Uncertainty clouds IPTV picture | South China Morning Post

The fourth, however, comes from the State Administration of Radio, Film, and Television (Sarft), which is interested in protecting the cable operators as they switch to digital broadcasting. The agency hopes to sign up 100 million digital cable customers by 2008 and might not welcome the competition.

'The common belief is that the last licence from Sarft is the most difficult to get,' said Jeffrey Soong, chief executive of BNS, a consultancy to broadband services providers.

Last month, the China Daily reported that Sarft would grant licences this year giving fixed-line operators the right to beam television programming over broadband connections to set-top boxes.

China Telecom and China Netcom already offer limited TV programmes and movies to users' computers on a trial basis.

China Netcom has formed a joint venture with Tiantian Online to deliver content to PCs. It is offering free IPTV channels in Hangzhou and planning a content joint venture with PCCW.

China Telecom, meanwhile, has partnered with Shanghai Cultural and IPTV licence holder Broadcasting Media Group to develop IPTV services in the 21 provinces where it operates.

There is a favourite expression among industry players in the pay-television services market: content is king. On the mainland, where government officials are sensitive about what is shown on television screens, that makes Sarft the kingmaker.

Media Partners Asia does not expect the licensing issue to be resolved until next year.

'Approval may take longer due to the lack of clarity over legalising convergence between broadcasting and telecoms, and the debate over who will control a potentially new and consolidated regulatory structure - Sarft or the MII,' it said.

Dave Carini, business development manager for Norson Telecom Consulting, said competition between Sarft and the MII could hinder IPTV development in China.

'Sarft is charged with the promotion of a technology that competes with IPTV - digital cable TV technology,' he said. 'When you have IPTV involving another regulator, Sarft would choose something that they have more control over.'

Like IPTV, digital cable TV promises interactive services such as video on demand, but Sarft fell far short of its goal of signing up 10 million subscribers by the end of last year.

The agency is more inclined to work with those with whom it already has established relationships, like broadcasters such as CCTV. This is why China Telecom has sought out Shanghai Cultural and Broadcasting Media Group as a partner. 'We can co-operate with an authorised IPTV licence holder [to offers services],' China Telecom chairman and chief executive Wang Xiaochu said.

Mr Soong of BNS is optimistic despite the regulatory obstacles.

'The lack of official status does not mean that you don't have any development in China,' he said. 'When operators can find a valid business model and have their network upgraded to faster speeds ... then they'd have more incentive to launch on a bigger scale.'

Market researcher International Data Corp put the number of IPTV subscribers on the mainland at 50,000. This is forecast to reach 270,000 this year and more than a million next year.

China Telecom isn't waiting for the regulatory picture to clarify. It has joined such set-top box manufacturers as Sichuan Changhong Electric to produce decoders and televisions this year that are internet-ready.

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