China Netcom First Commercialized AVS-IPTV in Dalian

Tuesday, March 18th, 2008

On February 28, China’s home-grown IPTV system (AVS-IPTV) based on the second-generation source coding standard (AVS) was put into commercial use by the Dalian Branch of China Netcom (HKSE: 0906; NYSE: CN). It is another achievement recorded by the industry since China Interactive Media Industry Alliance was established in January by 18 enterprises and entities including, among others, China Netcom, China Telecom, China Academy of Telecommunications Research of MII, Huawei, ZTE and Hisense. It indicates that AVS standard and AVS-based IPTV System have entered a new stage of the commercialization and industrialization.

Interactive TV (IPTV) is a multimedia service driving forward Triple Play and the evolution of communications network technologies. We should never underestimate its influence over the future digital audio/video industry and the communications, broadcasting and computer sector at large. And the digital audio/video coding/decoding technology is a key technology for developing IPTV.

Now MPEG-2 and H.264 are mainstream digital audio/video coding/decoding standards. MPEG-2 is the first-generation source-coding standard with a long history and a rather extensive user group, e.g. it has been applied to existing DVD and digital TV products. Its royalty fee is charged by each set. However, with a rather low efficiency and over-consumption of bandwidth, MPEG-2 is likely to retreat from the historical stage.

H.264, a new second-generation standard, has improved in technology, but its developer puts forward a brand-new patent licensing model, i.e. the telecom operators are required to pay according to the lengths of the delivered video programs. The model may result in increasingly huge amount of royalty fee, which, most probably will be transferred to the consumers ultimately. Therefore, the model has been resisted by many foreign operators and is also not good for China.

As a standard developed in parallel with H.264, AVS has not only reached the same level as the second-generation source coding standard (some index even take the lead) in terms of the technology, but it is comprised of more than 50 homegrown technologies in China. AVS is expected to become China’s mainstream digital audio/video coding/decoding standard, thus help Chinese companies avoid being forced to pay a disastrous amount of royalty fee like for DVD.

The R&D of AVS as a national standard aims directly at competing with international standards, and is a new audio/video coding/decoding standard. It is an important step in solving the intellectual property problem that disturbs the development of the industry in China through innovation under the unified coordination of the government. If the commercialization of AVS is as successful as expected, it will be highly likely to become the best choice as China’s next-generation audio/video coding/decoding standard. In 2007, AVS won successively the first prize of “China Standards Innovation and Contribution Award” and the “Information Industry Important Invention Award” of MII.

The advent of IPTV has efficiently combined the ubiquity of telecom network, bandwidth advantage of the broadcasting network and interaction of the computer network, and therefore has provided a new chance for delivering triple play. IPTV will promote the Triple Play with Chinese characteristics, i.e. the convergence of telecom network, broadcasting network, and computer network to breed a new and stronger industry apart from their respective fast development on their own paths.

The industry insiders have all recognized the potential of using IPTV as a starting point to realize triple play. And the business model of IPTV indicates that there are possibilities for the coexistence, resource complementarity and competition among the three networks in the long run, and triple play is not only possible, but also feasible.

After MII advocated speeding up the development of AVS-IPTV, CNC outlined its guidelines of “Support, Participation, Advocation, and Promotion” which was solemnly announced by Chairman Zhang Chunjiang at the “China Netcom Technical Innovation Conference” held on November 17th, 2006. AVS-IPTV is top on the agenda of China Netcom’s technical innovation work and is directly led by Zhang ChunJiang.

Zhang ChunJiang pointed out on various occasions that the company would use AVS-IPTV as a starting point to achieve the innovation towards a “broadband communications and multimedia service provider”. China Netcom is a large telecom operator in China with a history of over 100 years and it shoulders the historic mission of building an information society. The basic principle practiced by China Netcom is to insist on innovation and strive for sustainable development.

Before that, with the approval of National Development and Reform Commission, China Netcom first established a company which integrated the production, study, research and utilization on the basis of the “National Lab on Next-generation Internet Broadband”. China Netcom strengthened its research on AVS-IPTV together with its partners and conducted a successful field trial in Dalian. China Netcom is the first among Chinese operators to make clear its support for the home-grown AVS and its willingness to adopt AVS standard.

It is very important for IPTV to establish a perfect industrial chain. As one link of the industrial chain, operators must create a reasonable business model and provide an ideal platform that would allow each side of the industrial chain, including developers and providers, to reap profits in order to encourage them to develop rich and colorful content.

In order to promote the development of AVS industry, under the support of related ministries and commissions, China Netcom, together with some content providers, network operators, system/terminal vendors, chip providers, software companies and instruments suppliers, initiated and set up the “Interactive Media Industry Alliance” in this January, in order to jointly drive forward the industrialization of China’s homegrown technologies. The operators would play a key role in the Alliance.

With AVS-IPTV as a starting point, China Netcom is exerting its full efforts to push forward the innovation towards a “broadband communications and multimedia service provider” and the initiative is taking effect. On October 10th, 2007, China Netcom successfully held “China Netcom AVS-IPTV Commercial Trial Result On-the-spot Meeting” in Dalian. Lou QinJian, Vice Minister of MII and other representatives from the AVS sector attended the meeting and affirmed the achievements made by China Netcom in AVS-IPTV innovation as well as the important role played by China Netcom in pushing forward the national industrialization of AVS-IPTV.

Then, CNC announced that it would adopt AVS to develop IPTV, and other operators also expressed that they would support the AVS standard. For China as a nation, the innovation in audio/video coding/decoding technology and the development of such a standard with the IPR in our hand means that our development will not be restricted by others just because we do not have the patent. AVS standard also bears strategic significance for China Netcom to develop into a “broadband communications and multimedia service provider”.

So far, China Netcom has made a series of achievements in the development of AVS standard in cooperation with other partners:

  • through R&D and application of AVS-IPTV, China Netcom has completed the development of the first end-to-end AVS-IPTV system integration in the world.
  • China Netcom has finished the first AVS-IPTV pilot technical trial which has proved the usability of AVS in IPTV, realized the one-in-four interaction between the set-top box and the system, and promoted the rapid formation and development of the AVS-IPTV industrial chain.
  • China Netcom is the first to develop the AVS-IPTV technical standard system, which is a technical basis for the development and implementation of the AVS-IPTV system. And what’s more, together with its partners, China Netcom has submitted applications for 64 patents which have been accepted.
  • China Netcom recommended the AVS standard to ITU-T who accepted it as one of the four dominant audio/video coding/decoding standards. This marks an important step in pushing China’s homegrown AVS standard to the international arena.

In addition, through the technical R&D, China Netcom has directly trained a professional AVS-IPTV R&D team composed of over one hundred people and many leaders have been cultivated in the process, which has laid down a sound foundation for China’s sustainable development in the sector. The combination of AVS with IPTV is a contribution made by China and China Netcom to the world’s ICT development. And as a headstream digital audio/video coding/decoding standard, AVS plays a key role in the development of the industry.

Gao Wen, the Chief Scientist of China Netcom and professor of Peking University explained that the AVS-based interactive TV would bring great convenience to people. Thousands of hours of programs such as movies and TV series are available for your choice and our dream of “watch what we want to watch” is coming true. In the future, even you miss some programs in some channels, it will be very convenient to demand and replay them. Therefore Professor Gao thought it would be greatly welcomed by the users.

As a backbone operator in china’s telecom industry, China Netcom is actively conducting R&D in AVS-IPTV, which bears great realistic significance to the development of the audio/video industry and the ICT industry. Basically AVS-IPTV is laying down elements for realizing triple play with Chinese characteristics and accordingly will improve China’s innovation capability in the ICT sector.