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An interview with Zhang Guoxin, GM from the Huawei Digital Entertainment Product Line

By Hu Xianghui

IPTV construction is sweeping the globe and numerous carriers in Eastern Europe, Southeast Asia, the Middle East, Latin America and Africa are entering into this rapidly expanding field. However, IPTV is an area fraught with challenges, and many carriers are confronted with complicated operational environments such as license and content control, competition from traditional TV services and emerging interactive media.

Zhang Guoxin shared with us his views concerning how carriers can embrace the IPTV trend and establish an effective profit model.

Reporter: What's your opinion about IPTV development? How should it be approached by carriers and equipment vendors?

Zhang Guoxin: Let me first give you some background information. IPTV is characterized by integration, and specifically embodies integrated digital entertainment that comprises broadcast & TV, telecom and Internet services.

IPTV development can be divided into four phases: trial, small-capacity commercial application, large-scale commercial application, and mature development. In each phase IPTV integrates with different media. Before large-scale commercial application, we refer to "TV over IP" which describes interactive TV services based on IP bearer networks. Large-scale and mature commercial application integrates IPTV and the Internet, and IPTV effectively becomes an extension of the Internet based on STB and TV.

By March 2007, PCCW was supporting 638,000 IPTV subscribers and had become the world's biggest IPTV carrier, with a staggering penetration rate in Hong Kong of 59.5%. France Telecom and Deutsche Telekom have each attracted 300,000 subscribers and now China is witnessing rapid IPTV development in Shanghai and Guangdong. Although it came later than expected, IPTV is developing surprisingly quickly and is certainly not disappointing us. In the future, IPTV will integrate communication services so that TV becomes a platform that supports sharing and communication.

However, IPTV development is beset with many problems. Leaving aside uncontrollable external factors such as licensing and content control, carriers are confronted with a range of microeconomic problems that include the development of business models, operation methodologies, system technology, and content and service packages.

Consequently, we believe that a system vendor who can meaningfully assist carriers to commercially apply IPTV must be more than a component or systems' provider. In-depth understanding coupled with considerable experience in the telecom, broadcast & TV, and IP network fields are prerequisite. A solution provider should be dedicated to IPTV's long-term development, and be able to provide end-to-end solutions that enable seamless integration and sustainable development.

Partner selection for a carrier therefore, requires an assessment of a vendor's long-term potential, especially in the context of phase-to-phase capability and the likelihood of successfully realizing the carrier's IPTV business goals. To do so requires a vendor to facilitate industry-wide cooperation in order to co-establish with the carrier an effective IPTV development environment.

Reporter: What do you think are the key elements for successful IPTV? What do you think of IPTV industry resource integration and industry chain cooperation?
Zhang Guoxin: As Microsoft's CEO, Steve Ballmer, puts it: "It's no longer the case that big fish eat small fish, instead fast fish eat slow fish. Speed is the key to success." Both IPTV and the digital entertainment industry need to respond quickly to market changes. Broad cooperative systems are necessary to achieve this. They allow partners to share market risks, exploit opportunities together and form an efficient IPTV industry chain comprising equipment suppliers, content providers, network carriers and end users.

Although IPTV is very popular, its random application is unsustainable. Content providers, carriers and equipment suppliers should jointly seek to establish suitable commercial application sites that can serve to accelerate industry chain development and operational maturity.

A quick study of worldwide IPTV progress exhibits that content forms the most important element for IPTV's successful commercial application. As such, cooperation is necessary between equipment vendors and content providers, which in effect helps carriers shorten commercial application times by offering market reactive customized content packages that are competitively advantageous.

So far, Huawei has built close relationships with a dozen or so global and regional content channel providers under the ethos of win-win partnerships. This has been illustrated by the successful implementation of numerous projects.

Reporter: IMS has remained a focus for carrier transformation and service integration. What's your opinion on IPTV/MTV and IMS integration?

Zhang Guoxin: IPTV itself is an integrated solution that integrates technologies. By combining media solutions based on different networks, we can optimally improve each carrier's holistic operational and competitive capabilities. IPTV is a rapidly developing solution that in turn demands the effective and equally swift integration of telecom, digital TV and Internet services.

Huawei's strategic roadmap describes IMS-based integrated IPTV, PCTV, Cable TV and Mobile TV digital media centers as its successive product development strategy. The integrated, end-to-end digital media center solution not only integrates technical systems, but creates an operations' evolution path. In full consideration of carriers' transformation requirements, we integrate Internet video services, telecom networks and cable networks via the digital media platform to enable interactive interworking. Moreover, Huawei has been actively participating in the exploration and standardization of IMS-IPTV integration, and we welcome the participation of more carriers and vendors.

Reporter: You mentioned just now that Huawei has formed effective partnerships in a number of commercial application projects. Which are Huawei currently implementing in the global IPTV field? What is Huawei's position in the global market?

Zhang Guoxin: Huawei has enjoyed great success in the global IPTV market. To date, we've built 10 commercial office projects worldwide, and 35 trial commercial application and trial offices. Huawei-supported system capacity exceeds 600,000 subscribers globally. In China, Huawei has implemented many large-scale projects for Guangdong Telecom, Jilin Netcom and Liaoning Netcom. Completed in 2006, Guangdong Telecom's iTV project had already attracted 30,000 subscribers by May 2007 due to its range of innovative service packages, and this is increasing by 3,000 per month.

We also completed a key strategic project for Morocco Telecom in 2006 and formally allocated numbers for commercial application, which marked the first project of this scale utilizing H.264 technology-based IPTV. The four-month implementation time set an industry record as the fastest deployed IPTV scheme, and the project as a whole served to consolidate our position as an industry forerunner.

Thanks to our solutions' packages, experience and success, we're implementing the strategic projects for Russia's NMN and Pakistan's PTCL, which will support 110,000 subscribers and 300,000 subscribers, respectively.

Huawei has become one of the most important IPTV solution providers in the world.

Reporter: Can you introduce the unique advantages of Huawei's IPTV solution?

Zhang Guoxin: Huawei provides a total E2E solution covering business and operation consultation, service operations, system integration, network integration, and network optimization. A purely technical system integration solution is incapable of garnering business success in the early phase of IPTV development. For each carrier, Huawei's unique value is four-fold: Efficient system integration and implementation enables carriers to quickly allocate numbers and enhance their competitive ability; End-to-end network integration and business consultation capabilities in terms of service operations, network optimization and other associated issues; Carrier-class system solutions; Zero risk implementation.

Huawei's IPTV is based on an integrated digital media center architecture that supports both IPTV and PCTV services, and conjoins communication, media, and fixed and mobile services. Digital media services such as videophone, 3G streaming and video monitoring are effectively merged. Our digital entertainment product line benefits from more than 1,000 employees who are dedicated to the R&D, marketing, sales and services in the digital media entertainment field.

Indeed, our IPTV solution can act as a precursor facilitating carriers' transformation into effective, competitive and globally recognized integrated information service providers.

Reporter: Can you give your perspective on the future of the digital media market?

Zhang Guoxin: After years of effort and practical application experience, some issues affecting IPTV development have been addressed. H.264 technology is reaching maturity and the industry now has a clearer understanding of IPTV profit models. The industry chain is expanding, which reduces infrastructure expenditure and increases development speeds.

The remainder 2007 will witness the intensification of IPTV development, although applications won't be large-scale until 2008-2010. Mobile TV will be simultaneously deployed as the numbers of 3G networks increase, and IPTV and Mobile TV will interwork to further promote industry chain evolution. In summary, we're looking forward to a digital media era underpinned by openness, focus and integration.