New research has shown that Western Europe accounts for two-thirds of worldwide IPTV subscribers.

A study by analyst firm Canalys shows overall industry revenues of $1bn a year, on total IPTV subscribers of more than 3.6 million.

The main boost to the service, and the reason why Europe is leading the way, is increased investment in networking technology in the region.

"IPTV networks will quickly become the most complex and bandwidth intensive that have ever existed," said Canalys vice president Alessandra Fitzpatrick.

"Many service providers have invested millions of euros on network upgrades, but it remains unproven whether IPTV networks can scale into the millions without performance degrading and response times slowing, or even collapsing altogether.

"Another infrastructure challenge is that service providers will have to learn quickly how to manage multiple billing systems and content across large server farms and storage area networks, while maintaining the highest quality of service."

However, the market is very tightly focused and many regions are without a reliable service, so the top five providers make up 60 per cent of the total market.

The top three global providers, according to Canalys, are PCCW (18.2 per cent), France Telecom (16.8 per cent) and Free Telecom (14 per cent).

The Asia region is reckoned to be the next big hotspot for growth, although Hong Kong already has a mature market in IPTV.

North America will be another major growth area, where AT&T and Verizon are already pushing nationwide roll-outs of IPTV services.