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Telecom firms face new challenge from IPTV service

Saturday, Sep 19, 2009

Dubai Technologies such as the internet protocol television (IPTV) are expected to form the new battleground for telecom firms in the Middle East as they start to experience lower revenues, fixed-mobile substitution and strong mobile competition, industry experts said.

"At present the facility [ IPTV service] is only offered in the UAE [by du], Qatar [by Q-Tel] and Morocco [by Maroc Tele-com]. In addition, Egypt TE Data [part of Telecom Egypt] officially launched its ADSL-based IPTV service, TE-VU, with a wide range of television channels in addition to video-on-demand [VOD] in June 2008,' Stephen Wilson, Senior Research Analyst, Informa Telecoms and Media, said.

He said the regulation around IPTV licensing is not clear and for this reason TE Data has held back on major promotions.It plans to launch a full-fledged IPTV service with a set-top box, time shifting, live voice-on-demand, local and western content but sees the presence of major satellite operators Arabsat and Nilesat as a major challenge to overcome in the market. TE-VU had around 5,000 subscriptions at end-2008.

"In the UAE, etisalat had 300,000 e-vision subscribers (served via cable TV or IPTV - most are cable though) and du had 58,000 IPTV subscribers by end of 2008. Overall, household penetration in the UAE is about 50 per cent (including all etisalat and du subscribers) and around 9 per cent (pure IPTV)," Ghassan Hasbani, Partner at Booz and Company , said.

"In Qatar, Q-Tel had 81,000 IPTV subscribers in 2008, representing a household penetration of about three per cent. Saudi Arabia, Bahrain, Oman and Kuwait have no commercial offerings yet. In the GCC as a whole, household penetration is less than five per cent," Hadi Raad, Senior Associate at Booz and Company , said.

According to Fareed Faraidooni, du 's executive vice-president, commercial, the current IPTV customer base of du is around 65,000 and expects to have 85,000 customers by 2010.

"We are aggressively pursuing our plans for growth and expansion as we are confident of the potential for growth of our IPTV service."

"By comparison with other Mideast countries, IPTV deployments in the Gulf are described as being at a much more advanced stage where some operators have migrated to Next Generation Networks (NGNs), enabling the provision of increased bandwidth and new value-added services," Mohsen Malaki, Research Director at Delta Partners, said.

Hadi said many providers including du use the streaming model. In it programming is delivered directly to the viewer's set-top box requiring a robust, high-capacity network. Others have pursued a download strategy for IPTV services, in which pre-selected programmes can be downloaded to the viewer's set-top box. A downloaded content model tends to be less expensive, less demanding on the network, and less complicated.

Hasbani said the television landscape in the region is dominated by illegal distribution and a free-to-air satellite (FTA) service, with household penetration reaching 94 per cent in countries such as Saudi Arabia. This offers no real interactivity or way to communicate with specific audience subgroups. Cable TV penetration in the region is low at around five per cent.

By Naushad K. Cherrayil, Staff Reporter

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