Digital TV Development : Techno-Economic Planning Considerations

1. Digital TV Development:Techno-Economic Planning Considerations John Yip Chief Engineer Radio Television Hong Kong 28 March 2007

2. 1. Introduction • Proposing a systematic and practical methodology for analyzing the numerous factors influencing the rollout/ growth of digital TV technologies. • Focusing on the application of basic economic concepts to facilitate strategic development. Reducing guesswork.

3. 2. Delivery Systems • The choice of a delivery system may affect rollout/ growth. However, growth depends also heavily on market dynamics and rapid technological adaptation of manufacturers. DTT/HDTV ATSC ISDB-T DVB-T DMB-T/H IPTV ADSL/ADSL2 (for IPTV-SD) ADSL2+/ VDSL2 (for IPTV-HD/SD)

4. 2. Delivery Systems S-DMB DVB-H MediaFLO T-DMB Mobile TV (Broadcast) CMMB / STiMi T-MMB DMB-T/H Mobile TV (Cellular) 3G 3.5G / HSDPA UMTS/ MBMS/ TD-CDMA(TDtv)

5. 3. Generic Growth Equation and Methodology • Equation (for current/ future digital technologies) Driving Force, DF = function of (soft factors, hard factors) = M (r, p, m, o) * H (G, g) where M = soft factors (regulatory, pricing, marketing, other), and H = hard factors (G for macroeconomic, gfor geo-physical)

6. Generic Growth Equation, soft and hard factors

7. S-curves of technological diffusion Figure 1. S-Curves with picture quality as the performance measurement Source : Technology Strategy, 15.912, Spring 2005, MIT, Sloan School of Management

8. Generic Growth Equation, illustrating acceleration by soft factors Soft factor effects Growth (Penetration, %) Baseline growth Critical Mass Time (Years) 0 S-curve for growth (growth at 15% pa or more is strong; 5% pa or less is weak)

9. GDP-per-capitais significant if there is a significant outlay, e.g. for an HDTV display, and/ or a recurrent fee, e.g. in a pay-TV service, over an initial service period of 1-2 years. • Regulation can prevent new players from entering the market; minimizing barriers enhances growth. • International cooperation and IPR ie transaction cost minimization could allow world-wide use of a digital TV system, analogous to the Coase Theorem (R. Coase, 1959) in economics, on the allocation of property rights re radio frequencies.

10. Methodology, using growth equation • Proposed process : • Form a development team. • Analyse hard factors, to form a baseline. • For r, p, m, o, compile separate lists of relevant considerations. • Assess soft factors through group discussions/ market surveys (eg using Delphi Method). • Analyse critical issues; synthesize a roll-out strategy. • Liaise with the government where necessary.

11. 4. HDTV GDP * GDP-per-capita, (or AI relative to 100) Hard Factor Soft Factor Mh (r, p, m, o) Propelling Factor, HDF = Mh (r, p, m, o) * (GDP * GDP-per-capita) where GDP is based on the PPP (Purchasing Power Parity), (GDP * GDP-per-capita) = Affordability factor, and Mh is a function of regulatory/ pricing /marketing /other factors.

12. 4. HDTV

13. 4. HDTV On breaking down function M, HDF = (Ar * Ap * Am * Ao) * (GDP * GDP-per-capita) Ar - mandating early rollout / cessation of analog TV, built-in digital tuners in TV sets, on-air HD quota, spectrum allotment, licensing regime, standardization; Ap - subsidies by governments / operators, assisting viewers eg on HDTV STB; Am - promotional/ marketing campaigns, to promote viewers’ awareness; Ao - quality leap using HD (eg USA and S. Korea, using ATSC, have achieved fast rollout), increasing HD production and sourcing attractive HD programs.

14. 5. IPTV Propelling factor, IPDF = Mi (r, p, m, o) * GDP-per-capita * Population Density, = Mi (r, p, m, o) * GDP/population * population /area Hence IPDF = Mi (r, p, m, o) * GDP /area • GDP/area (ie US $billion/ sq. km, PPP, pa) is analogous to annual crop yield in economic farming and harvesting; GDP is computed yearly; it is dimensionally similar to speed. • IPDF applies only to a city-sized economy but not to countries with large barren areas.

15. Potential, IPTV-SD Estimated (GDP/ area) yields: Source Data from World Fact Book and Wikipedia

16. Potential, IPTV-HD, using IPDF estimate Estimated (GDP/ area) yields, these to be considered together with AI for HDTV: Source Data from World Fact Book and Wikipedia

17. IPTV, Soft Factors (r, p, m, o) Regulatory - licensing, cross-platform content-flow control; regulatory hurdles to be minimized eg allowing cross-platform (terrestrial/ cable/ satellite) content-flow and leaving the market to decide. Pricing - smart and competitive bundling of channel services/ STB plus services, to entice consumers; penetration pricing, using a bundling of attractive program channels plus broadband internet/ VoD and other value-added applications.

18. Marketing/ promoting - advertising and promoting increase awareness and the perceived value (total use value or TUV) of the IPTV services. Other factors - varied contents could be offered, as there are numerous channels. Interactivity, shopping, games and VoD could be offered. FTTH/ FTTP will cater for a very wide range of services on PON (passive optical networks).

19. 6. Mobile TV • Mobile TV is a complex subject due to numerous factors, including • Spectrum allocation • Emerging standards and system maturity • Handset designs/ functions and pricing • Competition between broadcast and cellular system operators • Viewing habits/ reluctance/ lack of understanding • Reception reliability in a heavily built-up city; continued investment in maintaining mobile reception reliability.

20. 6. Mobile TV Propelling Factor, MDF = Mm (r, p, m, o) * GDP-per-capita *T where T is the Terrain Factor (0 < T =< 1), and MDF applies to a city-sized economy.

21. Terrain Factor • Terrain includes hills and housing estates. • If terrain is flat, T = 1. • T is a retarding factor, critical for pay TV. • Dependent on frequency band, eg VHF for T-DMB or UHF for DVB-H, and on technology (eg satellite/ terrestrial). • By combining satellite, terrestrial and cellular networks, T can be enhanced.

22. Factors (r, p, m, o) Regulatory - government-led or market-driven development. - allocation of RF spectrum (VHF, UHF, L and S bands) - licensing for broadcast and cellular operations. Pricing - handset cost and design eg battery life, antenna size, unit size and weight, screen size, channel switching/ signal recovery times, reception frequency bands, etc. - Competition between broadcast/ cellular operators. - In a built-up city, the costs of providing and maintaining a reliable network will be off-loaded onto consumers.

23. Marketing / promoting - to increase awareness of the technologies/ benefits and to raise the perceived value of services, hence increasing the demand. - Promotion could take advantage of the young generation’s attraction to fashionable handset designs/ styles and to cultivate consumers’ habits. Other factor - content offerings (news, other real-time information, drama, sports, interactivity, short clips of compelling content including UGC). - consumer habits and attitudes.

24. 6. Comparison. (G, g), (r, p, m)

25. 6. Comparison. Soft Factor (o)

26. Use slide show and  to animate. g= generic model, usable for powering your Digital TV boat) Don’t miss the boat, the “Digital TV” boat. Thank you.