The road to IPTV

IPTV’s adoption in the Middle East has not been so widespread despite its advantages. A look at the challenges that the operators face in the region and ways to overcome them

IPTV is well-established in Europe and North America, mainly because of the strong presence of traditional telecommunications companies, which can deliver video over copper wires or fibre networks that criss-cross the continents. However, the telecommunications industry in the Middle East is less developed and satellite operators dominate the market.

Establishing an IPTV operation is attractive because of its distinct advantages, but IPTV operators also face special challenges, particularly in the Middle East, which is a region marked by extreme socio-economic disparity and diverse geography. In order to be successful, Middle East IPTV operators must overcome those challenges and continually innovate, and to do that, they must choose the right ecosystem of technologies and partners to help them build their services.

The advantages of IPTV

IPTV has distinct advantages over its counterparts, especially the satellite. The cost of bandwidth is less than that on satellite, and IPTV offers greater speed. Once there is a cable going into the house, the operator and viewer have a pipeline for both pushing content and receiving it very quickly. It’s something that is much harder to do on satellite, and it paves the way for viewer interactivity and personalisation that can drive subscriptions for the operator.

Another advantage is that IPTV can integrate easily with other IP-based services such as phone and internet access, allowing the operator to offer “triple play” bundles and capture the revenue for all of those services. Bundling is more complicated and expensive for satellite operators because they have to create partnerships with other providers to be able to offer the same services.

IPTV also has an edge when it comes to piracy, which is rampant in the Middle East. A typical satellite broadcast requires a card that scrambles the content, which is easy to crack and copy. But with IPTV, viewers have a set-top box with a specific IP address, so the operator knows exactly where a given piece of content is supposed to go at a given time, making it easier to track and harder to steal.

These are just a few of the advantages of IPTV, so it’s easy to see why a company would want to offer IPTV services. But creating an IPTV operation in the Middle East is not easy.

Why IPTV Is challenging in the Middle East

IPTV relies predominantly on telecommunications infrastructure — copper wires or fibre strands that must physically connect to a dwelling in order for that household to receive the service. The diverse geography in the Middle East has made it difficult to bring the wires to the houses in areas outside the cities, so the region lacks the ubiquitous telecommunications infrastructure that one would find in North America or Europe. This means that unless it is an established telco operator, a company would likely have to make a significant investment just to build its telecommunications network. (Incidentally, cable operators have the same issues related to coax cable.)

It’s no wonder then that satellite operations such as Al Jazeera, Canal+, and MultiChoice dominate the region today. After all, satellite delivery requires no expensive infrastructure, only a dish that sits on the rooftop.

That’s not to say that IPTV operators do not exist in the region. STC in Saudi Arabia and du and Etisalat in the UAE have built successful IPTV operations in those states, but it’s worth noting that those are also two of the more wealthy states in the Middle East — a fact that brings up another challenge: major economic differences. Some areas, such as North Africa, are very poor, so operators there must be sensitive to cost. When dealing with such socio-economic discrepancies, one product does not fit all, operators must, therefore, create multiple services for multiple economic levels.

On top of geographic and socio-economic factors that require significant investment, there is also the cost of continual innovation. Sports, especially international soccer, drive consumption in the region, so operators must always be looking towards the next new product in order to boost subscriptions ahead of the next big event. For example, right now Middle Eastern pay-TV operators are rushing to get new products to market in time for next summer’s World Cup.

It is against that backdrop that Middle Eastern IPTV operators must not only develop, but continually improve their IPTV operations in order to be competitive and successful. And they must do it while balancing average revenue per user while preventing churn, achieving growth, and controlling capital expenditures.

Choosing the right technology and partners

IPTV operators need a platform and an ecosystem of suppliers that can evolve quickly to meet changes in the market. It’s the only way to guarantee they will remain relevant and deliver an experience that’s better than their competitors.

IPTV is especially technical and requires specific equipment, so it is important to choose the right equipment from the right suppliers. There are typically two approaches to choosing suppliers. One is the end-to-end approach, where a single supplier provides all or most of its own components in a pre-packaged product (backend + OTT solution + user experience + STB middleware + CAS + STB hardware). This approach is the simplest because, once the supplier is chosen, there are no more technical decisions for the operator to make. The trade-off is that the operator is then “locked-in” to this single solution provider for the better or for the worst. In order to ensure a competitive solution, however, it also means that the chosen supplier has to be the best at everything along the value chain, which is unlikely. This approach can work well for operators that dominate their market, need to go to market quickly, and/or aren’t concerned about differentiation.

Then there is the best-of-breed approach, where an operator, or its assigned integrator, assembles the best components from different suppliers along the value chain into a seamless solution, effectively tapping into a rich ecosystem of suppliers that do IPTV well, are familiar with each other, and can drive each other’s innovation. This approach is more time-consuming and complex, to be sure, but can yield a more inventive, agile solution that is more competitive in the longer term. It’s a good approach for operators in the highly competitive Middle East market, where the product is expected to have a long life with numerous future evolutions.

Open ecosystems for IPTV

The trend in the Middle East and elsewhere is not only towards these rich, best-of-breed ecosystems, but also towards open ecosystems, some of which go as far as delivering source code to the development community. Two examples are Comcast RDK for cable operators in the United States and Frog by Wyplay for any pay-TV operator anywhere, both of which are driven by tier-one operators in their respective regions.

What are the attributes of an open-source ecosystem?

* Backed by tier one, innovative operators

* Published source code

* Large and diverse network of partners –STB providers, chipset manufacturers, third-party application developers, etc. – to ensure collaboration and spur innovation even more quickly

* Advanced tools to help create and deploy the solution (testing, debugging, etc.)

* Based on new, advanced architectures

The familiarity and collaboration among best-of-breed suppliers in these rich, open-source ecosystems reduce risk and time to market. These environments represent the future of pay-TV development and will do for the STB market what Android did for the cell phone. They provide a development architecture and network of partners that take care of the technical components so that operators can focus on the business of delivering IPTV.

Steve Coutts is EVP of Business & Corporate Development at Wyplay.