regional breakdown for worldwide IPTV equipment revenue was 40% North America, 30% EMEA, 28% Asia Pacific, and 2% CALA

Here is a post back in early January regarding some penetration rates in various countries.

Again, you have to take the projections with a grain of salt as they change a lot but it does seem like UT has some material traction this time (with the announced wins/subscriber numbers, worldwide trends, deregulation, etc). For some perspective, on September 15, 2005, previous UT CTO Bill Huang held an iptv webinar and frankly, I don't remember much from it (although I am sure I listened to it) and looking back, why the heck did they even have it? Anyway, its been a couple of months since we got an update on UT worldwide and China iptv subscribers and the fact that they are having a webinar for an hour shows more communication and probably some positive developments. Again, what can I say with this company but good luck to us all. :-)

PS, this post may have been a little all over the place (not as organized as I'd like) but I just wanted to throw all the info out there and not surprisingly, there is a lot. Also, it won't cost you $10k or even $20 so how can you beat that? Have a good rest of the weekend everyone and looking forward to the update tomorrow.

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