Middle East satellite operators are at full capacity and the industry itself is in a state of flux. Digital Broadcast assesses the prospects of bandwidth-hungry HD services in the region via terrestrial, satellite and wired platforms.
The number of satellites servicing the Middle East broadcast industry is set to pay dividends over the coming years, as all of the major players launch new platforms.
Unfortunately, consumers in the Middle East are ready for HD content now. As the public facing element of the broadcasting industry, the channels, networks and pay TV operators will come under increasing scrutiny from their viewers as more time elapses without significant HD programming available.
Investment in HD infrastructure at the content production and ingestion level is progressing. The inability to monetise this content and begin to profit from these assets will be frustrating for those that have taken chances and attempted to pioneer high definition services in the region.
As additional capacity comes online, many have predicted that there will be intense interest among broadcasters to get their additional services, chiefly HD, on air.
A newcomer to the satellite operator business, Yahsat, is looking to tie up some of this new business.
"There is currently a capacity crunch. Existing satellite capacity is already full," says Shawkat Ahmed, chief commercial officer of Yahsat. As well as adding to the available bandwidth, Yahsat is also aiming to differentiate itself from its competitors, Ahmed says.
"We have been studying the market and our first satellite will look to offer something that our rivals do not currently provide. The first satellite will not be exclusively targeting the Middle East, but will also extend to include some additional territories that are rivals do not," he adds.
Yahsat 1a (Y1a) is scheduled for launch in 2010. The Ku band on Y1a will be offered in three separate beams. One beam will extend east to provide full coverage over Pakistan, Afghanistan and Iran. Another will cover the entire MENA region.
"We want to make sure there is no audience waste. Broadcasters from say Pakistan are looking to target viewers in the GCC and Levant. However they would not be interested in a beam that covers North Africa," explains Ahmed.
The third Ku beam is situated over Western Europe and although it will be primarily used for uplinking content from that region to the Middle East, it can also be used by Yahsat customers to broadcast programming to Arab expats living in those countries.
"There are several reasons why we decided to have three Ku beams. Firstly, we can ensure that there are fewer content rights issues; we can reduce the dish size required to receive the signal and also, it offers variable angle reception, which is useful for households that cannot gain an unobstructed line of sight to the satellite because of surrounding buildings," says Ahmed.
Nilesat and Arabsat in particular, have enjoyed a long lasting dominance of the sector. Newcomer Yahsat may meet some resistance from broadcasters reluctant to switch operators, particularly to an organisation launching its first satellite.
Ahmed is well aware of these challenges but is convinced that the company's considered approach will provide them a healthy share of the broadcast market as the race for HD services intensifies.
"I think there are three reasons why we can be confident about our broadcast services. Firstly, being based in the UAE gives us an edge - there are two media hubs there so we can reduce our broadcast client's turnaround times - secondly the system design is market orientated and thirdly we will be able to offer additional services through our partners."
Ahmed goes on to explain the process by which the company designed the structure of its beams.
"We went to the broadcasters and we asked them to tell us their requirements. We asked 'if you were going to design your dream satellite service, what would it look like?' and the three beams that you see now are the result of that consultation process," claims Ahmed.
"The segregation between the MENA beam and the South-West Asia/GCC beam has come about because of this."
According to a recent report published by Euroconsult, the cost of transponder space across the Middle East and other emerging markets has been driven up growing demand and short supply.
The satellite market certainly has some interesting twists and turns ahead of it. The pressure on broadcasters to get HD programming to air is predicted to drive the cost of transponder space through the roof with demand more than capable of matching the expanded supply. It is possible now that internal market dynamics within the satellite operations sector could limit the potential for further price hikes as each provider aims to remain competitive.
The possibility of internet-based HD content service provision further complicates the issue. Several companies at this year's IBC exhibition in Amsterdam demonstrated proven technologies for HD transmission over the internet.
Video compression specialist Ateme, was one such company highlighting the recent advances that have been made in compression.
"The right delivery method depends on the specifics of the particular market in question," says Michel Artieres, CEO of Ateme. "Whether an existing cable operator decides to rollout new HD services, the incumbent telephone operator might want to introduce IPTV services as a way of retaining customer loyalty, or a pay TV operator may be looking to introduce new HD channels. Whatever the market scenario, the fact remains that the H.264 codec is the most efficient and cost-effective way of bringing HD to the masses."
According to Artieres, the H.264 video codec can deliver efficiencies of between 50 and 60 percent when compared to a legacy MPEG 2 format.
If the cost of satellite capacity does rise steeply, even with the new launches scheduled over the coming years, this 50 percent could represent a major financial saving. For telcos offering IPTV and internet services, the saving creates more room for the broadband connection and an even more efficient use of bandwidth.
"We've just introduced the third-generation of our H.264 codec that can provide very high HD picture quality using limited bandwidth. HD streams can be delivered for IPTV at less than 5Mb/s," says Artieres.
This brings HD services into the realm of possibility for Middle East broadband connections with an increasing number of households equipped with suitably fast connections everyday.
However, just because high definition can be delivered at reasonable broadband speeds, doesn't necessarily mean that it should be actively pursued by broadcasters.
Broadband penetration is the obvious stumbling block and one which certainly ends the interest of FTA channels that rely on reaching the broadest possible market to keep audience figures - and advertising revenues - as high as possible.
"Broadband penetration varies from region to region. In areas well served by broadband, through cable, satellite or ADSL, we are going to see more and more innovative video applications delivering HD content through the internet," says Artieres.
"In areas where broadband penetration has yet to reach a critical mass market, combining IPTV with telephony and internet access services within a competitively priced package is a way for operators to attract new customers. However, as more and more homes are equipped with HD television sets, customers will demand HD and H.264 is the only way deliver HD over IPTV."
This is not to say that internet-based HD transmission would be wasteful altogether. Satellite may long remain the default mass market delivery platform for the Middle East for as long as broadband penetration remains so low. However, if you consider the typical broadband subscriber in the Middle East, they are surely more likely to subscribe to a pay TV service, purchase on-demand content and have more sophisticated technology and video consumption habits. For these reasons they could be worth tapping as a minority.
More-developed HD markets have seen live sports, movies and documentaries excel. If the satellite capacity cannot support full-time, dedicated HD channels and the limited number of broadband subscribers renders permanent online HD channels unsustainable, then perhaps there is a different solution.
What is to stop content rights owners making premium content such as their tier one movies or live sports events, available on a pay per view basis, on the web and in HD?
USB inputs on LCD and plasma screens, STBs and media servers make displaying signals from the web on TVs an increasingly straightforward option.
With sports and live events one of the primary drivers for HD content, with the ''one-off' effect likely to encourage pay-per-view users. Dealing with live streams of HD content is a slightly different proposition.
US-based technology firm Kulabyte claims to offer live streaming of HD and SD signals via consumer speed broadband. Its products have been used for webcasting several major live events and are now also appearing as part of mainstream broadcasting operation with the UK's ITV using the company's XStream system for coverage of European races on the Formula One circuit.
There could however, be some consumer resistance to such services. The GCC in particular has adopted satellite television wholeheartedly having almost completely skipped the terrestrial analogue phase.
A recent survey by Arab Advisors Group reported that 98.9 percent of television viewers in Bahrain own a satellite receiver with 26 percent of those tuning into pay TV services. That means 73 percent of TV viewers in Bahrain have a satellite receiver but opt to watch only FTA channels.
If this situation is considered typical across the GCC then it is possible that HD over the internet would not figure in the plans of broadcasters who specialise in reaching the mass market via satellite platforms.
A national scale telco providing an IPTV service would be able to offer a highly attractive differentiator in the form of HD channels. The issue here is whether they could acquire the highest quality content to attract viewers. Pay TV operators may be reluctant to offer their bouquet to subscribers in HD on a limited number of platforms and the pan Arab FTA networks may also be reluctant to roll out HD content on this limited scale.
The two most certain things regarding this entire debate are that the satellites are full and broadband penetration is low. Yahsat announced a new service during this year's GITEX Technology Week that will address both of these issues.
The launch of the company's second satellite Y1B will see the first MEA deployment of satellite based internet services. YahClick will begin in 2011 across 24 countries and bringing broadband service to anyone with a dish and modem.
"The dish will be around 75cm and smaller for some markets. This is about the same size as a regular TV dish. You connect that to a modem and you have a broadband connected.
The terminal that we are going to provide with our service can reach 100 Mb/s on downstream and 16 Mb/s on upstream. So it has the ability to support high-speed data rates, which means there is the possibility for some crossover into the broadcast industry," says Yahsat's Ahmed.
There is already interest in potential tie-ups with broadcasters and Ahmed reveals that Yahsat has appointed a team within the company dedicated to engineering ways to combine the broadcast and satellite broadband services.
"Both the broadcasters and Yahsat are interested in this. We are in talks with many companies in the US and in the region but we are pursuing this on several fronts.
"We will make an announcement about the future of our broadcast services early next year, before CABSAT," reveals Ahmed.
The YahClick service means broadband will be available in any location where the dish is connected. This means extending broadband penetration from modern urban centres, to anywhere with a power point.
"Satellites are a more suitable distribution method for broadband in this region. The existing availability is very poor and there is little investment happening in terrestrial infrastructure," says Ahmed.
"We will be able to cover Iraq, Sudan, Angola Saudi Arabia, Egypt, Nigeria so. Also, in parts of Africa People can pay more than $200 for a simple broadband connection. That creates a huge entry barrier."
Ahmed claims that Yahsat will be targeting a lower price point for the subscription and the hardware. If affordable broadband with full regional coverage does prove popular in the region, an interesting situation could arrive whereby the satellite operator provides broadcast and internet to the same dish, much the same as the telcos deliver these services over a single cable installation.
This would mean once the satellite capacity was in place, consumers could opt-in for a broadband package that included TV services. They would use their internet connection to stream their TV signal but would negate the need for a separate TV dedicated transponder on the satellite.
Yahsat's plans have piqued the interest of US content owners suggesting that they may now be looking at satellite broadband as a platform that allows them to access the Middle East and African markets directly through internet, rather than via an existing, regional aggregator.
Speeds of 16Mb/s are certainly enough for HD. If the major studios cannot find an outlet for the HD versions of their prime TV series in the region, they could choose to distribute online themselves.
Away from speculation surrounding the actual composition of these services, Ahmed is keen to assert the role that Yahsat is looking to assume in the broadcast industry.
"Our presence will trigger major new momentum because of the system design that we have and the strategy partnerships that we will be launching," says Ahmed. "We have a good relationship with both Dubai Media City and the new Abu Dhabi Media Zone and have had a good reception from them."
SAT revenues rocket
Research firm Euroconsult recently estimated worldwide revenue growth in the satellite industry at 9.5 percent reaching US$8.9 billion last year. The report attributed much of this growth to the emerging digital markets.
"Demand for satellite capacity for digital TV broadcasting accelerated further still last year, due to the addition of both standard and high definition channels," says Pacôme Revillon, managing director at Euroconsult. "Capacity usage for TV services increased by 13 percent, with more than 21,000 channels now broadcast by satellite."
The research also predicted an annual revenue of $14.4 billion by 2017 with consumer broadband services viewed as the main drover for this continued growth.