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Middle East Communications and Internet via SatelliteProduct Type: Market Research ReportPublished by: Spotbeam Communications Ltd Published: October 2002 Product Code: R131-008 Description Middle East Satellite Communications and Internet via Satellite is the latest in a series of market research reports which cover the latest trends in satellite communications and associated technologies. It focuses on the two main areas we believe are of interest to the industry, satellite broadcasting and Internet via satellite. We have chosen to cover the Middle East because it is of an area of major success for DTH broadcasting, a major market for Internet via satellite and an area of intense topical interest. We have, within the report, identified a long-term major market for military broadband and narrowband communications. The report is a regional follow-on and update to our annual Internet via Satellite reports published in 1998, 1999, 2000 and 2001. We have, though, made substantial changes to the nature of our research on Internet via Satellite, opting for a series of regional reports looking at the issues in a much greater depth, providing a general overview of all forms of satellite communications within each region. The geographic coverage of the report is the Arabic-speaking countries of the Middle East and North Africa, Iran, Afghanistan, Israel, Cyprus and Turkey. The primary topics covered are DTH satellite broadcasting, satellite operations, point-topoint satellite links for ISPs and hybrid and two-way satellite-based broadband services. It also covers mobile satellite communications and military communications, with an overlap into cable, MMDS and thin route rural satellite coms. It details major players in the region and current trends in satellite communications and provides a comprehensive database of key satellite players and ISPs in the region. The Middle East has a substantial satellite communications sector based on regional satellites and DTH broadcasting. Its development reflects economic modernisation. The market consists of a core Arabic-speaking sector surrounded by a periphery of Iran, Turkey, Cyprus and Israel. Indeed, Turkey has developed as a regional satellite communications node. In North Africa there is considerable overspill of satellite broadcasting from Europe. Our key conclusion is that DTH satellite broadcasting in the Middle East is that it is the primary distribution platform for commercial TV, either advertising or pay-TV financed. We have come to this conclusion because, overwhelming, terrestrial TV broadcasts in the Arabic-speaking sector and Iran are those of basically turgid state-owned public service broadcasters. There is little evidence to suggest that politicians in the region are willing to let go of their control over domestic terrestrial broadcasting. The only true commercial terrestrial broadcasts in the region are in the Lebanon, Israel, Turkey and Cyprus. The penetration rate for DTH in the region is a staggeringly successful 24% of TV households - rising to 92% in Algeria. It is less than a decade ago that French channel TV5 was telling us that its Algerian viewers were having their throats cut for owning satellite dishes. The only two countries with an alternative delivery platform of any significance, cable, are Israel and Turkey and even in Turkey, DTH has already won the battle for audiences. MMDS in the region has long failed as a significant alternative. The core demand for DTH is from free-to-air television. The Middle East follows the German model. Arab consumers are used to having some 55-60 free-to-air Arabic language services, often available through cheap analogue DTH receivers. They have proved unwilling consumers for pay-TV even where disposable incomes are high. The core advertising support pan-Arabic DTH advertising supported sector consists of four channels, LBC, Future TV, MBC and Al Jazeera. At rate card, they have a potential advertising income of around US$1 billion a year but the Arabic advertising sector is under-developed and deep discounting means their actual income is around US$ 200-250 million a year. We expect in the medium term this will change. The advertising agencies are loosing a lot of potential revenue through the deep discounting. DTH TV is getting closer to its customer base with an increasing local production base and the consolidation of the industry around four regional broadcasting nodes in Egypt, Dubai, the Lebanon and Jordan. Politicians in the region are increasingly regarding satellite TV as a major driving force behind modernisation of the regions economies and are sponsoring its development. Hitherto it has been seen as somewhat of a political pariah, been perceived as a source of troublesome news and opinion and a Western threat to Islamic values. However, attempts at control through dish bans and the development of MMDS (allowing filtering of content at national level) have largely ceased and now only remain of significance in Iran and marginalized Iraq. We believe that a really big success of the DTH sector has been Al Jazeera. It is not a problem that this Arabic all-news channel is still loss-making. The losses are peanuts to its Qatar backer. Al Jazeera is center-stage in the modernisation of Arab-language broadcasting. At present it probably has an audience of around 35 million viewers - an extremely healthy figure for an all-News service, and is expected to launch another two channels. Al Jazeera, though, offers what no terrestrial broadcaster in the region does - a worldclass, free, uncensored, professional source of news and opinion provided by Arabs and targeted at Arabs. That is it doing its job brilliantly is evidenced by the widespread criticism of its content by regimes in the region, Israel, the United States and Britain's deeply conservative middlebrow newspaper, the Daily Telegraph. Of course it is sometimes biased - so are CNN, the BBC and the Daily Telegraph. "All news is something, someone, somewhere, doesn't want publishing - the rest is advertising." But its strength is that it isn't cowered into self-censorship and it allows dramatically opposing views to be aired. It is a slick and professional operation. Yet Al Jazeera alone is not responsible for the deep changes taking place in the control of Arab broadcasting. In the 1990s Arab satellite broadcasters were clearly scared of operating from within the core region. MBC opted to operate our of London to avoid censorship and control and the pay-TV services ART and Orbit operated out of Italy for much the same reasoning. It is probably no coincidence that two of the big four free-to-air Arabic services, LBC and Future TV, are based in the relatively uncensored Lebanon. Araboc brpadcasters are being induced back into the region by guarantees of freedom from governments who see satellite broadcasting as a key economic driver. ART has moved its operations from Italy to Amman in Jordan and MBC from London to Dubai. The spin-off is the growth of local production capabilities and the infusion of commercially oriented management into a region where state-owned and often badly run and overstaffed broadcasters have been the norm. There are now four broadcasting nodes for satellite television in the Middle East - Dubai, Cairo, Amman and the Lebanon. Amman is probably the outsider - it is too politically risky for US broadcasters to use as a base. We believe that the front runners are Dubai and Cairo. Dubai is the more expensive base and the United Arab Emirates lacks both a strong production base and a broadcasting infrastructure. On the other hand, it is a fabulous citystate where everything works. It is aiming to be a regional Singapore - a comment that should be carefully noted. Not for Dubai is the scruffiness of that other great city-state, Hong Kong. But it doesn't have its own regional satell Table of Contents
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