ITV

Category: Cable TV

  • Registered MSOs for DAS areas touch 275 mark; cancellations total 29

    Registered MSOs for DAS areas touch 275 mark; cancellations total 29

    NEW DELHI: With less than six months for the completion of Phase III of Digital Addressable System (DAS) for cable television, the number of multi system operators (MSOs) who have been given permanent registration for a period of ten years is now 215.

     

    In addition, a total of 60 MSOs have been given provisional registration, while 29 MSOs have had their licences cancelled or their files have been closed.

     

    The number of MSOs getting permanent licences has gone up sizably since the list issued on 22 June put this figure at 191.

     

    While a majority of MSOs including Kal Cables have had their licences cancelled following the Home Ministry denying security clearance, some have been cancelled for non-operation. These include only four, which were cancelled in 2015.

     

    MSOs given permanent registration pan India after 22 June include Goldy Diginet of Rajasthan, Engineer’s Resource Associates India of Madhya Pradesh, Multireach Media of Kolkata, SHR Digital Networks of Delhi and Siti Cable Network Limited of Noida.

     

    The others are as follows: E-Cable Vision of Chhatisgarh to cover the Districts of Dhamtari, Charama, Kanker, Keskal, Konda Goan, Jagdalpur, Gidam, Dantewada, Kirndul, Nagarnar, Balod, Dalli Rajraha, Bhanupartapur, Mahasamund, Kurud and Nagri under Phase-lll & lV; Manair Digital Entertainment Networks for Telengana; Narmada Cable Network for Kareli and Narsinghpur Tehsils in Madhya Pradesh, Linkmen Services for West Bengal; Desh Entertainment for West Bengal Under Phase III & IV; Sai Digital Services for Andhra Pradesh and Telangana under Phase lll and lV; INSAT Cable Network for Sitara, Pune, Sangli, Solapur and Raigard/Sindu Durg Districts in Maharashtra; Mahapatra Dooradarshan Cable Network System for Ganjam District of Odisha; Raj Cable Network for Anuppur, Shahdol and Umaria District in Madhya Pradesh and Koria, Surajpur and Ambikapur District in Chhattisgarh, Baba Nanak Optical & Fiber in Punjab; Aurangabad Satellite Cable Service Centre for West Bengal areas; SM Cable for Pachpadra in Barmer District of Rajasthan; Diamond Cable Network for Bhandara, Gondia & Nagpur Districts of Maharashtra under Phase-lll & lV; Zaka Cable TV Network for Uttar Pradesh and Uttarakhand; One Digital TV Services in Nalgonda, Khamam, Warangal, Ranga Reddy & Mahaboob Nagar Districts under Phase lll & lV in Telangana; Bhagyalakshmi Communication Network in Rompicherla, Chinnagottigallu, Bakarapet, Sodam, Somala, Chowdepalle’ Kallur, Damal Gheruvu and Kalikiri in Ghittoor District of Andhra Pradesh; and Bhimavaram Community Network in West Godavari district of Andhra Pradesh.

     

    While there is no new addition to the northeast, one licence has been issued for Kashmir to J K Cable Network for Sopore, Baramula, Zainageer, Rafiabad, Bandipora, Handwara, Kupwara, Uri, Pattan, Tangmarg, Gulmdrg, Sumbal, Hajin, Narbal and parts of Srinagar. 

     

    While Kal Cables continues to be blacklisted by the Home Ministry, licences issued for Tamil Nadu are: Lucky Cable Vision which will cover area in all cities, towns, Town Panchayats, Village Panchayats of Pollachi (Taluka) Udhumalpet (Taluka), Palani (Taluka), Valparai (Taluka), Kinathu, Kadavu (Taluka) Phase III & Phase IV; and King Digital Network for Salem.

  • Despite roadblocks, India attains 48% digital pay-TV penetration in 8 years: MPA

    Despite roadblocks, India attains 48% digital pay-TV penetration in 8 years: MPA

    MUMBAI: Following a blitzkrieg of cable set-top box (STB) deployment, the digitisation process is taking a breather as operators shift focus from deployment to monetisation in order to ensure growth with profitability. 

     

    As per a recent Media Partners Asia (MPA) report, the pace of India’s pay-TV growth story may appear to be in trouble. However, the report also points out that the process of profitable digitisation typically takes 15-20 years. “In this context, for a market characterised by low average revenue per user (ARPUs), absence of tiering and fragmented last mile cable distribution, India has done well to attain 48 per cent digital pay-TV penetration in eight years,” the report highlights. 

     

    As the industry consolidates and regroups, the current phase of India’s pay-TV industry offers significant opportunities for value creation across various business segments. The key opportunities and levers, according to MPA are as follows:

     

    Cable

     

    Initial STB seeding by cable operators has improved subscriber declarations. Accordingly, with the transition from analog to digital, net ARPUs to multi system operators (MSOs) have grown 10x, to Rs 100 per subscriber per month. However, the current balance sheet position of most MSOs does not justify market expansion. MSOs are therefore compelled to drive operational efficiencies through prepaid services and packages. This helps improve yields from existing digital subscribers. Operators successful in executing such moves will attract refinancing (of existing debt) to expand their consumer offerings with bundled broadband and HD services. Over time, MSOs will also gain more operational control of their networks through majority ownership of joint ventures, and eventually acquire primary points at affordable prices.

     

    At each stage of cable’s evolution, the operating margin for MSOs will grow multifold. The business will remain capital-intensive but as operators grow to become full-service providers, they hold the potential to generate significant returns on capital employed (RoCE). Cable assets should not just be evaluated on reach and the digital subs base but also on their ability to cross-sell high value services such as HD and broadband. Also important is their effective economic interest in the last mile business. As the approach for MSOs shifts from width to depth, structurally, cable platforms will remain concentrated in the top 50 cities. This could change dramatically, however, with the entry of deep-pocketed players such as Reliance Jio and the growth of Headend-in-the-Sky (HITS) platforms, which seek to digitise rural markets.

     

    Several international and long-term financial strategics have also been eyeing partnerships with India’s cable and broadband players. This would help expedite capital as well as technical, operational expertise.

     

    DTH

     

    Since its inception, the DTH sector has made cumulative investments of Rs 275 billion and has been primarily responsible for driving penetration of digital pay-TV. With a base of more than 41 million active subscribers, DTH is poised to benefit from greater economies of scale. In 2014, the DTH industry reported an average EBITDA of Rs 38 per sub per month, with margins at 16 per cent. Moreover, two of the leading operators, Dish TV and Airtel Digital, have already started generating positive free cash flow (FCF). 

     

    Over time, MPA expects the DTH industry at large to generate meaningful FCF through: 

     

    (1) EBITDA margin expansion, as operating leverage starts to play out with subscriber acquisitions in Phase III and Phase IV DAS markets; and 

     

    (2) The composition of incremental revenue becoming driven more by ARPU growth rather than subscriber volumes. Leading players will be able to self finance future growth as well as consolidate the market, creating significant value in the process.

     

    Broadcasting

     

    India’s $3.5 billion broadcast industry remains in a sweet spot. The dual revenue stream of advertising and subscription is expected to benefit from a resurgent economy as well as improved structural dynamics anchored to steady growth in the number of TV households (TVHH) and higher digital pay-TV penetration.

     

    At 60 per cent TVHH penetration, India continues to add seven million new TV homes each year. In other words, at an average family size of 4.5 members, TV is gaining more than 30 million potential viewers each year. Television will continue to offer the highest reach to advertisers, relative to other media. As a result, advertisements will remain the major revenue stream for broadcasters, while an increase in affiliate sales will help stabilise the business and drive profitability.

     

    As of end-2014, total affiliate sales for broadcasters reached $1.1 billion, according to MPA. Significantly, 80 per cent of affiliate revenues were derived from digital subscribers (cable DAS + DTH), while India’s digital pay-TV penetration stood at 48 per cent for the same period. Digitisation has therefore improved subscription yields for broadcasters.

     

    In 2014, an average broadcaster’s yield from digital subscribers stood at Rs 74 per sub per month, against Rs 18 per sub per month from analog. There is therefore upside on affiliate sales, as analog subscribers in Phases III and IV convert to digital.

     

    Besides leading to greater addressability, digitisation has also improved channel distribution economics by lowering the cost of distribution and allowing multiple modes on content delivery (SD, HD SVoD, TVE etc). Although cable continues to account for more than 80 per cent of the carriage and placement (C&P) market in India, since the roll-out of DAS in 2012, the cable net distribution income (or NDI, which is essentially subscription income minus C&P costs) for broadcasters has grown by 137 per cent, to $218 million. 

     

    Going forward, the growth of the broadcasting industry will be driven by:

     

    (1) Expansion in advertising through sub-segmentation and identifying new genres

     

    (2) An increase in the addressable subscriber base with more digital homes

     

    (3) Growth in subscription yields: MPA projects total pay-TV channel revenues for broadcasters to grow from $3.5 billion in 2014 to $6.1 billion by 2019, and to $7.9 billion by 2023.

     

    Based on the relative growth for other markets in Asia- Pacific (ex-China), India is expected to contribute more than one-third of the total channel revenue business in the region by 2023. India’s strategic importance in the region cannot be ignored. For major international networks,

    India already contributes a significant part of their overall APAC business.

     

    Broadband to sow seeds for new digital assets

     

    Significant investments are also being made in India’s fixed and wireless broadband infrastructure. This will help boost internet penetration and improve average broadband download speeds. To address the challenge of last mile connectivity, the Department of Telecom (DoT) is considering joining forces with cable MSOs and local cable operators to help boost broadband penetration in smaller cities and towns. The above proposal, if implemented, can open new avenues for cable broadband.

     

    MSOs have already increased their investments in broadband. As of end-2014, cable broadband subscribers stood at one million, or only 0.3 per cent penetration of total households in the country. However, the entry of new players such as Reliance Jio could dramatically change the fixed broadband landscape. Having recently secured a pan-India MSO license, the company claims to have built the capacity to serve 20 million fiber-to-the-home (FTTH) customers.

     

    Traditional broadcasters are looking to capitalise on the emerging digital opportunity by investing to create long-term assets. For instance, incumbent broadcasters Zee, Star and Sony have started to aggressively invest in delivering branded OTT services. The belief is that online video consumption will complement the existing linear pay-TV business. Eventually, subscription OTT services will take off as bandwidth costs become more affordable and compelling exclusive content is made available for online audiences. Nonetheless, revenue monetisation will require more scalability, as online video revenues are projected to account for not more than 10 per cent of total video industry revenues over the next decade.

  • AIDCF appoints Saharsh Damani as secretary general

    AIDCF appoints Saharsh Damani as secretary general

    MUMBAI: The All India Digital Cable Federation (AIDCF) has appointed Saharsh Damani as its secretary general.

     

    With a career spanning over a decade in various analytical and strategic roles, Damani will pilot the federation’s work and support the president and the federation in seeking solutions on industry issues. Damani will also endeavour to build a strong and sustainable MSO sector in India.

     

    AIDCF president V D Wadhwa said, “Saharsh’s wide experience in dealing into research, planning and strategic issues will be of immense help to the Federation. I take this opportunity to join my fellow members in welcoming Saharsh to AIDCF.”

     

    Prior to joining AIDCF, Damani led research at the Indian Broadcasting Foundation, the preeminent body of television broadcasters’ in India. He has worked in various industries such as Information Technology, Building Materials, Life Sciences and Media on strategy, M&A and research related areas. 

  • AIDCF submits recommendations to I&B; asks for removal of 8% AGR on cable broadband

    AIDCF submits recommendations to I&B; asks for removal of 8% AGR on cable broadband

    MUMBAI: Broadband is the way forward for multi system operators (MSOs) who are looking at improving their average revenue per user (ARPU). Understanding the pain areas of the operators who are looking at expanding their broadband base, the newly formed MSO association- All India Digital Cable Federation (AIDCF), recently met the Information and Broadcasting Ministry (I&B) on the issue of 8 per cent AGR being charged on MSOs offering broadband services.

     

    During the meeting a five point recommendation was submitted to the Ministry, which later will be submitted to the Department of Telecommunications (DoT). The recommendation reads:

     

    1)      Remove the 8 per cent AGR applicable for MSOs who are offering broadband services.

     

    2)      It has requested the Government to support MSOs for right of way and protection of infrastructure laid on ground. MSOs offering broadband services feel that the pole charges levied by some states are huge. Also, to set up the broadband service, expensive equipment needs to be installed on streets and poles. According to AIDCF, as of now, there are no rules per se, to protect the equipment which costs anywhere between Rs 7000 to Rs 10,000. The association, through the recommendation, is asking the Government to protect the expensive equipment, so that the MSOs can start installing the infrastructure.

     

    3)      The association has asked the Government to rationalise import duties on network equipment. While the Government has plans for ‘Digital India’ and ‘Make in India’, there are still certain infrastructure related products which are not being manufactured in the country, and hence have to be imported. The association has thus asked the Government to rationalise the import duties being charged on these goods, until someone from the country starts manufacturing them.

     

    4)      It has requested the Government, like in the case of Telecom, to provide infrastructure status to the cable broadband network. With the infrastructure status, MSOs will become eligible for easy bank financing, in addition to overseas fund raising to expand their broadband base.

               

    5)      Allow use of Universal Service Obligation (USO) fund for wireline network rollout in the country.

     

  • Cable operators urge Delhi CM Arvind Kejriwal to reduce entertainment tax

    Cable operators urge Delhi CM Arvind Kejriwal to reduce entertainment tax

    NEW DELHI: The Cable Operators Welfare Federation (COWF) has been assured by Delhi Chief Minister Arvind Kejriwal that he would examine their grievances including the recent hike in entertainment tax by the Delhi government.

     

    In a meeting that lasted more than an hour, Kejriwal heard the 30-member delegation led by its president Surjeet Singh on various issues.

     

    COWF convenor Ramesh Zadoo later told indiantelevision.com that the meeting was “positive, fruitful and favourable for local cable operators” and the CM promised to protect the interest of cable operators.

     

    Kejriwal promised a study of entertainment tax within seven days and said if the demand of the LCOs of reducing the tax to Rs 20 is possible, the government will consider a roll back of the recent hike.

     

    COWF suggested to the CM that he could offset the loss on account of entertainment tax by increasing the tax on DTH to Rs 50 as that is aimed at the upper class. They also complained about supply of inferior Set Top Boxes by multi-system operators. They also referred to VAT & tax evasion by MSO and broadcasters. The COWF also apprised Kejriwal about the harassment and switching off STB/ disconnecting line without notice by MSOs, thus inconveniencing the public.

  • Ortel Communications launches free broadband for cable TV consumers

    Ortel Communications launches free broadband for cable TV consumers

    MUMBAI: Last mile owner (LMO) Ortel Communications, in order to strengthen its broadband base in Odisha, West Bengal and Chhattisgarh has introduced free broadband offer for its cable TV subscribers. This complimentary broadband service is part of the LMOs special value added service (VAS).

     

    The service will be available in areas where Ortel Broadband is provisioned within its cable TV network.

     

    The offer includes free data limit of 250 MB every month for a year, post which the subscriber will be charged a nominal fee for any usage exceeding the free data limit in a month. The plan also includes unlimited upload data offer. However, if the subscriber wants to migrate to any other existing Ortel Broadband plans, they can within the offer period of one year.

     

    It can be noted that Ortel Broadband has already started offering mega speed broadband of 50 Mbps using DOCSIS 3.0 technology in select areas of Bhubaneswar.

     

    The broadband segment revenue for the company grew 5.2 per cent to Rs 28.89 crore in FY-2015 from Rs 27.47 crore in FY-2014. Not just this, the operating profit from broadband segment grew a healthy 43.3 per cent to Rs 20.89 crore in FY-2015 from Rs 14.57 crore in FY-2014. Within this segment, internet connection fees grew 12 per cent in the current year to Rs 1.9 crore from Rs 1.7 crore in FY-2014.
     
    The retail broadband average revenue per user (ARPU) for Ortel currently stands at Rs 356 as compared to Rs 373 in both FY-2014 and FY-2013. The broadband revenue generating unit (RGU) for the company stood at 58,519 in FY-2015.

     

    Ortel Communications president & CEO Bibhu Prasad Rath said, “We are glad to launch free Broadband Combo offer to Ortel Cable TV customers. Our objective is to deepen our penetration into markets by making internet affordable and continuously delight our valued customers. We have been constantly adding value to our customers and this free broadband offer will be useful for those who are having limited download and unlimited uploads.”

     

    “In addition, the company has already actively deployed DOCSIS 3.0 recently to deliver impressive internet surfing experience to its subscribers. With faster digitisation of Cable TV customers, we will be in a strong position to leverage the opportunity by offering combo plans of cable TV and internet connections,” he added. 

  • Digicable launches e-payment solution app for hassle free utility services

    Digicable launches e-payment solution app for hassle free utility services

    MUMBAI: Multi system operator Digicable has launched an utility service app for Kolkata. Christened, Complete E-payment Solution, this mobile app will initially be available only to the local cable operators (LCOs).

     

    The app will allow the LCOs to provide a wide array of hassle-free utility services at the doorstep of their customers. This value added facility will present the LCOs another source of income.

     

    The customers can avail this facility from their LCOs to make instant payments for services including credit card bill, electric bill, mobile bill payment, direct to home (DTH) recharge, mobile recharge, cash deposit in own bank account, train, flight and movie ticket booking, at a very nominal cost while enjoying the comfort of their home.

    As a confirmation of the payment, a real time receipt will be sent to the customers’ registered mobile number with no added cost.

     

    The company has associated with leading banks, mobile/DTH/airline operators, Indian Railways and The Calcutta Electric Supply Corporation (CESC) to provide fast and smooth utility solution services.

     

    Multicon Group & Digicablecomm Services chairman Dileep Singh Mehta said, “Being an operator friendly MSO, we always strive to enhance our services and provide new opportunities to the local cable operators. This facility will not only help the LCOs to enhance their earnings but it will also enable the customers to make most of the essential utility service related transactions from the comfort of their home and on a completely secured and accountable network. This product is a win-win for all.”

  • Siti Cable and Dish TV join hands to form ‘Comnet’

    Siti Cable and Dish TV join hands to form ‘Comnet’

    MUMBAI: Dr Subhash Chandra led Essel Group believes in innovation and how. The two companies from the group, multi system operator (MSO) Siti Cable Network and direct to home (DTH) player Dish TV have formed a joint venture (JV) to deal with the ever growing content cost. Christened ‘Comnet’, the JV will help synergise the strengths of both the organisations in dealing with broadcasters.

     

    Essel Group has synergies in broadcast, cable, DTH and over the top (OTT) services. “When we look at either of these platforms, the key to its existence is content. The cost of content today is increasing rapidly and at a pace with which even the connections in the market aren’t growing,” tells Siti Cable CEO VD Wadhwa to indiantelevision.com.

     

    According to Wadhwa, while the consumer average revenue per user (ARPU) levels is increasing in single digits, broadcasters, who sign one-year deals with distribution platforms, expect the revenues grow anywhere between 20-60 per cent. “This is impractical, unsustainable and is no way any business model will evolve or work,” he adds.  

     

    The reason both Dish TV and Siti Cable have come together is to be able to make the best use of each other’s advantages and disadvantages. While DTH doesn’t enjoy as much carriage as cable gets, when it comes to content deals, DTH platforms have an upper hand. “While my input cost, which is the content cost is growing at a fast pace, I am not being able to drive the market price. If consumer ARPUs remain low, we can’t allow the content cost to go up. Also considering both the platforms target the same set of consumers in the market, it made more sense for us to join hands to deal with broadcasters,” informs Wadhwa.

     

    Dish TV CEO RC Venkateish says, “This move will help both the entities to provide quality content at affordable price to consumers.”

     

    Both, the DTH and cable platform currently is unable to pass on the increased input cost to the customer. “And then there are the additional taxes. The Delhi government recently increased the entertainment tax from Rs 20 to Rs 40, not realizing that it is a price sensitive market. Neither the consumer nor the broadcaster is ready to take the burden of the increasing cost. In order to protect our business model and remain a consumer friendly company and comply with all the rules and regulations, we thought of coming together,” he says.  

     

    The JV will help the duo in not just controlling deals with broadcasters, but also in sourcing equipments. “Both Dish TV and Siti Cable need set top boxes. There are a lot of synergies if we work together,” he adds.

     

    Between Siti Cable and Dish TV, the two currently have more than 2 crore subscribers, which in the next two years, according to Wadhwa will go up to 4 crore. “If we are currently present in 2 crore households, we are talking of almost 9-10 per cent of India’s population. This gives us a lot of leverage,” he says.

     

    According to Wadhwa, while the broadcasters have already come together to work for the advantage of the broadcasting sector, the distribution platforms too need to work in a synergy. “While that is currently not possible, at least the two companies in the group should start working together immediately,” he opines.

     

    As part of the JV, the duo will hold joint discussions with broadcasters, taking joint call on the deals. “If the broadcaster wants to arm twist Siti Cable, it has to be careful that Dish TV may also react or vice versa,” he informs.  

     

    Starting 1 July, 2015, it is ‘Comnet’ that will do the negotiations with broadcasters for both the platforms together. Post that, a direct contract between the broadcaster and the distribution platform will be signed. “The benefit will be shared between Dish TV and Siti Cable,” concludes Wadhwa.

  • Can the Indian cable television industry truly head the US cable television industry way?

    Can the Indian cable television industry truly head the US cable television industry way?

    People often tend to compare the cable television industry in India with that of the US. They say that the industry is headed the US way. One of the crucial points is internet service and more specifically broadband service. This business and revenue growth alternative has been gaining a lot of attention from the cable television industry as an expansion strategy. Higher Average Revenue Per User (ARPU) in India, to the extent of 3 to 5 times the ARPU earned through transmission of television bouquets, certainly makes this service an attractive proposition.

     

    Comparisons with a mature market like the US may not work in India. Indian cable television players have a long road ahead before any comparison or trying to relate with the industry, in any way could even start to make sense.

     

    One of the foremost factors is money. According to the National Cable and Television Association, USA (NCTA), the total US broadband industry investments since 1994 is about US$ 1400 billion (4.7 per cent of the US’s estimated revenue for 2014) or 60.7 per cent of India’s nominal GDP of US 2308 billion in April 2015. Money can bridge the technology gap, leapfrog it, as it has in many instances in India.

     

    Of course, this leads to the oft repeated point about the high cost of implementation of all DAS phases. It is a foregone fact that the capex starved cable television industry with poor balance sheets is going to deploy more money towards that effort if it wants the government to allow it to remain in business. Delays in deadlines may be possible, but in the current scenario, DAS is there to stay and is required for the benefit of all stakeholders.

     

    Notwithstanding the bureaucracy logjam that India is notorious for, another major stumbling block is the slow and hugely over vamped judicial system (besides regulation) in India that could take years to decide on any dispute. Settling of civil disputes has no deadline in India. The cliché, for businesses, ‘time is money’, holds good here too.

     

    Let us look at internet services

     

    The number of internet users worldwide will surpass 3 billion (300 crore) in 2015, according to eMarketer, increasing 6.2 per cent next year to reach 42.4 per cent of the entire world’s population. By 2018, eMarketer estimates, nearly half the world’s population, or 360 crore people, will access the internet at least once each month.  

     

    eMarketer says that by 2016 India will jump the US as the second-largest internet user population. China leads the world in terms of number of internet users with estimated 66.98 crore users, followed by the US with 25.93 crore and India with 24.23 crore say eMarketer estimates. In 2016, the publication estimates an Indian internet user base of 28.38 crore, higher than the 26.49 crore projections for the US. By 2018, India’s estimated internet subscriber base will be 34.63 crore or probably in the range of about 25-28 per cent of the population of the country at that time. Indian population figures for 2013 are an estimated 125.2 crore. Current population estimates for the US are about 32 crore, or the US has an internet density percentage of about 80, while China’s internet density percentage is about 50 and India just under 20.

     

    “Inexpensive mobile phones and mobile broadband connections are driving internet access and usage in countries where fixed internet has been out of reach for consumers, whether that’s due to lack of infrastructure or affordability,” said eMarketer senior forecasting analyst  Monica Peart. “While highly developed markets are nearly saturated in terms of internet users, there’s significant room for growth in emerging ones; for example, India and Indonesia will both see double-digit growth in each year between now and 2018.”

     

    The growing youth population is another important driver, as the most technologically savvy, and their demands shape internet development itself, says a Euromonitor report.

     

    According to the Telecom Regulatory Authority of India (TRAI), India had a wireline broadband subscriber base (speed greater than 512 kpbs) of 155.2 lakh and 852.3 lakh wireless broadband subscribers as on 30 April, 2015 or 1007.6 lakh broadband subscribers totally. This means that less than 1 per cent of the total population of the country has broadband. There is no denying the fact that the potential is huge, more so for broadband.

     

    Siti Cable (Siti), a multi system operator (MSO), believes that its strategy of cross-selling broadband services to its existing cable television subscribers and new customers will provide it with an opportunity to increase ARPUs, increase retention rates, ensure higher sustainable EBITDA margins and leverage upon its existing pan India presence.

     

    A few players such as medium sized MSO Atria Convergence Technologies (ACT) had actually changed its strategy since 2012 and started focusing more on broadband services, without losing focus on its MSO operations. It offers broadband internet in areas where it does not have cable subscribers. Despite being a regional player, ACT is the second largest private wired broadband player in the country, just after the mobile telecom behemoth Airtel. ACT’s broadband subscriber base has grown by 43.76 per cent to 6.11 lakh in the 12 months until 31December, 2014. As on 30 April, 2015, ACT had a wired broadband subscriber base of 6.8 lakh.

     

    However, ACT has followed a different strategy when compared to the other MSOs who use DOCSIS on the existing television cable for internet delivery. The company has laid separate optic fibre lines for internet delivery and hence owns even the last mile, rather than use its existing cable infrastructure and be dependent upon the LCOs’ whims and fancies.

     

    It must also be noted that the number of internet subscribers that each major cable television player in the US has runs in crores in a couple of cases. The largest MSO in India in terms of cable subscribers – Den Networks, with about 130 lakh subscribers has less than half the customer relationships that Comcast’s Cable Communications segment has with 272.34 lakh subscribers, of which about 223.75 lakh are video subscribers and 223.69 lakh are high speed internet subscribers. While Den’s cable subscriber base is about 58 per cent of Comcast Cable Communications segment, its internet subscriber base as on 31 March, 2015, is a small fraction at just 23,000 or just a little more than one thousandth of the internet subscribers that Comcast has. Even, ACT’s internet subscriber base of about 7 lakh is less than one-thirtieth of Comcast’s Cable Communications High-Speed internet subscribers. Is there any comparison?

     

    According to Nielsen’s 2015 Advance National TV Household Universe Estimate (UE), there are 11.64 crore TV homes in the U.S. prior to the start of the 2014-15 TV season. The number of homes represents a 0.5 per cent increase from Nielsen’s 2013-14 TV Household Universe Estimate. The number of persons aged 2 and older in U.S. TV Households is estimated to be 29.6 crore—also an increase of 0.5 per cent from last year. This puts the number of subscribers in the previous year as per Nielsen’s estimates at 11.58 crore.  The Indian carriage universe has 16.8 crore homes (44.3 per cent more than the estimated US TV homes) according to the FICCI- KPMG Indian Media and Entertainment Industry Report 2015. (FICCI-M&E 2015 report).

     

    The number of video subscribers through wire in the US as of 2013 was about 6.6 crore or the country had a cabletelevision percentage density just under 21. India has a TV home (TV Households or TV HH) density percentage of a little less than 13.5 (this includes DTH for India).

     

    Besides a number of cable television and IPTV service providers, the US has two big DTH players – Dish and Directv that had a combined subscriber base in Q1-2015 of approximately 341 lakh, or about 29 per cent of the total TV homes in the US estimated by Nielsen. India had an active DTH subscriber base of about 405.4 lakh (24.3 per cent of TV HH in India) as on 31 December, 2014.

     

     As mentioned above, in India, internet services ARPU is much higher than the ARPU from cable television services as compared to more mature markets such as the US, where it is the other way around. At the time of writing of this report, internet services monthly ARPU could be between 50 to 65 per cent of the video monthly ARPUs’ in the US. Video monthly ARPU would typically be in the range of US$ 75 to US$ 95, while internet monthly ARPU would range between US$ 40 to US$ 50. Is there an ARPU comparison? No way!

     

    Let us look at three players in the US. The entities in this report – Comcast Corporation’s Cable Communications segment, Time Warner Cable (TWC, about half the size of Comcast Cable Communications segment) and Charter Communications (Charter Comm) (About half the size again of TWC) represent about 32 per cent of the total US TV homes estimated by Nielsen.

     

    In Q1-2015, these entities combined video subscribers dropped by 6.12 lakh (1.61 per cent) to 373.47 lakh (32.09 per cent of Nielsen’s estimated TV Homes) from 379.59 lakh (32.77 per cent of Nielsen’s estimated TV Homes) in Q1-2014. Individually too, all the three entities reported loss of video subscribers in Q1-2015 to the extent of 1 per cent in the case of Comcast and Charter Comm and 3.08 per cent in the case of TWC, as compared to the corresponding year ago quarter. Despite the drop in video subscribers, the other two reported an increase in revenue from video in Q1-2015, while TWC even saw its video revenues drop by 1.04 per cent in Q1-2015 as compared to Q1-2014.

     

    The total number of internet subscribers of these three entities exceeded the total number of video subscribers in Q1-2015– internet subscribers grew to 392.5 lakh (5.1 per cent more than video subscribers) as compared to 369.45 crore (2.67 per cent less than video subscribers) in Q1-2014. All the three players reported increases in their internet subscription base as well as revenue from Internet in Q1-2015 when compared to the year ago quarter.

     

    Triple play (or triple product) subscribers increased in all the three cases, between 0.61 per cent in the case of Charter Comm to 14.49 per cent in the case of TWC and 4.26 per cent in the case of Comcast in Q1-2015 when compared to Q1-2014. TWC and Charter Comm’s double play subscriber base shrank 8.05 per cent and 0.6 per cent respectively, while Comcast’s double play subscription numbers increased in comparison during similar periods.

     

    Notes: (1) 100,00,000 = 100 lakh = 10 million = 1 crore

     

    (2) Revenues for US companies and some figures in this report have been mentioned in US$, million; subscription numbers in lakh or crore and TV homes in crore.

     

    (2) SARPU, a term similar to ARPU has been coined by the writer to bring terms to a common denominator for all the three US entities. To arrive at SARPU, the writer has added the quarterly revenues from each stream and divided the result by the number of customer relationships in that quarter and further divided the second result by 3 to arrive at a rough estimate of the revenue earned per relationship per month by the entity. Similarly, individual revenues from video, internet and voice streams/business have been divided by the number of subscribers of video, internet and voice streams respectively, further divided by 3 to arrive at an SARPU of that stream. Residential subscriber numbers have been used wherever available.

     

    (2.1) VIVE, another term coined by the writer, means video, internet and voice, the three main revenue generating streams or businesses for the three US entities in this report.

     

    (3) Voice numbers has been included, since there are number of overlaps in subscription numbers for VIVE of all the three entities.

     

    (4) ARPUs’ and SARPUs’ in this report are on a monthly basis unless stated otherwise.

     

    Comcast Cable Communications segment

     

    Comcast’s Cable Communications segment’s (probably the largest cable company and home internet services provider in the US) comprises 272.34 lakh relationships in Q1-2015 (quarter ended 31 March, 2015). The number grew by just 1.62 per cent from the 268 lakh in Q1-2014, and was driven by increases in double and triple product relationships.  This is what the cable industry in India is trying to ape – the double and triple play numbers.

     

    The breakup of these customers is 83.99 lakh single product, 2.39 per cent lower than the 86.05 lakh in Q1-2014; 88.90 lakh double product, 2.7 per cent more than the 86.56 lakh double product consumers in Q1-2014 and 99.45 lakh triple product consumers, 4.26 per cent more than the 95.39 lakh in  Q1-2014.

     

    The breakup of number of Comcast’s cable operations customers base on products is 223.75 lakh of video consumers in Q1-2015 – the number fell by 8000 as compared to the corresponding year ago quarter; 223.69 lakh high-speed internet consumers – the number increased by 4.07 lakh as compared to Q1-2014; and 112.70 lakh voices consumers – the number increased by 77000 as compared to the previous year ago quarter.

     

    Based on the financials filed by the company for Q1-2015, 69.16 per cent of the company’s consumers’ use two (double play) or more of its products, (up 127 basis points or 1.87 per cent higher) than the 67.89 per cent in Q1-2014.

     

    Let us examine the revenue that these businesses bring in for the company:

     

    Comcast’s Cable Communications segment revenue in Q1-2015 grew 6.26 per cent to US$ 11430 million from US$ 10757 million in Q1-2014. Combined revenue from Video, Internet and Voice (VIVE) businesses in Q1-2015 grew 4.89 per cent to US$ 9281 million (81.20 per cent of Cable Communications segment revenue) from US$ 8848 million (82.25 per cent Cable Communications segment revenue) in Q1-2014.

     

    Video revenue in Q1-2015 was US$ 5331million (57.44 per cent of VIVE revenue), 2.95 per cent more than the Rs 5178 million (58.52 per cent of VIVE revenue) in Q1-2014; Internet revenue in Q1-2015 grew 10.69 per cent to US$ 3044 million (32.80 per cent of VIVE) from US$ 2750 million (31.08 per cent of VIVE) in Q1-2014. Voice revenue fell 1.52 per cent in Q1-2015 to US$ 906 million (9.6 per cent of VIVE revenue) from US$ 920 million (10.4 per cent of VIVE revenue) in Q1-2014.

     

    A simple back of the envelope calculation as mentioned in Note 2 above shows the simple average monthly revenue per user (SARPU) of US$ 113.60 for Q1-2015, up 3.22 per cent as compared to the US$ 110.05 in Q1-2014.

     

    Similarly, Video SARPU grew 3.99 per cent in Q1-2015 to US$ 79.42 from US$ 76.37 in Q1-2014; Internet services SARPU grew 4.25 per cent to US$ 45.36 (56.97 per cent of video SARPU) in Q1-2015 from US$ 43.51 (57.12 per cent of video SARPU) in Q1-2014; Voice SARPU fell 5.06 per cent to US$ 26.80 from US$ 28.23 in the year ago quarter.

     

    Time Warner Cable

     

    Let us see how another big player in the US performed – Time Warner Cable (TWC).  In Q1-2015 the company saw its highest q-o-q growth in internet subscriber base since 2007 by 3.15 lakh to 119.90 lakh from 116.75 lakh in the quarter ended 31 December, 2014. Y-o-y, the company’s internet subscriber base grew by 6.32 lakh. However, the company’s video subscribers fell 3.08 per cent in Q1-2015 to 108.19 lakh from 111.63 lakh in Q1-2014. Voice subscribers increased 14.06 per cent in Q1-2015 to 56.04 lakh from 49.13 lakh in Q1-2014. TWC’s customer relationships increased 1.27 per cent in Q1-2015 to 147.16 lakh from 145.32 lakh in Q1-2014.

     

    In Q1-2015, the number of consumers using TWC’s double or triple play increased by 64 basis points (up 1.05 per cent) to 61.45 per cent from 60.81 per cent.

     

    TWC’s overall revenue in Q1-2015 grew 2.06 percent to US$ 4662 million from US$ 4568 million in Q1-2014. Its VIVE revenue in Q1-2015 grew 1.96 per cent to US$ 4638 million (99.49 per cent of overall revenue) from US$ 4549 million (99.58 per cent of overall revenue) in Q1-2014.

     

    Video revenue fell 1.04 per cent in Q1-2015 to US$ 2469 million (53.23 per cent of VIVE revenue) from US 2495 million (54.85 per cent of VIVE revenue); Internet revenue grew 8.86 per cent to US$ 1696 million (36.57 per cent of VIVE revenue) in Q1-2015 from US$ 1558 million (34.25 per cent of VIVE revenue) in Q1-2014. Voice revenue in Q1-2015 fell 4.64 per cent to US$ 473 million (10.2 per cent of VIVE revenue) from US$ 496 million (10.9 per cent of VIVE revenue).

     

    TWC’s SARPU per customer relationship was US$ 105.06 in Q1-2015 or 0.68 per cent higher than the US$ 104.34 in Q1-2014.

     

    TWC’s video SARPU in Q1-2015 increased 2.1 per cent to US$ 76.07 from US$ 74.50 in Q1-2014; Internet SARPU increased 3.12 per cent to US$ 47.15 (61.98 per cent of video SARPU) in Q1-2015 from US$ 45.72 (61.37 per cent of SARPU) in Q1-2014 and Voice SARPU fell 16.4 per cent in Q1-2015 to US$ 28.13 from US$ 33.65 in Q4-2014.

     

    Charter Communications

     

    Charter Communications (Charter Com), an even smaller player than Comcast or TWC, reported 4.48 per cent growth in residential consumer relationships in Q1-2015 to 59.27 lakh from 56.73 lakh in Q1-2014. Video subscription base fell 1 per cent to 41.53 lakh (70.07 per cent of total relationships) from 41.95 lakh (73.95 per cent of total relationships) in Q1-2014; Internet subscription base grew in Q1-2015 by 8.23 per cent to 48.91 lakh (82.52 per cent of total relationships, addition of 3.23 lakh subscribers) from 45.91 lakh (79.66 per cent of total relationships) in Q1-2014; Voice subscribers grew 6.71 per cent in Q1-2015 to 24.81 lakh (59.74 per cent of total relationships) from 56.93 lakh (40.98 per cent of total relationships) in the corresponding year ago quarter.

     

    Overall revenue grew 7.27 per cent to US$ 2362 million in Q1-2015 from US$ 2202 million in Q1-2014. VIVE revenue in Q1-2015 grew 6.68 per cent to US$ 1980 million (83.83 per cent of overall revenue) from US$ 1856 million (84.29 per cent of overall revenue).

     

    Video revenue increased 3.58 per cent in Q1-2015 to US$ 1129 million (53.23 per cent of VIVE revenue) from US$ 1090 million (54.85 per cent of VIVE revenue) in Q1-2014; Internet revenue increased 16.4 per cent to US$ 717 million (36.21 per cent of VIVE revenue) in Q1-2015 from US$ 616 million (33.19 per cent of VIVE revenue) in Q1-2014. Voice revenue in Q1-2015 fell 10.67 per cent to US$ 134 million (6.77 per cent of VIVE revenue) from US$ 150 million (8.08 per cent of VIVE revenue) in Q1-2014.

     

    Charter Comm’s SARPU in Q1-2015 increased 2.11 per cent to US$ 111.35 from US$ 109.05 in Q1-2014. Video SARPU increased 4.63 per cent to US$ 90.62 in Q1-2015 from US$ 86.61 in the corresponding year ago quarter; Internet SARPU in Q1-2015 increased 7.54 per cent to US$ 48.87 (53.92 per cent of video SARPU) from US$ 45.44 (52.46 per cent of video SARPU) in Q1-2014; Voice SARPU fell 16.28 per cent in Q1-2015 to US$ 18 from US$ 21.51 in Q1-2014.

     

    Let us see what the richest Indian does through Reliance Jio Media, for this is probably the only group/entity that has the deep pockets to really offer a shimmer of comparison with the media giants in the US.

     

    Can we truly compare Cable television internet in India with the industry in the US? No way!

  • All India Digital Cable Federation condemns ET hike in Delhi

    All India Digital Cable Federation condemns ET hike in Delhi

    MUMBAI: The Arvind Kejriwal led Aam Aadmi Party is currently dealing with a lot of criticism, especially from the cable and direct to home (DTH) sector. This, after it presented its budget for the national capital on 25 June. Of the many decisions, the government has decided to increase the entertainment tax on cable and DTH services from the current Rs 20 to Rs 40. While it is the consumers who have to bear the burden of the increased taxes, both the cable operators and DTH players have come out heavily on this decision.

     

    The newly formed All India Digital Cable Federation (AIDCF) through a statement said, “The Delhi government’s recent announcement proposing to double the entertainment tax on the cable TV and DTH services in the budget is an added burden on the common man whose main source of entertainment is television. Aam Aadmi Party, which had promised to control the prices by reducing electricity and water charges is negating by the proposed hike. Due to this, the common man will have to bear the brunt of yet again, an additional tax, as cable TV operators will have no choice but to pass on this hike to the common man.”

     

    The statement further said, “It should be noted that cable TV is the biggest medium for news, entertainment and education. It should also be noted that the common man is already burdened by an increase in service tax from June 2015. The said proposal of Delhi government is like giving a piece of bread with right hand and snatching back the same from left hand. All India Digital Cable Federation strictly condemns the proposed hike.”

     

    In an earlier statement, even the DTH Operators Association of India, a body consisting of all private DTH players had condemned the hike. Association president and Videocon d2h CEO Anil Khera had then said, “The recent announcement of doubling of entertainment tax on cable TV and DTH services made by the Aam Admi Party government seems unfair and illogical. DTH as a platform is considered as critical to citizen’s right to information, news, education and entertainment. The sector is already saddled with high tax, where 33 per cent of revenues are taxed between the Centre and State. DTH operators that comprises Tata Sky, Dish TV, Airtel Digital TV, Videocon d2h, Sun Direct and Reliance Big TV, will have no choice but to hike their tariffs in Delhi to accommodate this hike in entertainment tax and the load will finally fall on the customer. By dropping electricity prices on the one hand and increasing entertainment tax on DTH on the other, does not seem like a move in favour of the aam aadmi! Is this how we plan to achieve a balance budget and reduce fiscal deficit?”