Shanghai-based IPTV operator SiTV is launching China's largest IPTV service this week, and will initially serve 10,000 homes across Shanghai by the end of 2005.

SkyStream has been awarded the contract to provide 106 channels of MPEG-4 AVC video headends for SiTV.

Shanghai Daning Net Company, the integrator and content aggregator of the SiTV service, selected SkyStream's Mediaplex headend after nearly two years of lab trials and evaluations of video headends from multiple international suppliers.

The Mediaplex will encode and transcode MPEG-2 content into MPEG-4 AVC for delivery over the new China Telecom ADSL IPTV network. SkyStream recently announced integrated MPEG-4 transcoding functionality in its video headends and this will be the first deployment of an AVC transcoder in China.

Shanghai Daning will manage the operations of the SiTV service, while Shanghai Media Group (SMG) will supply content and services. SiTV is providing an MPEG-2 and MPEG-4/ASP/H.264/AVC-compatible television (TV) set-top box.

SiTV will offer 99 channels of broadcast-quality TV, along with 10,000 hours of Video on Demand content and nPVR digital video recorder services, over a fiber network supplied by China Telecom. On-Demand video content will be charged as premium content and nPVR service will carry an extra fee per set-top box along with a monthly service charge. Much of SiTV's content will feature Chinese-originated programming, including sports, movies, opera, soaps and talk shows, but will also include English-language educational content.

SiTV eventually plans to offer TV services across the greater Shanghai region and is unique among IPTV operators because its business model is not based on offering triple play services. China Telecom will provide separate Internet and voice services to SiTV subscribers.