The Economic Impact of IPTV Deployment in the European Countries: An Input-Output Approach

Paper in proceeding, 2010

A double-edged sword phenomenon is illustrated by the consequences of the rapid penetration rate of information and communication technology (ICT) devices. Besides the success story of these devices becoming ubiquitous, there is also a visible decline in performance of the ICT industry in financial respects. Due to more intense competition and market saturation, the players in this industry are now facing limited revenue sources. Among other things, traditional TV industry offering broadcasting services is suffering a significant drop in viewers and advertising revenue because of the massive substitution effect of the vast penetration rate of Internet and broadband. It is then important to see how the innovation of ICT devices can create possible alternative sources of revenue. Vibrant ICT devices, which combine television (video), telecommunication (audio) and data (Internet) in so-called triple play may enable operators to obtain additional revenue. IPTV (the TV which is transmitted to the Internet protocol) is seen as a strong new triple-play device which can support ICT as well as being a precursor of further economic impact, especially in driving output multipliers and Gross Domestic Product (GDP). This study is aimed at investigating the economic impact of IPTV deployment in the European countries, using the Input-Output table. The method enables us to estimate the economic multiplier for each Euro investment in IPTV deployment as well as to estimate the contribution to the GDP from two main sources: the production phase, when the deployment is implemented by installing fiber and network to the household, and the diffusion phase, where the consumption of IPTV services increases after the completion of the investment project. Among fourteen European countries investigated, the study reveals that Sweden is the country which enjoys the highest level of impact due to the construction activities, while Austria gets the larger portion of the multiplier from the diffusion side.