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Emerging markets sustain global IPTV boom

The global rise in IPTV subscriptions is at last slowing down a bit but the boom is continuing on the back of strong growth in emerging markets led by China and Russia.

Yet, even the more saturated IPTV powerhouses, France and the U.S., each gained 3 percent in IPTV subs over the second quarter at a time when cable and satellite are stagnating or in decline. There was growth in every region, with Russia still increasing the fastest of the major markets at 17 percent over the quarter to reach 1.93 million subs. A surprising joint second was the relatively saturated Netherlands, notching up 8 percent quarterly growth to scale 1.15 million. The story there appears to be of a swing from cable to IPTV rather than an overall gain in pay TV subs, with KPN, the dominant Dutch Telco, continuing to gain at around that same rate per quarter.

In Germany, which witnessed 7 percent IPTV subs growth over the quarter to reach 2.25 million, the picture is slightly different from the Netherlands in that the country as a whole is still emerging from its historical anathema to subscription TV. It has come to an end partly as a result of disillusionment with the quality of free to air programming.

In China, which also saw 7 percent IPTV growth over the quarter, the background is different again as the whole country is gripped by a surge in TV viewing and ownership generally. China only overtook France as the world’s leading IPTV market in 2011, but has now opened a large gap with 16.28 million subs, compared with the Gallic 12.79 million. The U.S. remains the world’s third-largest IPTV market, at 9.66 million subs, up 3 percent over the quarter. South Korea is fourth after notching up notable 8 percent quarterly growth to approach 5.7 million.

The continuing global surge in IPTV has led the London-based analyst group Point Topic, which conducts surveys on behalf of the Broadband Forum, to call for an expansion of the data collected about IPTV usage. This is partly to reflect the status of IPTV as a major TV distribution medium, but also the changing patterns of content distribution associated with it and its cousin, OTT, with the growth of TV Everywhere.

“IPTV is gaining huge economic and social importance,” said Tim Johnson, Consultant Analyst at Point Topic. “It can set off riots or earn millions right across the world. But there’s very little data on who can get it, who uses it, how much they watch it and how much it earns.”

Point Topic already collects data on IPTV services spanning the 70 million customers worldwide, but as Johnson pointed out, that is only a fraction of the estimated 500 million homes that download TV clips and longer videos over the internet, mostly for free. Hard facts about this huge global shift in how easily we can access video are scarce, and most of what there is available covers only single countries.

To address this, Johnson has proposed expanding the metrics collected in its surveys to include total IPTV households, number of subscription IPTV households, hours spent viewing IPTV, revenue generated by IPTV, and extent of IPTV coverage.

IPTV growth is fuelled by broadband expansion, which is also continuing at a fast rate. According to the Broadband Forum, global broadband subscriptions had risen to 624 million by the end of Q2 2012, compared with about 565 million a year earlier. The breakdown between the different media is significant since it indicates that all three of the principle delivery media, fiber, telephony copper and coaxial cable, are all doing about equally well in terms of broadband expansion — even though cable is now losing ground for TV. By the end of Q2 2012, telephony copper was delivering to 365 million broadband homes, up from 346 million a year earlier, while cable stood at 120 million, up from 111 million, and FTTH rose 4.6 percent from 14.3 million to 17.6 million.

There is also a fourth category — hybrid fiber/copper in the telephony sphere including services such as VDSL, where fiber extends beyond the Telco central office or exchange to street cabinets or multi-tenanted buildings — with the last loop still being copper but shortened to enable higher bit rates. This category is growing at about the same rate as FTTH, 4.5 percent, but from a higher base to reach 99.5 million by Q2 2012. Given that cable operators are also deploying fiber deeper within their networks for HFC, the battleground between them and Telcos for broadband subs lies mostly at this level rather than fiber all the way to the home yet.