Internet-based television services such as video-on-demand won't be widely adopted in China until 2008, according to new reports from research firms that watch the industry.

The obstacles include uncertain policies, immature technology and high prices, according to research firms iSuppli Corp, Deloitte and International Data Corp.

The Internet-protocol TV user base in China reached 300,000 in 2005 - a huge leap from the previous year's 50,000 but still only a limited portion of the total TV user base of 300 million.

"IPTV is a wise choice for telecom operators to expand their business scope, but it still faces restrictions at present," IDC China analyst Yang Feng said in a new report.

The IPTV market won't develop rapidly until 2008, the researchers said. By the end of that year, the IPTV user base should hit 10 million and reach 23 million by 2010, IDC said. Currently, China Telecom and China Netcom have launched trial IPTV services in Shanghai and in Harbin, Heilongjiang Province.

The State Administration of Radio Film and Television, worried about the convergence of the telecom and media sectors, have issued IPTV license only to media giants such as Shanghai Media Group. As a result, telecom operators have to cooperate with media groups to run IPTV services.

IPTV provides interactive programs including video-on-demand and remote medical, education and videoconference services, all of which depend on high speed Internet access.

High-definition TV programs need speeds of 1 to 2 megabits a second, but most Chinese broadband networks can deliver only 512 kilobits to 1 megabit, industry insiders said.

China Telecom is upgrading its national broadband network and hopes to triple or quadruple Internet speeds by 2008. But speed isn't the only pathway to profits. Content is another key.

"The main challenge for the majority of IPTV operators is that telecommunications carriers are relatively inexperience in selling media services," Deloitte said in a report.

High prices are another problem. The monthly breakeven price of IPTV in China is 85 yuan (US$10.62). Digital cable TV, which provides a huge number of TV channels but without interactive functions, has a break-even price of only 28 yuan.

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