Since the announcement of the new policy for the integration of the three networks in January last year, nearly two years have passed. During this time, the policy objectives for the integration of the three networks have largely not been realized, and perhaps the only notable progress has been in the IPTV business.
One of the main driving forces behind the convergence of the three networks is the telecommunications industry's demand for video services. However, there is intense competition between telecommunications and broadcasting in terms of industry interests. Telecommunications has not loosened its grip on its basic services, nor has it been able to obtain control over IPTV broadcasting. After gaining control over IPTV broadcasting, the broadcasting sector deployed a two-tier IPTV broadcasting control platform, coordinating the national IPTV broadcasting platform of CNTV with the long-established IPTV operations of BesTV, thereby opening the door to IPTV for telecommunications operators. In the pilot areas for the convergence of the three networks, the National Radio and Television Administration will no longer support local cable network companies' aspirations to block IPTV services. The fundamental reason for the broadcasting sector's opening up of IPTV services is that IPTV can achieve shared benefits, allowing both broadcasting and telecommunications to jointly share the profits from IPTV services.
After the policy was lifted, 2011 was expected to see rapid growth in IPTV users. However, the situation was not that simple, and the IPTV business in 2011 did not experience the anticipated significant development. During this period, there were reports that the national broadcasting control platform CNTV sued Nanjing and Guangdong Telecom over copyright issues related to CCTV television programs, highlighting the ongoing struggles of IPTV in China. The main reason for the slow progress this year is the resistance from telecom operators against CNTV's IPTV promotion. Why is China Telecom, which has been involved in IPTV for a long time, resisting CNTV's IPTV broadcasting control platform? First, after losing control over IPTV broadcasting, telecom operators have significantly reduced their interest in IPTV services, focusing instead on the future development of broadband networks and mobile internet, which has slowed down video services constrained by policies. Secondly, China Telecom has had a long-standing IPTV partnership with BesTV, which offers a much higher profit-sharing arrangement compared to the later entrant CNTV. CNTV, leveraging its monopoly license and policy advantages, aims to take a larger share of the profits. Therefore, China Telecom continues to maintain its partnership with BesTV, expanding its IPTV business in various regions while refusing to connect with CNTV's IPTV broadcasting control platform.
Another issue is that the two-tier broadcasting control platform for IPTV set by the State Administration of Radio and Television is most beneficial to CNTV. Originally, provincial broadcasting stations could independently build their own broadcasting control platforms and collaborate with telecom operators to exclusively share IPTV revenues within their provinces. However, with the intervention of the national-level broadcasting control platform by CNTV, a significant portion of the IPTV business profits from local broadcasting will be taken by CNTV, which has led to a lack of enthusiasm among them.
As a result, CNTV's IPTV promotion nationwide has neither received support from telecom operators nor active cooperation from local broadcasting authorities. The ambitious goal of developing 5 million users by 2011 has already fallen short.
As the end of the year approaches, there seems to be a significant turnaround. The northern telecom operator China Unicom has not collaborated with BesTV on IPTV services, and its willingness to adopt CNTV's broadcasting control platform is much higher than that of southern telecom operator China Telecom. The tripartite cooperation for IPTV in regions such as Shanxi, Shandong, and Beijing (involving CNTV, local broadcasting, and China Unicom) has already been initiated. Furthermore, the telecom's refusal to connect to CNTV's IPTV broadcasting control platform has attracted the attention of the State Council's Leading Group for the Integration of the Three Networks. It is reported that during a recent internal meeting, the State Council's Coordination Office for the Integration of the Three Networks urged the Ministry of Industry and Information Technology and the State Administration of Radio and Television to accelerate the promotion of mutual access between broadcasting and telecom pilot units in related businesses of the three-network integration, particularly speeding up the connection work between the IPTV integrated broadcasting control platform and the IPTV transmission system, and requiring that the standardization work be completed by the end of this year. Telecom enterprises and broadcasting institutions are encouraged to actively cooperate, negotiate equally, and complete the process as soon as possible, with each IPTV transmission system connecting to only one integrated broadcasting control platform. If this information is accurate, and the relevant authorities facilitate the connection work for the IPTV broadcasting control platform, then the cooperation between CNTV and China Telecom on IPTV services will begin to accelerate.
It is evident that in 2012, CNTV's IPTV in regions such as Beijing, Shandong, Shanxi, Zhejiang, and Yunnan will embark on a path of rapid development, and other provinces and cities led by China Unicom will also join this trend. 2012 will witness a significant explosion in CNTV's IPTV business. If telecom operators in southern provinces can successfully integrate with CNTV's IPTV platform, it will undoubtedly expand IPTV users, and the IPTV business within China Telecom in the south will also experience rapid growth in 2012. However, the partnership between China Telecom and BesTV will remain a complex issue. Regardless, in 2012, China's IPTV business will truly accelerate its development, and by the end of next year, it may surpass 20 million users, subsequently overtaking France to become the world's largest IPTV market.