One of the key trends witnessed globally is video overtaking data as the primary driver of internet traffic. Video currently accounts for 55 per cent of the total traffic, and is expected to grow by 13 times over the next five years.

Content consumption itself is changing. A digital culture has emerged over time. For instance, the Skype user base has increased from zero to 100 million in about four years.

Mobile broadband has also seen growth. The percentage of additional time spent on the web due to mobile internet is around 18-20 per cent; on a country-wise basis, this figure is highest in South Korea at 24 per cent, and 21 per cent and 18 per cent in the UK and the US respectively.

However, the role of wireless broadband will vary according to the type of market. For instance, in emerging markets like India, Sri Lanka and China, the focus of wireless broadband will be to bridge the digital divide and enhance business connectivity. In contrast, in developed markets, it will be driven by quadruple play and ubiquitous broadband.

IPTV
In order to overcome competitive pressures, arrest the fall in voice and data average revenue per user (ARPU), and to sustain broadband growth, IPTV has emerged as a critical component of fixed line operators' strategy.

France, the US and Hong Kong are the largest IPTV markets in the world.IPTV penetration amongst France Telecom's broadband subscriber base is 14.1 per cent and 78 per cent for France's IliadFree. In the US, IPTV penetration is 10 per cent for Verizon, while in Hong Kong, PCCW provides IPTV services to 69 per cent of its broadband subscribers.Amongst operators in other advanced markets, Sweden's Teliasonera has an IPTV penetration of 21.5 per cent and Belguim's Belgacom, 20.8 per cent.

IPTV players focus on upgrading the service provided to their broadband subscribers through a bundled offering. While in saturated pay-TV markets, a company's target segment is mostly broadband subscribers, in low density pay-TV markets, the target segment is new subscribers.

As a next step, IPTV needs to evolve from a network platform to an experience platform with increased quadruple play and convergence.

Regulation, implementation bottlenecks and business model issues are the key challenges for IPTV players. For instance, countries like Korea and China restrict the entry of telecom service providers in content distribution. There are issues like guaranteeing quality of experience, creating a differentiated mix of content and services, and implementing a pricing strategy that balances penetration and returns.

Mobile TV
The key drivers for mobile TV include falling voice ARPUs and faster network speeds. Further, mobile TV value chain participants drive service trials and quadruple play; mobile advertising provides a new revenue stream; and rich media client companies drive the interactive mobile video and TV services.

However, there are several deterrents to mobile TV taking off –­ limited availability of compatible handsets, prohibitive data charges, lack of standardisation, limited selection of video content and channels, and lack of adherence to intellectual property rights for mobile video content.

According to forecasts by Frost & Sullivan, mobile TV is neither projected to be the fastest growing segment nor the largest contributor to data revenues. Music is projected to be the fastest growing segment, followed by application downloads and mobile TV (phone-based browsing).

The road ahead
Companies are experimenting with a wide array of devices offering different value propositions. The various devices competing in the converged world include mobile phones, Skype phones and the Gphone. The key factors impacting their usage are performance, display, storage and connectivity.

Going forward, the next-generation service portfolio is expected to be a mix of core, differentiated and enhanced services. The key sales drivers will be the triple-play service bundle and blockbuster content. Operators will have to leverage the technology by focusing more on applications like games, music, ondemand services and interactivity.
(Based on a presentation by Jayesh Easwaramony, director, ICT practice, Frost & Sullivan)