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A Quick Primer on Pay TV in China

The US isn’t the only region where the pay TV industry is undergoing massive change. Since I recently had the privilege of sitting down with a couple of the folks from Motorola’s Asia team, I thought I’d share these learnings on the pay TV market in China.

China’s cable market is growing in leaps and bounds, and several telecom operators have recently started running their first IPTV trials. However, the industry environment is still very different from what exists here in the states. For one thing, the market is heavily, heavily regulated. For another, cable and telecom companies have traditionally remained very distinct in their services. In other words, beyond small IPTV trials, there’s virtually no such thing as the triple play in China, at least not yet.

There are roughly 150-165 million consumers with cable subscriptions in China today. Early telecom IPTV trials, on the otherĀ  hand, reach around 1-1.5 million subscribers. Aside from regulations, the difficulty here is the business model. Deploying fiber to the home for IPTV is expensive, and ARPU in Chinese cities is minuscule compared to the US. Still, there are operators who see it as an opportunity. Motorola can lend credence to that fact with the active discussions taking place now around Motorola’s IP set-tops and GPON access technology. Operators are interested in IPTV, and some are starting to act on that interest.

Meanwhile, the cable industry continues to move forward as well. Motorola reflects that growth in sales across the company’s entire cable portfolio: set-tops, VOD hardware, CMTS sales, cable modems, etc. And China’s own transition to digital cable is well underway. Today about 40 million cable subscribers are digital, with Chinese operators aiming for an all-digital footprint by 2015. All in all, China is an interesting and developing market to watch. There is a lot of growth and change ahead.