SkyStream announced it has been awarded the contract to provide 106 channels of MPEG-4 AVC video headends for Shanghai-based IPTV operator SiTV. SiTV is launching China's largest IPTV service today, and will initially serve 10,000 homes across Shanghai by the end of 2005.

Shanghai Daning Net Co., Ltd (Shanghai Daning), 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.

"China has a great opportunity to launch a groundbreaking IPTV service as advanced as any in the world today. Chinese viewers will see many of the same programs, delivered over their broadband connection as IPTV, that regular cable viewers enjoy today," said Mr. Samuel Chang, Shanghai Daning's CEO. "This project is the result of a three-year effort to develop the highest-quality IPTV network possible, and we have worked closely with SkyStream to adapt its industry-leading technology for China."

SkyStream CEO Jim Olson will participate in a special ceremony today inaugurating the new SiTV service at the Shanghai Mart along with the Mayor of Shanghai and government representatives, and executives from SMG, China Telecom and Shanghai Daning.

"We are enormously proud that our video headend equipment will be part of this innovative new IPTV service in China, that may ultimately serve millions of Shanghai residents," said Mr. Olson. "Shanghai Daning has put together the largest MPEG-4 AVC headend deployment in China and designed an exciting new way of delivering on-demand content over a relatively low bandwidth network that should provide tremendous appeal to subscribers. With this deployment, China is showing the rest of the world how IPTV can be done."

"Shanghai Daning's SiTV project allows end users to experience real IPTV, instead of Internet TV, not only in terms of quality-of-service, but also in ultra-DVD picture quality," said Dr. Joe Cao, SkyStream General Manager of Great China. "We will continue to support Shanghai Daning with technology that will allow it to introduce MPEG-4 High-Definition TV by the end of the year."