With domestic Chinese telecom operators facing decreasing ARPU and slowing broadband subscriber growth, IPTV is beginning to look like a promising new business, according to a new report.

A new study from ABI Research suggests that the delivery of television over IP networks has the potential to create revolutionary growth in the broadband customer base, as TV viewers, as well as PC owners, find a reason to subscribe.

"But for that to happen," says analyst Junmei He, "a number of questions need to be resolved. First, IPTV licensing is currently tightly controlled. This hinders domestic telecom operators, who don't want to risk high CAPEX on a business whose shape is still unclear."

The report breaks down IPTV markets into IPTV-to-PC and IPTV-to-TV, and discusses their status and outlooks respectively. It also analyzes the performance of Huawei, the main player in the Chinese IPTV chain.

Another problem He sees is the immaturity of the business models. "In the current business model," she notes, "the IPTV content provider is also the content aggregator, and even the service provider. IPTV content providers are lacking the commercial experience needed to aggregate and package content flexibly and effectively."

Purely technical concerns also impede IPTV development, such as a lack of unified standards, insufficient bandwidth, proprietary systems, mainstream compression technology issues, and low quality-of-service. But the report concludes that these obstacles will be overcome relatively soon, and the IPTV market in China will take off in 2007.