THE DEVELOPMENT OF CONVERGED VIDEO SERVICES
In the early 2000s, telecommunications companies in Europe, Asia and the United States started to introduce IPTV. The service was frequently offered as part of triple-play packages.
In countries where broadband development was already advanced, considerable growth in both linear and non-linear online video content was deemed suitable for the launch of IPTV1 By 2006, IPTV services had been started or offered on a trial basis in at least seven of 13 Asia-Pacific economies (Kim, 2009; Shin, 2009). In Taiwan, for example, the incumbent telephone company Chunghwa Telecom (CHT) launched the first IPTV service, named multimedia-on-demand (MOD), in 2004. In South Korea, which has been a leader in broadband and new media development since the 1990s, Korea Telecom (KT) and Hanaro Telecom initially scheduled the launch of IPTV for 2006. However, due to regulatory setbacks the introduction was delayed until 2008 (Shin, 2009). In recent years, the IPTV market in South Korea has shown rapid service innovation and an impressive increase in the number of subscribers. As of March 2014, the total worldwide number of IPTV subscribers was around 92.7 million. With 45.6 million subscribers, the Asia-Pacific region comprised 49.2 percent of the global market. Subscribers in Western Europe reached 27.3 million (29.4 percent) while North America accounted for 11.7 million or 12.6 percent of the global market (PRWEB, 2014).A second platform is offered by mobile television. In this chapter, mobile TV refers to ‘the transmission of TV programs or video for a range of wireless devices ranging from mobile TV-capable phones to PDAs and wireless multimedia devices’ (Kumar, 2007, p. 5). There are two main kinds of mobile TV One is broadcast over a terrestrial network or via satellites to mobile devices, utilizing a separate frequency from the one used for mobile voice and data and hence requiring handsets that are equipped to receive such signals.
The other is transmitted ‘in-band’ over a 3G or 4G network (ITU, 2013) and hence does not require additional hardware functionality. This chapter focuses on the former service and only briefly touches on the latter. Although mobile TV was initially developed in Japan, SK Telecom launched the first mobile TV service based on satellite digital mobile broadcasting (S-DMB) in South Korea in May of 2005 (Lee and Kwak, 2005). In the following year, S-DMB managed to provide 15 video channels and 19 audio channels. When the service was inaugurated, some called it a new technology that would change people’s lifestyles. Yet in August 2012 S-DMB was shut off. A main reason was that terrestrial stations supported free terrestrial digital mobile broadcasting (T-DMB), diluting the willingness of consumers to pay for content on S-DMB that was seen by many as less appealing (Seo, 2012).In China, although the government adopted China Mobile Multimedia Broadcasting (CMMB) as a standard, mobile TV was also not successful. For one, the service initially also relied on a for-pay model. Moreover, China Mobile received an exclusive three-year contract, excluding subscribers of other mobile phone companies from receiving mobile TV programs.2
In European countries several mobile operators adopted digital video broadcastinghandheld (DVB-H) as the standard for mobile TV. However, only Nokia supported the standard in its devices and thus consumer uptake was limited. All European countries have now stopped DVB-H broadcasts (OECD, 2013). In the United States, Dyle, a jointventure of 12 broadcast groups including ABC, NBC, Fox and Telemundo, is the major example of broadcast mobile TV offering its services since August 2012 (ITU, 2013).
Since its introduction to the market in 2005, broadcast mobile TV has encountered many challenges, including a lack of appealing content and sustainable business models. Its quality of service also varies depending on the technology and the mobile handsets.
With the increasing bandwidth and download speeds in terrestrial long-term evolution (LTE) networks, in-band transmission has become increasingly used for mobile video. It can be provided as streamed mobile video and multicast mobile video, which utilizes the available bandwidth more efficiently (see Bauer et al., 2007 for an early analysis).In addition to IPTV and mobile TV, OTT video now allows content creators, aggregators and new or existing content distributors to provide consumers with content via broadband (Frieden, 2012). IPTV and OTT differ in several ways. For one, IPTV is often provided by incumbent telecom providers in a ‘walled-garden’ format, which may narrow the technological options of users but allows guaranteeing quality of service. In contrast, OTT video services are typically provided via any broadband connection. Consequently, the market for OTT service is highly fragmented and composed of many different devices and solutions. A second distinctive difference is the need for a set-top box, which is often mandatory for IPTV but not necessary for OTT services. In terms of geographical reach, IPTV is mainly offered at a national level while many OTT services are, at least technically, available internationally. In most countries, IPTV service providers need to obtain a license from the (tele)communications authority whereas OTT video service providers usually do not require a license (China and Singapore are among exceptions).
Netflix, YouTube, and Hulu are the most vivid examples of OTT video service providers. Netflix was delivering content through video rental services as early as 1997. Digital distribution was introduced in 1999. YouTube launched at the beginning of 2005 and quickly became a household name before it was sold to Google for US$1.65 billion in October 2006 (White, 2006). In 2008 Hulu joined these competitors as an over-the-top service for content streaming and storage. Although these services have emerged only recently, they have grown rapidly. Recent data indicate that video constitutes the largest type of Internet traffic in most countries and regions, and exceeds 60 percent of peak traffic in some cases (Mocerino, 2011).
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