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Tag: Anil Malhotra

  • TRAI asks MSOs to devise rational channel rates for phase III

    TRAI asks MSOs to devise rational channel rates for phase III

    MUMBAI: Close to 61 multi system operators (MSOs) have approached the broadcaster for signing of interconnect agreements. The statistics were revealed at the eighth task force meeting by the Telecom Regulatory Authority of India (TRAI) advisor Sunil Kumar Singhal.

     

    Of these, according to the report received by Singhal, while the broadcasters have given their replies to the MSOs, the memorandum of understanding (MoU) is yet to be signed. The TRAI through its meetings with the MSOs and broadcasters, has identified four core issues relating to interconnect agreements. These are:

     

    1. While the MSOs are expressing interest for getting signals from broadcasters, they are being asked for more information, which is taking time. “Now with the intervention of TRAI, broadcasters have formalized their formats and have placed them on their websites so that all MSOs can submit requests at one go and the agreement signed,” informed Singhal.

     

    2. The distributors of several broadcasters in a state are also MSOs and that has led to conflict of interest with the MSOs. “We have been able to address this by seeking the details of the core team of the broadcasters to be approached for getting the signals and the broadcasters have provided such details also on their websites,” he said.

     

    3. The third point was related to pending dispute between MSOs in DAS areas which are both old as well as new. “These disputes need to be resolved mutually as TRAI would not intervene in such disputes,” he opined.

     

    4. There are differences between MSOs and broadcasters on the rate of channels.   “The larger MSOs are in negotiations with broadcasters to finalise the prices and it is indicated that they will be in a position to finalise them by mid June,” he said.

     

    Meanwhile, TRAI has asked the MSOs to devise means to have rational rates for phase III areas, as the rates for phase I and II cannot be workable in the remaining phases.

     

    The TRAI advisor also informed the task force meeting that there was confusion between both MSOs and broadcasters which related to the modus operandi for entering into agreements during the transition period.  The TRAI advisor said that the MSOs and broadcasters were business entities who should know how to communicate with each other in order to expedite and facilitate their business interests. The TRAI has asked the stakeholders to not repeat the mistakes of phase I and II by deploying pre-activated STBs.

     

    The representative of the MSOs, during the meeting said that whatever be the rate declared by broadcasters, TRAI should come out with a non-discriminative clause which should not push packages but allow the channels to be on a-la-carte basis. “We have been insisting on a-la-carte and not bundling of channels and any delay in the implementation of DAS will result in losses to both MSOs and broadcasters,” informed the TRAI advisor.

     

    According to a MSO representative, the packaging of channels should be monitored by TRAI. “The LCOs should be trained to spread DAS amongst the consumers as they are close to the consumers and can speedup this process,” opined the MSO representative.

     

    Information and Broadcasting Ministry (I&B) additional secretary JS Mathur, who was also chairing the meeting said that the publicity campaign for the cutoff date for phase III should start now.

     

    According to Siti Cable Network’s Anil Malhotra, while the target rate of seeding set top boxes (STBs) requires to be around 2 to 3 lakh per day, the present rate of seeding is about 20-30 thousand boxes which is way short and logistic support has to be planned out in order to step-up the pace of seeding.

     

    During the meeting, a representative from BIS raised the issue of hacking of STBs and said that a request has been received from some broadcasters to strengthen the BIS Standard of STBs.

  • Cricket Packs could become universal

    Cricket Packs could become universal

    MUMBAI: Digitisation is set to change the way television channels are packaged. In addition to the subscriber getting the option to pick and choose channels, multi-system operators too are finding newer opportunities.

     

    MSOs have found a good business prospect in cricket, the most-watched sport in India.

     

    With digitisation of cable TV services in 42 major cities, MSOs are increasingly shifting to per subscriber deals with broadcasters instead of making bulk payments.

     

    Hathway Cable  & Datacom, like direct-to-home television service provider Dish TV, has carved out a Cricket Pack for its subscribers.

     

    In the case of Dish TV’s India cricket pack, the channel on which live telecast of a match involving Indian men’s cricket team is switched on.

     

    “Sports channels, by the nature of its programming are event driven. We have an Indian Cricket Pack, which is a cost per subscriber deal with broadcasters,” says Hathway Cable  CEO Jagdish Kumar.

     

    More MSOs are likely to follow suit and offer Cricket Packs to their customers.

     

    “Though right now we have entered into a per set top box deal with the sports channel broadcasters, we may also look at Indian Cricket Pack going forward,” informs SitiCable COO Anil Malhotra.

     

    There are three types of commercial arrangements entered between broadcasters and operators. These are: Fixed deal, in which the operator pays a lump sum amount to the broadcaster; Reference Interconnect Offer, in which operator takes channels based on the choice of the subscribers; and on a per set top box deal, in which the operator shares details of the number of STBs installed with the broadcaster and the number of the subscribers subscribing to a sports channel.

     

    DEN Networks is currently on a fixed deal with the sports broadcasters. “We are still asking for lump sum because of cash flow issues,” informs DEN Networks CEO SN Sharma.

     

    While till last year, broadcasters were entering into fixed deals with operators, “now everybody is moving towards cost per subscriber,” adds Sharma.

     

    When questioned if DEN would also offer Indian Cricket Pack, Sharma says, “Let’s see. Different experiments are happening. With time everything will evolve.”

     

    According to GTPL Hathway COO Shaji Mathews, broadcasters are entering into fixed deals or negotiate a per subscriber rate.

     

    “The per subscriber deal has clauses which say that the operator needs to show a minimum number of subscribers who subscribe to the channels,” he says.

     

    Currently, GTPL Hathway has a fixed fee deal with the sports broadcasters.

     

    “The moment we get into a la carte, the rates are really high and if we get into cost per subscriber, unless we guarantee a certain number of subscribers for the channel, the cost per subscriber is also high. So, in fact on fixed deal, we land up paying less because of the fee structuring,” he says.

     

    GTPL Hathway may also move to Indian Cricket Pack. “We are looking at that as well,” he says.

     

    It makes business sense for channel distributors to create cricket packs. But Increasing inclination towards cricket packs would mean predominantly cricket channels would gain at the cost of those with less or absolutely no cricket content.

  • MCOF and its MSO-LMO revenue sharing proposal

    MCOF and its MSO-LMO revenue sharing proposal

    MUMBAI: The struggle to find a solution on how multisystem operators (MSOs) and cable operators (LMOs – last mile owners) will work together in a digitised India continues.  The discussions between Maharashtra Cable Operators Federation (MCOF) and Hathway Cable & Datacom to come up with a workable arrangement had given some hope for a smooth rollout of MOS-LMO revenue shares, and consumer billing in Mumbai. But talks between the two seem to have come to a standstill for some time now. 

     

    Indiantelevision.com has got a hold of the proposed revenue share model which has been hammered out after a lot of thought and conversation: it takes into consideration operational expenses (OPEX) and the capital expenditure (CAPEX) of both the LMOs and MSOs.

     

    “It is as much in our interest as it is in the MSO’s to resolve the bottleneck, differentiate amongst subscribers and cater to their needs to optimise the network resources and push ARPUs up in the shortest time,” says MCOF president Arvind Prabhoo.  

     

    According to the proposed revenue sharing structure, the MSO: LMO share for free to air (FTA) channels should be 37 per cent : 63 per cent. For basic pay packages, the price range of which is Rs 150-Rs 250 (excluding taxes), the proposed revenue share is 45 per cent : 55 per cent; for advanced pay channels, which are in the price range of more than Rs 250, the revenue share proposed is 50 per cent : 50 per cent. For special/VOD packages, it is 75 per cent : 25 per cent and for HD channel packages it is 60 per cent: 40 per cent.

     

    “The best way for the industry to not only survive but prosper to its true potential is to work as a pure and true partnership business. MCOF will act as the collection management and settlement entity,” adds Prabhoo.  

     

    The MCOF model assumes that every MSO has two systems in place: the subscriber management system (SMS) and Financial Accounting System (FAS). The SMS hosts the entire subscriber details and is the basis of value chain reconciliation and audit.  

     

    “We have proposed that the MSO use this to generate end-customer bills with full details, factoring the LMO income share and taxes at various levels. These bills would be raised in the name of the LMO network and carry the tagline powered by the MSO,” says Prabhoo.

     

    The billing details, as per the proposal, will be pulled by MCOF and placed on the cloud and each LMO would gain access via the worldwide web using a mobile device or through a desktop.  The collection data is planned to  be captured in real time using MCOF approved technology, which is currently UPASS and updated on the MCOF cloud in real time and at the MSO-end either in real time or on an end of day basis.

     

    “We will work out the tax liability at LMO levels and guide them to use the technology to compile tax returns/challans. We will also reconcile the MSO-LMO accounts taking into account prepaid/post paid, online payments made to the MSO and unpaid customers,” informs Prabhoo.  

     

    Explaining the reason for the proposed revenue share, Prabhoo says, “The LMO has certain base expenses to cover, such as employees, office rent, repairs and replacements of shared infrastructure, audit and tax returns.”

     

    The effective OPEX for an LMO, according to MCOF for 1000 subscribers is Rs 109,500 a month. “The LMO’s per subscriber cost comes to Rs 109.5. We need at least Rs 109- Rs 110 to pay the employees and other costs. So this is the minimum and then comes profitability,” he highlights.

     

    The average CAPEX per subscriber is close to Rs 4000. Also, MCOF points that while the subscribers/employee ratio for an LMO is around 400, it is expected to be more than 5000 for a MSO. Thus making the OPEX element much higher for an LMO than an MSO.  

     

    Prabhoo feels that while the MSO is a wholesaler and LMO the retailer, the assumption of equal sharing as envisioned by the Telecom Regulatory Authority of India (TRAI) needs to be rectified and replaced by equitable sharing.

     

    “We have had detailed discussions with the TRAI on this and the matter will be reviewed sooner or later, but for sure it is not correct on TRAI to assume equal sharing by all three stakeholders,” he says.   

     

    The collection cost currently is entirely on the LMO while a good part of the monies flows to MSOs. This, according to MCOF needs to be allocated in the revenue share formula, if not actually computed and reimbursed. “For all practical purposes the LMO’s work load will increase as he acts as the marketing arm and administrative support system for the MSOs. Also, another round of set top box (STB) deployment/retrieval/repairs/replacement by HD boxes will entail quite a lot expense.”

     

    MCOF, in the email to MSOs, has also suggested that carriage fees should be clubbed with customer revenues, being a mathematical product of STBs in place and carriage fee per STB.

     

    MCOF has agreed that the UPASS technology, devices and connectivity costs will be borne by the LMOs. Also while integration, payment gateway, electronic processing and settlement system costs are incurred by the MSOs for direct connections or internet services, for any additional integration, the cost can be shared with the LMOs on a pro-rata basis.

     

    The LMOs are also suggesting carriage fee sharing as a loyalty bonus. “This can be mutually worked out,” says Prabhoo.  

     

    The new system will enable the MSO to see and monitor the exact collections made each month by the LMO and also the revenue due to the MSO, excluding taxes. While revenue will be booked in both books as per packages, the LMO will pay the MSO per month for all the collections made during the previous month after deducting taxes and the LMO share within seven days of the invoice being generated by the MSO.

     

    While MCOF is trying to move things forward, what’s stopping the MSOs? “Well! There are talks going on between the promoters of the MSOs. There is no consensus amongst the MSOs and that is what is taking time,” says a Hathway official on condition of anonymity.

     

    According to the official, the proposed revenue share by MCOF is acceptable, with minor changes. “But, all the MSOs operating in the state, have to come to a consensus, which I don’t see happening soon,” he says. The official feels that billing in Mumbai is most likely going to  be delayed further.

     

    SitiCable Network, which also has a presence in the country’s financial capital says it may soon conclude on how it will share revenues. “We are negotiating. We may announce our revenue share in a couple of days. Since, we have a small presence in the state, we are seeing what other MSOs are doing there,” explains  SitiCable Network chief operating officer Anil Malhotra.

  • Star Sports plays hard ball with Siti Cable

    Star Sports plays hard ball with Siti Cable

    MUMBAI: Star Sports has come out with a pan India notice against India’s Multisystem operator Siti Cable. The notice that was issued in select newspapers on 15 November as per the Telecom Regulatory Authority of India (TRAI) guidelines has hauled up the multiple system operator (MSO) on several grounds.

     

    “A huge outstanding and non-signing of agreement in both DAS as well as non-DAS markets are the two major reasons for this notice,” says Star Sports India COO Vijay Rajput.  “I would like to point out here that Siti Cable has not submitted subscriber reports for any of the DAS I and DAS II markets.  Also there have been instances of piracy. Earlier in October, we had filed an FIR against Siti Vision Digital, a joint venture unit of Siti Cable Network at Saifabad police station in Hyderabad, for illegal transmission of the Star Sports channels.”

     

     The sports network has come out heavily against Siti Cable for not playing with a straight bat.   “We have been following up with Siti Cable for all these issues but have not received a favorable response from its  officials. Therefore, as per the law of the land we have issued a 21 day public notice. We will avail all options available to us if in case Siti Cable fails to resolve the stated issues within the stipulated period,” adds Rajput.

     

     Star Sports had earlier played hardball with GTPL and yanked its channels off the cable network. Now it’s the turn of Siti Cable. Rajput says that he has been forced to take these steps. “These are the two specific cases that we are trying to address primarily due to non-payment and non-renewal of agreements.”

     

     So what is it that Siti Cable plans to do post this notice? Answers Siti Cable chief operating officer Anil Malhotra, “Well, this is a regular practice adopted by every broadcaster as per the TRAI regulation, when an agreement is about to end or has ended. The notice is a precursor to negotiation.”

     

     Malhotra claims that his cable network is already intalks with the sports channel for the renewal of contract. “We had signed the agreement last year in October-November. So the agreement is due for renewal and, so, this notice. We will amicably resolve the issue.”

    Star Sports says it is ready to revisit the matter if the MSO resolves the issues in the set deadline.

  • Siti consolidated Q3 loss widens 47% Q-on-Q to Rs 185.7 million

    Siti consolidated Q3 loss widens 47% Q-on-Q to Rs 185.7 million

    MUMBAI: Zee Group-promoted multi-system operator (MSO) Siti Cable continues to be in the red with the fiscal third quarter consolidated net loss widening 47 per cent to Rs 185.7 million from Rs 126.5 million a quarter earlier on rise in expenses due to digitisation.

    Siti Cable’s consolidated operating profit for the quarter, however, increased 7 per cent to Rs 202.5 million from Rs. 189.3 million a quarter earlier.

    The consolidated operating revenues for the third quarter rose 33 per cent to Rs 1.24 billion from Rs 935.3 million a quarter earlier.

    Operating revenue is primarily generated from subscriber related income, income from bandwidth charges, income from advertisements and set-top-box (STB) activation.

    Total consolidated operating expenses for the quarter stood at Rs 1.04 billion, a 23 per cent increase from Rs 850.6 million a quarter earlier.

    The company’s main operating expenses include cost of goods and services, employee costs and selling & distribution expenses.

    Major cost item was cost of goods & services recorded as Rs 768 million during the third quarter, representing 62 per cent of the total revenue. It increased 24 per cent from Rs 621.5 million a quarter earlier, when it was 60 per cent of the total revenue then.

    Siti Cable COO Anil Malhotra commented, “Siti gained further momentum in the third quarter of fiscal 2013. We were able to maintain our margins through operational efficiency improvements despite increased operating expenses.”

    Malhotra said that the company had seeded 1.5 million set top boxes (STBs) during Phase-1 of digitisation in Delhi, Mumbai and Kolkata and had added approximately 700,000 STBs during the third quarter.

    The STB seeding done by the company is under the paid scheme and the payments were realised on upfront basis, Malhotra said.

    “We are now in exciting phase of our journey as we strengthen our existing operations and expand our digital subscriber base in phase-2 cities as well. We believe that experiences gathered from Phase 1 will form the basis for phase-2 switch-over to digital, helping to speed up the exercise eventually,” he said.