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12/27/2007
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China IPTV Subscriptions Miss Expectations

The country is shy of a predicted 1.3 million mainland customers for the year but could recover with a cooperative business model, analysts suggest.

China's Internet-enabled television -- or IPTV -- market has disappointed this year, according to industry analysts with iSuppli.

The research and consulting company said that China failed to meet expectations for subscriber growth and shipments in 2007. Chinese operators had predicted 1.3 million mainland subscribers by the end of this year, but iSuppli said it looks like only 846,000 people will have subscriptions by next week.

Loren Zhao, industry analyst, China Research for iSuppli, said uncertainty resulting from slower-than-expected rates of adoption could discourage investments needed for expansion.

Chinese telecom carriers provide access, service platforms, and broadband network for IPTV, while broadcast operators have licenses and supply television and video content.

The industry watched for signs of success or failure when Shanghai Media Group, China Telecom, and China Netcom took IPTV to Shanghai and Harbin in 2006.

SMG planned to expand in 10 cities and the State Administration of Radio, Film, and Television approved the plans. Local operators did not effectively promote IPTV, so two provinces drew 130,000 subscribers, while other locations fared worse.

"The main reason for the IPTV deployment slowdown is the industry as a whole failed to develop a successful business model -- one capable of being replicated in geographically dispersed urban centers," Zhao said in a prepared statement.

Three other operators have held back on IPTV deployment. One of the three, China Central Television International (CCTV), plans field tests in three provinces, but SMG is the only Chinese operator actively deploying IPTV, iSuppli said.

Meanwhile, the other three IPTV licensees chose to pursue a cautious wait-and-see strategy. CCTV has announced plans for IPTV field tests in Baotou in Inner Mongolia, in Changchun in Jilin Province, and in Nanjing in Jiangsu Province.

If telecommunications and broadcast companies cooperate to form an effective business model, IPTV could draw 17 million subscribers by 2011, iSuppli said.

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