The illegal part is more towards the content provider I think.

As a media player it is not wrong at all.

It doesn't have to be channel from Astro. Example, if they stream TV channel from TVB or HBO Asia (from Indo/Thai/Sing), it would still be illegal because they do it without the permission of content provider of the said channels.

Imagine this:

You have a wifi access with 10mbps Internet speed that you paid for it every month. You willing to spend around RM200 because you love to have all that bandwidth for yourself.

Suppose a hacker manage to hack into your wifi and use your 10mbps Internet line to make money for himself by selling YOUR Internet access to someone else for cheaper price (maybe RM10 per client @ 512kbps per month).

Don't you think what the hacker does is illegal? Same logic applies with iptv with the supposedly 'free' tv channel.

Of course some channels are meant to be stream free to iptv (1Malaysia TV for example). But as far as I know, premium channels like HBO or TVB does not.

Of course it is unless HBO provide an app with monthly subscription.

Time Warner can make report to local authority to catch the culprit lah.

Gov will surely punish till hang on rope. They can trace your IP. Watch out for the warning letter.

So here is the conclusion:

IPTV can watch. However the content itself might be illegally taken from other paid service.

Police will go after the source of the IPTV provider, shut down server that stream the show, and in the app that you use to watch IPTV will not work anymore.