The age-old complaint that 'there is nothing on the box' should finally become a thing of the past if even half the services discussed at last week's World Broadband Forum Asia event in Hong Kong materialise. As the content and movie industries get to grips with new broadband-based delivery opportunities, viewers should be tuning in to more programmes, more often and on more devices in the not-too-distant future. But under this deluge of content choice, telecoms operators face stiff competition to get viewers tuned into their fledgling TV services. The content owners' embrace of broadband represents a volte-face from as little as a year ago when they regarded the telecoms interlopers with deep suspicion, fearing their valuable programming would be sucked down fat broadband pipes and lost. Now they have a better handle on security issues, so talk is of a 'transformational opportunity' as content executives see the dollar signs more clearly. IPTV will soon arrive in premium high-definition format, mobile TV is going live across multiple platforms while digital content delivered over broadband offers more revenues and targeted advertising dollars. All of which is good for the content owners, but telecoms operators will need to be smart to ensure they are not left out of the loop. While broadband allows telecoms operators to provide television, the flip side is the same technology also breaks down barriers and allows internet-based companies to do the same. Content owners can now go directly to the customer. Disney has already put some of its top shows on iTunes. The BBC has been promoting its iMP media player with which it plans to sell its shows overseas, while MTV has just launched its 'Urge' music download service in conjunction with Microsoft's revamped Windows Media Player. One recurring message from the media industry is that the adage 'content is king' remains true. Telecoms operators, therefore, need to compete for content - preferably exclusive content - in the same way they compete for customers. The market has arguably never been more competitive with devices like iPods, Xboxes and laptops vying for consumers' entertainment budgets. The telecoms operators must also fight the misconception that new technology and faster broadband speeds will create demand by itself. As HBO Asia chief executive Jonathan Spinks noted last week: 'Why pay for fibre if there is nothing to watch?' Why then should telecoms operators build new networks or households buy a new 3G phone or set top box? Securing a return on investment is therefore the key challenge facing the operators, and arguably nowhere more so than in China. The telecoms industry is ready to invest billions of dollars in fixed and mobile broadband networks ahead of the 2008 Beijing Olympics. The spending could reach US$114 billion on 3G infrastructure alone, according to industry estimates. There is the risk that China could be left with a world class infrastructure but without the means to make it pay for itself. Getting people to pay for television content that is strictly controlled looks tricky at best. With foreign content barred outside foreign compounds and five star hotels, growing a Pay TV business will be difficult as it is traditionally this content that drives the industry - the local content is already freely available. The strict controls also contribute to the endemic piracy and signal theft. If you want to watch something new in China, a pirated DVD or satellite receiver makes more sense than an IPTV service. China has many trials of IPTV services taking place, although so far subscriber numbers are small. China Netcom said last week the commercial launch of its pay-TV service in Harbin had attracted just 50,000 subscribers - a figure that is unchanged since last year. 'Customers pay for the product, not the technology,' said Star TV chief executive Michelle Guthrie. 'Delivery can only enhance the product, not replace it.' But if China wants a lesson on how to make pay-TV work, it should look to Hong Kong's PCCW NOW TV service, which boasts the most IPTV viewers - 560,000 - worldwide. As a shareholder in PCCW, China Netcom already has a ringside seat of a service that is garnering significant global attention. Netcom and other operators should be able to replicate PCCW technology platform, clever security and marketing. The difficult part will be replicating its 110 channels of content, including exclusive Hollywood movies and flagship sports channels ESPN and Star Sports. But that is what is needed to ensure there is always something on the box - something that is worth watching, and worth paying for.
