Reliance's IPTV Venture

Reliance Anil Dhirubhai Ambani Enterprises (ADAE) group has drawn a blueprint for its entertainment business that straddles the entire value chain of the entertainment content and carriage-way business i.e. from development of content, carriage of the content and, finally, its exhibition. In the process, it will straddle different platforms ranging from film production to broadband Internet TV (also known as IPTV), mobile TV, direct-to-home (DTH), multiplexes and FM radio. Reliance Infocomm has collaboration with Microsoft to look at IPTV. The company is all set to enter consumer homes with broadband Internet through its fiber optic backbone. The same connectivity can be used to deliver entertainment content like channels, video-on-demand, among other things.

Reliance Infocomm has been undertaking IPTV trials on users in Jamnagar, Mumbai and Delhi for the past one year. During the trial period Reliance is using Set Top Boxes (STBs) named Choicepad with 40GB storage capacity. There are two types of remote which are currently under trial. One is the wired one and other one is wireless. Wired remote can be used to call other Home Netway users. Company is in the improvement process to provide telephony services from Netway to other networks also. Other than broadcasting channels company is also providing internet on TV sets (which is not limited in terms of access to the outer universe). Company is also experimenting with the static content in the form of “Magazine” service which is just like an encyclopedia. Company is not providing gaming as of now during the trial period. According ABI Research, total subscribers for IPTV globally are likely to cross 120m by ’10 and Asia Pacific will comprise 47 per cent of it, with India being a major market.


Microsoft, which has an existing technological alliance with Reliance Communications Ventures Ltd (RCoVL) for IPTV services, is likely to upgrade that into a joint venture partnership. Steve Ballmer, CEO of Microsoft, who spoke via video conferencing (during the post listing session of RCoVL), said that it would look at the possibility of picking up a strategic stake in RCoVL due to the immense potential of the IPTV business. Currently, there is a limit on FDI to the tune of 74 per cent and RCoVL has plans to rope in equity participation. The two companies had planned to work together to jointly create, test and deliver next-generation Internet Protocol (IP)-based television services using an IPTV solution being developed by Microsoft TV. This new technology is designed to enable Reliance Infocomm to leverage its nationwide infrastructure (that includes 60,000 kilometers of fiber optic) to deliver a set of next-generation television.


RCoVL is planning to invest around Rs. 5,000 crore per annum over the next three years in business segments of broadband, global and wireless businesses. A significant part of it will go to the IPTV business. Internal accruals and debt financing will fund this capital expenditure.