Goodbye Cablewallah, Hello Reliance

Reliance Infocomm and Microsoft have tied up to launch internet protocol television services. Surajeet Das Gupta looks at IPTV's pros and cons

Couch potatoes are in for good times. Video-on-demand will soon be here. So if you're a couch potato, you'll be able to choose programmes and movies and see them at your convenience.

That's for starters. You'll also be able to scan multimedia programme guides at the touch of a button and record shows.

No, these services won't be offered by the neighbourhood cable operator. Instead, telecom company Reliance Infocomm will be offering them.

In the next few years the Ambani-controlled company hopes to enter homes with a range of services like these and more, by using its nationwide broadband network.

Those who subscribe to the company's broadband digital subscriber line (DSL) connection (which is used to hook on to the internet) can now use the same "pipe" to access entertainment programmes either on a personal computer or on a television set. And yes, a set top box will be required.

About a fortnight ago, Reliance Infocomm signed an agreement with US software company Microsoft Corp to jointly create, test and deliver next generation internet protocol (IP)-based television services.

The US company will employ broadband networks used for internet access to offer television quality signals at homes. Reliance is the second company (after Bell Canada) to have agreed to test Microsoft's new technology.

Reliance Infocomm officials decline to discuss IPTV. But in a press note announcing its tie up with Microsoft, Reliance Infocomm stated: "The new technology is designed to enable Reliance Infocomm to leverage its nationwide high-speed infrastructure to deliver a unique set of next generation television services that take full advantage of its state-of-the-art network."

What's special about Microsoft's IPTV? It has three things going for it: broadcasters can send multiple audio tracks, it has less disturbance and is interactive.

Above all, it offers telecom companies the ability to offer pay TV services. The disadvantage of IPTV, some say, is that video and audio quality could be better.

Microsoft will use internet protocol "� the packet switching standard which made the internet and the world wide web a reality "� to bring video to consumer homes.

To deliver signals, Microsoft has developed an advanced compression software, Windows Media 9. The new software is said to deliver broadcast-quality video over telephone lines but occupies little space.

For instance, compared to MPEG-2 (which is the standard used by TV and cinema today), it uses as little as a third of the bandwidth required for video delivery. Microsoft has also roped in Intel to develop a special chipset for the set top box.

Are cable operators in India spending sleepless nights in anticipation of the advent of IPTV? Do other telecom companies fear that they've missed the bus? Not quite.

Says an executive at a telecom company that competes with Reliance Infocomm and operates a fibre optic backbone across the country: "It's just a vision. After all, DSL penetration of homes is very low. We barely have a couple of lakh DSL subscribers and the majority of them is corporates. So where is the market?"

Executives at other telecom companies argue that even cable penetration is still pretty low "� India has only 40 million cable homes, though the country has over 120 million TV homes.

In a cost-conscious market where the public has resisted the introduction of the conditional access system (CAS) because their monthly bills will go up, it is ridiculous to think that there is a large enough audience for pay V and other value-added services, they argue.

In fact, even cable operators do n't think that IPTV will challenge them. Says a senior executive at Siti Cable, the Zee group's distribution company: "We already have a vast cable network in which we have invested money and have also entered the Direct-to-Home market. We do not see any logic in getting into IPTV."

Siti Cable executives point out that the company is already moving towards two-way communications on a DTH platform. It will soon introduce set top boxes that will offer many of the services IPTV promises to launch.

This includes facilities such as data downloading, pay TV, video-on-demand and programme recording.

The Microsoft offer is also still in an experiment stage. The company showcased a prototype of its IPTV just last month at the Geneva telecom fair. What is more, question marks still hang over the product quality of internet-based TV.

Says a telecom analyst: "The quality of picture and the experience is not something which customers will lap up."

In sum, IPTV is no big deal, cable TV distribution companies contend.

Why, then, are Reliance and Microsoft planning on launching it?

First of all, don't dismiss IPTV so fast "� in several countries telecom and broadband companies are already trying to offer IP TV services to customers.

For instance, Bell Canada, which added satellite-based TV services to its portfolio of services (apart from voice and data), is looking at DSL as another possible route for distributing TV to homes. British Telecom, too, is reported to be looking at using DSL to bring video on demand service to its customers.

IPTV offers telecom companies several advantages. One, it could provide an alternative channel of revenue, especially, with competition in the voice and data segment becoming stiff and margins getting squeezed.

Says a close Reliance watcher: "Reliance has already built large bandwidth capacity in the country which will be in terabits.

Video could provide a potentially large market in utilising this large capacity. Data and video transmission could become a potent revenue earner."

Reliance Infocomm's competitors, however, say that IPTV offers a means for telecom companies of muscling into the turf of cable TV distributors.

Says one telecom company executive: "Many telcos have been eyeing the large cable entertainment market but they cannot uproot the well-entrenched players. IPTV provides them with an alternative distribution channel to challenge their hegemony."

Clearly, Reliance Infocomm is readying for a long-term game. And if IPTV catches on and Reliance Infocomm breaks into the Rs 10, 000 crore cable distribution market, it may well laugh its way to the bank.