DVB settops in China................................
chinaonline.com
Set Top Boxes Will Hit It Big In China
(7/13/99) TV set top boxes will play a big role in the future of all of us, at least someday. In China that "some day" may be sooner than we expect, and the role, at least in the market place, bigger than most people imagine today. All this and more is reported in the June 3rd Zhongguo Zhengquan Bao (China Securities).
But what is the "top box"? Many people may not have ever heard of one, much less seen one. As the term indicates, it?s a little box that sits on top of your television set. Crammed with electronics and perhaps a little bit of magic, it does wonderful things to what you were seeing on your TV screen. Or it may bring the Internet or telephone connections. There are three different kinds of top boxes and what each kind does is very different.
Take the digital television set top box (DVP-C). This is considered one step that that China and the rest of the world will be making in their transition from the kind of relatively low-resolution television we have today to the fully digital television of the future. The latter will have as clear a picture as the signal that leaves the broadcasting studio. Yes, digital television exists today, but with receivers running at US$5,000 each, it is easy to understand why it is not a common sight now.
China Central Television?s leading programs have basically been converted to release through digital signals already, as have about half of its total programming. By next year all the programming will be digital. At the same time the trunkline transmission, short-range fiber optic cable, and microwave transmission will all be digitized.
China?s first digital program was broadcast on January first this year by Chengdu Cable TV in that West Chinese city. The manufacturer of the digital top boxes, Qian Feng Shareholdings, has already signed agreements for the broadcast of other programs in Guangdong and Zhuhai. A dozen or so other stations around the country will join in digitally broadcasting special programming on the 50th anniversary of National Day on October 1st. Other manufacturers presently include Sichuan Changhong, Haixin Electronics, and Fuzhou Datong.
The present DVB-C top boxes have prepared networks and stations for the creation of digital TV and the eventual spread of the true digital TV receiver. While DVB-C does not provide the quality picture of the latter, it is still far better than what is common today. The market for this device among the owners of China?s 320 million sets is expected to begin coalescing at the end of this year and then to soar for the next three years, until the time when the price of the true digital receiver begins to be competitive.
Another factor in the DVB-C market?s bright short-term future is its relation to cable television. China has 76 million cable subscribers today and is said to be adding five million more a year. They can be expected to add enormous numbers of top box users to swell the ranks.
Just for cable users, if 25% of them buy the unit at about 1500 RMB (US$181), this makes a market of billion RMB or US$3.45bn. If we figure that the top box will last an average of 10 years, the average annual market would be 4.725 billion RMB (US$571.34bn.), or over the 10-year period reaching a cumulative total of 47.2 billion RMB (US$5.71bn).
A major variation on the DVB-C is a type that relies on direct satellite broadcasts. Such a system brings the satellite signal directly into the home. It is designed for remote or sparsely populated or mountainous border areas where there is no cable installation. For the 100,000 villages that have no adequate radio or television reception, a KU band satellite transceiver was set up earlier this year, bringing a set of 8 central television programs in one transmission directly to the villages. This market is still far off, though, due to China?s restrictions on satellite TV program reception and related policies.
A second kind of product is the network television set top box (NTV). This kind of top box adds an entire new dimension to the DVB-C, namely allowing the analog color television set to be able to browse the internet, add e-mail, learning machines, games machines, and VCD functions. This will make it the leading information device product. Just as the VCD takes optical drivers and code portions out of personal computers, the NTV takes internet and home computer functions out of the PC. Such products as Microsoft?s "Venice Plan" and Cisco?s "Goddess Plan" are already available on some markets today. The NTV is expected to enter the Chinese market in the second half of this year and to sell for between one to three thousand RMB (US$121-363).
Again, the market can be expected to be large among all analog television owners and especially the cable subscribers. The latter are the more literate and affluent members of society, mostly urban dwellers. These are just the kind of people most likely to want Internet, e-mail, and the rest. The majority of China?s television owners, though, are still those who have limited understanding of computers. For them on-line charges are expensive. They can be expected in the short term to rely on learning and game machines and VCDs.
In fact, the manufacturers of NTVs are not merely interested in the set top box market itself. Since this is an imbedded operating system, it can be a key player in the enormously larger overall information home market. They may make use of the operating system method to take part in the development of the digital TV set top box.
The third major variety of top box represents the natural bringing together of the functions of the previous two devices and adding telephone service. This constitutes a multimedia duplex cable TV set top box (MDTV). At present the only successful development has been by the Shanghai Broadcast Television Group. The State Planning Commission approved the budget for the development in March. Called the "China High Speed Internet Model Project", it involves the Chinese Academy of Sciences United General Broadcast Bureau, the Ministry of Railways, and the Shanghai Municipal Government.
In effect the project creates a third major player in the Chinese telecommunications industry in addition to China Telecom and China Unicom. The Broadcast Television Group and the Ministry of Railways already have very extensive systems throughout the country. The project builds on this base and relying on the available bandwidth of the fiber optic network, operates Internet technology. While it would still be second to China Telecom in size, its bandwidth would be far superior. Reports say that it would not only function as the cable networks, but could also provide broadcasting, internet access, and telephone and multimedia communications.
The State Council has also already approved test sites for a three in one, broadband high-capacity information platform in Shanghai. The platform would be based on the networks of the Post and Telecommunications Bureau, the Broadcast Group, and China Telecom. The Shanghai Municipal Government has asked for a duplex cable system to serve half a million subscribers. The Shanghai Cable TV Station has responded by upgrading its existing network.
Surrounding Jiangsu Province saw its broadband multimedia telecommunications network completed last year and all cities and counties should be connected by the end of this year. This means that 60% of urban users across the whole province will have internet access and telephone service on cable.
To open up a full-fledged multimedia cable television network, the existing duplex cable network has to be all rebuilt, which takes a lot of time. The user?s terminal will need a multimedia set top box, a cable modem, and a voice router, all of which will be expensive. These two factors will hinder the market for multimedia top boxes in the short term, in direct contrast to the DVB-C and the NTV.
In the long term, though, the story is different. Possessing all the functions of the NTVs, the MDTV adds a key advantage, namely the much greater bandwidth. It would be easy to add the digital television function, making it the best substitute for the true digital receiver.
Projections for the future market of the MDTV set box then are very optimistic. If we say that half of the today?s 76 million cable customers will want the product over the next ten years, then there is an annual market of 3.8 million units. Adding half of each year?s new 5 million users, that adds another 2.5 million units, bringing the total demand to 6.3 million units a year. With the average price per unit at 2,000 RMB, the average annual market demand would appear to equal retail sales of 12.6 billion RMB (US$1.52bn). |
