Free satellite TV's a hit in a freed Iraq

Free satellite TV's a hit in a freed Iraq
PARIS — Since the overthrow of the Saddam Hussein regime last April, sales of digital satellite decoders to Iraq have been explosive. The once-information-starved populace now has access to signals from dozens of satellite channels in the Middle East, including Al Iraqiyah, a pro-American channel started by occupation forces, and Al-Jazeera, the Arab news network.

There are no official statistics, but STMicroelectronics says it sold more than 2.5 million chips between April and December to distributors that said they were building digital satellite decoders for shipment to Iraq.

"We received an order of 1.5 million chips" within weeks after the regime fell and another million by June, said Armando Caltabiano, satellite and terrestrial business unit director for ST's set-top box division. Distributors in Europe and Asia "all told us the same thing: They wanted as many chips as they could get their hands on for free-to-air satellite boxes to be sold in Iraq." He said ST is not sure whether all of the decoders landed in Iraq or whether some had been diverted elsewhere.

Harris Corp., meanwhile, has won a $96 million contract from the Pentagon to rebuild Iraq's media outlets, including its antiquated TV networks. The contract was awarded on behalf of the governing Coalition Provisional Authority, which has sought to use TV and radio broadcasts to appeal directly to the Iraqi people.

Set-top vendors in China and South Korea, for their part, have been quick to pursue the new Iraqi market, analysts said.

Free-to-air digital satellite broadcasts are unfamiliar to most consumers in the United States, where digital satellite programming is only offered through paid-subscription services. But in Europe, Asia and the Middle East, users can access free digital satellite TV programs whose broadcast signals are not encrypted.

Such broadcasts are based on the Digital Video Broadcast (DVB) standard established for Europe but broadly used throughout the world. Standard digital satellite decoder boxes can receive and decode DVB-Satellite (DVB-S) broadcasts.

Based on interviews with digital set-top box manufacturers and pay-TV operators, IMS Research estimates that 7.4 million households in the Middle East and Africa received free-to-air analog and digital broadcasts in 2003 and predicts the figure will grow to more than 7.7 million in 2004. "Most of this growth will come from digital free-to-air services, as the amount of analog free-to-air programming has been decreasing throughout the world," said Anna Hunt, a market analyst in digital TV and broadband at IMS Research. .

Michelle Abraham, senior analyst with research firm In-Stat/MDR, named almost a score of companies from China and South Korea that actively market their products in the Middle East. One Chinese company, Sichuan Changhong Electric Co. Ltd., boasted on its Web site just eight days after the Hussein regime fell that it had put a batch of 100,000 DVB-S set-tops on a plane traveling from Chengdu/Shuangliu Airport to Iraq.

Digital set-tops retail in China today for between $27 to $60, and ST's Caltabiano estimated that the bill of materials for a DVB-S set-top ranges between $22 and $50. Observers said individuals in Iraq could afford such set-tops.

There are fewer questions about pent-up demand. Satellite dishes were banned under Saddam Hussein, and surging demand for satellite TVs is said to be driving down the price of home digital receivers. Elimination of the 75 percent import tax imposed under the former regime has further made electronics products more affordable, In-Stat's Abraham said.

According to Lyngsat, which records satellite channel availability geographically, only two channels currently originate in Iraq: Al Iraqiyah, or the Iraqi Media Network, which is supported by the United States; and KurdSat TV. Both are carried by multiple satellites-each of which has a different footprint-so they can reach a wider target market. But with DVB-based broadcasting, viewers can also receive free channels that originate in neighboring countries, depending on the size and orientation of their satellite dish, ST's Caltabiano noted.