Visitors crowd in front of IPTVs presented by UTStarcom at a telecom exhibition in Beijing. [China Daily]

HONG KONG: The market for IPTV (Internet Protocol Television), which enables TV broadcasting over broadband Internet, is expected to take off in China next year as fixed line operators seek ways to grow, an industry executive said yesterday.

"IPTV could get a head-start next year in China," said Huang Dabin, vice-president of the network division of China's No 2 telecoms equipment maker ZTE Corp.

In an interview with China Daily on the sidelines of the ITU Telecom World 2006 in Hong Kong, Huang predicted the number of IPTV subscribers in China could exceed 1 million next year, skyrocketing from the current 100,000 subscribers.

Fixed-line operators China Telecom and China Netcom have been aggressively building trial IPTV networks since last year. This year, some commercial IPTV services have been operational in cities such as Shanghai.

"Fixed-line carriers are putting a big bet on IPTV as one of the top priorities of their business transformations, as IPTV promises a new revenue stream," Huang said.

China Telecom and China Netcom have been coping with a slowdown in their fixed-line voice businesses. The two firms have been lobbying the government for a licence to enter the lucrative mobile phone sector.

But the government has been denying the licenses, forcing the two fixed-line operators to promote Xiaolingtong, or PHS (personal handyphone system), a limited mobility service in the country.

In recent months, PHS has lost momentum in China due to dropping fees of mobile phone services. As of October, China had 93.4 million PHS users, compared to 85.3 million at the end of last year, according to the Ministry of Information Industry (MII).

Now operators are shifting their investment focus to the IPTV business as it is "a strategic choice for fixed-line carriers (besides the mobile phone business)," Huang said.

China had 370 million fixed-line telephone subscribers and 449 million mobile phone subscribers as of October.

The booming broadband Internet business is giving a boost to the IPTV market in China. By October China had 49.8 million broadband Internet users.

Operators' increasing investments in IPTV is benefiting a number of companies such as ZTE, UTStarcom, Huawei and Alcatel Shanghai Bell (ASB), which have been developing IPTV technology.

ZTE, for instance, has won contracts from operators to supply IPTV equipment and solutions in a number of cities and provinces including Beijing, Yunnan and Shaanxi provinces.

Yet, regulatory uncertainties are still thwarting rapid up-take of IPTV in China. Both broadcasting and telecoms operators are vying for an upper hand in the IPTV market, which represents a convergence of the broadcasting and telecoms industries.

Even regulators are struggling to enter the IPTV market. For instance, local broadcasting regulators in Quanzhou, a city in East China's Fujian Province, banned China Telecom from operating an IPTV service in the city.

But China's broadcasting regulators are aggressively promoting digital TV over cable lines in the country, which could eclipse the growth of IPTV in the country.

Despite intense competition, broadcasting and telecoms operators will find they need to work together to create a "win-win" situation to better tap into the emerging market, Huang said.