Joint ITU - AICTO Workshop on “Interoperability of IPTV in the Arab region” (Dubai, UAE, 20 – 21 September 2011 ) IPTV development as a vehicle for Broadband adoption : Role of Governments Dr Slim Saïdi, COO, QSat Communications™ Managing Partner, The Expert Associates® What’s the Buzz? Reaction ranges between two extremes: Cable is already doomed Telcos can’t do video Insufficient infrastructure Telcos will attract bundled subscribers Pay TV market is too competitive Cable architecture is inferior Service won’t be differentiated Dubai, UAE, 20-21 September 2011 Future is IP and telcos are there first 2 Where are the Customers ? No cable TV operator provides IPTV an opportunity and vice versa But the S and T TV is very popular, almost every household receives TV program through satellite and terrestrial antenna. Target customer can be divided into two types: subscribers with/without Broadband. Without broadband DTH TV subscribers Mid to lower income households Little current possibility to acquire BB service With broadband Mid or high income households More possibility to acquire IPTV service Television Today and Tomorrow Today Tomorrow Mostly Analog All Digital Broadcast Transmission Two Way Networks Same Media for All Media is Targeted, Personal Delayed & Inferred Viewing Stats Real-Time Viewing Statistics On-Demand is Add-On On-Demand is Integral Proprietary Encryption Open Encryption Business Models Limited by CAS Flexible Business Models Dubai, UAE, 20-21 September 2011 4 Connected TV Connected Services Common network architecture Common back office interfaces and operations Connected Devices Access to personal content from multiple devices in the home Select and schedule content Connected Content and Applications Deliver the same media and applications across devices Cross-promote services in broadband bundle Integrated Experiences Reduce Churn Dubai, UAE, 20-21 September 2011 5 What does it mean to you? Wide Distribution Robust Protection High Quality Dubai, UAE, 20-21 September 2011 Re-use of existing content assets Multiple on-demand options New business models Content protection with open standards Flexible rights management Connected TV experiences Windows Media high quality video Independent of number of services Scale from mobile to SD to HD 6 Why IPTV? Broadband Market Drivers Cable Telcos Financial: ROI on network upgrades Severe erosion of core telephony business: Regulatory: ‘All digital’ mandates Need to grow ARPU VOD as differentiator Increase ad revenues Decline of lines and minutes Losses to cable, wireless, VOIP HDTV consuming new spectrum Analog legacy Subscription TV VOD “Triple-Play” bundling Strategic shifts Planned expansion of broadband footprint Satellite Competition Retail STB Eliminate proprietary CA Increasing bandwidth ADSL2+, VDSL, fiber Dubai, UAE, 20-21 September 2011 7 IPTV Market Drivers: TELCOS Severe erosion of core telephony business: Decline of lines and minutes Losses to cable, wireless, VOIP Must grow Average Revenue Per User (ARPU) Pay-TV and VOD Need differentiated offering “Triple-Play” bundling savings Expanding broadband footprint Worldwide DSL Increasing bandwidth Major Telcos embracing IPTV, with consumer deployments underway Momentum building in the last 6m Operators engaging vendors today Source: Ovum Research Dubai, UAE, 20-21 September 2011 8 Global view in IPTV Most of the Top operators have launched IPTV 60,000 3.0% 50,000 2.5% 40,000 2.0% 30,000 1.5% 20,000 1.0% 10,000 0.5% 0 0.0% 2006 2007 IPTV Subs(Thousands) 2008 2009 2010 IPTV Revenue(US$, Million) 2011 2012 Household Penetration Source: Gartner, Forecast IPTV Subscribers and Service Revenue, Worldwide, 2006-2012 2001 2002 2003 Dubai, UAE, 20-21 September 2011 2004 2005 2006 …. 2010 IPTV Market Drivers: CABLE Financial: ROI on network upgrades VOD as differentiator Increase ad revenues Voice HSD VOD/SVOD, 4 HD Digital, 6 Regulatory: ‘All digital’ mandates HDTV consuming new spectrum Analog legacy Satellite Competition Aggressive pricing DVR SD Digital, 12 Strategic shifts Retail STB Embracing IP for VOD (backbone) Free, 8 Eliminate proprietary CA Unify on IP network Where? North America Analog, 80 Dubai, UAE, 20-21 September 2011 10 The Value of IPTV Strategic Value: Leveraging Infrastructure & Customer Relationship High 2 4 IPTV Value added by infrastructure Video on Demand Data-sensitive ASPs Online training Online games Home video conf Home networking Low 1 Instant messaging $35 Premium Channels $12 $8 Interactive Services Billing relationships with 3 utilities… Low High Value added by incumbents’ client relationships/brands Sources: McKinsey analysis, 2002-2005 Dubai, UAE, 20-21 September 2011 Digital TV Programming PPV/VOD IP music/radio E-commerce Estimated Monthly Revenue from IPTV Services 11 TOTAL $10 $65 Source: In-Stat/MDR 3/03 Broadband: New Opportunities Networks: Broadband IP Switched Broadcast Devices: IPTV Voice Services: Dubai, UAE, 20-21 September 2011 Data Triple Play 12 Video Key Drivers for IPTV success Pertinent Government Policies Broadband Development and generalized access Key drivers Developed Attractive Content Dubai, UAE, 20-21 September 2011 Improved Business Model Paradigms Global Entertainment Media Expenditure Scenario Annual Consumer Spend $Bn CAGR % 10% $314Bn Mobile Content & Broadcasting 45% Broadband/Internet Access 12% Online Content 45% 5% Packaged Content (Video, Music Games) -3% Box Office 10% Subscription TV & Radio* Source: U&S Digital Distribution Of Entertainment Service Dubai, UAE, 20-21 September 2011 $497Bn 14 * Basic & Premium, excludes receiver licenses & advertising Fixed Operators are Facing Revenue Loss Threats 1. Decline in traditional voice revenue 2. Increased BW doesn’t bring increased revenue BW a) Mobile substitution b) VoIP substitution 2Mbps Cost 30 USD 18 USD 256Kbps 2002 ARPU 2009 China Telecom 3. Being pipelined in internet services by service provider 4. Competition in internet access a) Other FBB operator b) Cable operator c) Mobile broadband Fixed operators are facing the challenges not only in the value added service but also in the basic broadband access services Dubai, UAE, 20-21 September 2011 Home network increased rapidly in worldwide Subscribers of home network worldwide 160 Subscribers of home network (M) Increase rate 140 33% 120 21% 80 17% 145 36 35% 30% 28% 1000 85 20% 64 15% 42 Unit: million 915.8 Data 800 25% 51 60 40 113 26% 100 33% Dev of equipment node of home-network Entertainment 720.8 Multimedia 600 590.7 NAS 485.6 357.7 400 10% 193 268.3 200 5% 20 0 0% 2003 2004 2005 2006 2007 2008 2009 0 2005 2006 2007 2008 2009 2010 2011 The number of home network has reached 145 million families in 2009, the access speed is further enhanced, and moving to FTTH fast. When the home node (storage, processing, media, etc.) increase, the needs to M2M and network sharing will appear. in 2011, the global number of nodes in the home network is expected to reach 920 million, of which 13% share of NAS, Media node of 23%, entertainment node of 48%. Dubai, UAE, 20-21 September 2011 IPTV maintains ARPU and improves use of broadband bandwidth ARPU Broadband Maintenances Upgrade the utilization of broadband Price rate vs. Penetration of Broadband HD Users Scale vs. Penetration E *Source: Gartner Analysis,, Business Insight Analysis Dubai, UAE, 20-21 September 2011 Forces Shaping IPTV Future Broadband IP Networks Market Opportunity Moore’s Law Market Dynamics Regulation Better Video Compression Content, Ad Models 18 Government Roles Stimulator Facilitator Arbitrator Investor Content Provider