Internet protocol television (IPTV) offers a potential opportunity for telecom companies in the Middle East and North Africa (Mena) region, finds a new report by Booz & Company.

The region is characterised by a traditional, conventional television service - delivered primarily via free-to-air (FTA) satellite, and illegal distribution; offering cost advantages to viewers but limited interactivity. Lack of interactive services and negligible competition from cable makes the Mena region well positioned to leverage the advantages IPTV offers, says the report.

Television service delivery technology has evolved rapidly from terrestrial to cable (CATV), satellite (direct-to-home, or DTH), microwave (multi channel multipoint distribution system, or MMDS), and to broadband IP (IPTV). “These have prompted an increased variety of services and new ways for service providers to differentiate themselves,” stated Ghassan Hasbani, partner at Booz & Company.

IPTV - a digital television service delivered over a broadband connection -  supports all traditional services offered by CATV and DTH and provides a personalized viewer experience with a high degree of customization, targeted advertising and high levels of real interactivity.

“The broadband connection can accommodate viewer commands enabling a high degree of real programming interactivity, and a unique IP-based address for each user’s set-top box allows targeted advertising and personalized services,” commented Hadi Raad, a senior associate at Booz & Company.

IPTV is typically delivered using the service provider’s closed network infrastructure and offered at consistent quality levels. This differs from television or video over the public Internet on a best-effort basis via Internet TV or Web TV, where video signals occasionally get dropped.

No single definitive model exists for how IPTV should be implemented. Each market’s characteristics must be analyzed before adopting one of the following models, the report said.

The value proposition of IPTV
IPTV’s greatest value is its ability to offer customers a greater choice of premium content, and greater control over that content, with features such as time shifting and rich Electronic Program Guides (EPG), which enhances the personalization experience. Moreover, repairs, upgrades to services, and billing are easier for consumers to manage when bundled into “triple-play” combinations from a single provider; these could also result in savings, the report said.

“IPTV allows operators to boost average revenue per user (ARPU) and can increase Internet and broadband penetration, especially in MENA countries where PC penetration and English literacy are low,” Raad explained. IPTV also allows operators to become media companies offering content and to assume the role of a retail media aggregator. This shift has relieved some revenue pressures from the declining value of traditional voice and data services. IPTV therefore represents the latest step in media convergence, with the expansion of telecom operators’ services.

The advent of IPTV in the MENA region
The television landscape in the region is dominated by illegal distribution and a FTA satellite service, with household penetration reaching 94 percent 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 percent. Microwave (MMDS) service is used in small pockets in Kuwait, Bahrain, and Egypt, and the terrestrial service is unpopular because of limited content. The number of broadband connections in the region is expected to grow by double digits, with household penetration expected to increase from 9.4 percent in 2008 to around 33 percent in 2013.

These make the region more receptive to new television technology, and give operators a chance to quickly move up