ITV

Tag: Cable TV industry

  • Catvision reappoints SA Abbas as managing director

    Catvision reappoints SA Abbas as managing director

    MUMBAI: Catvision Ltd has re-appointed S A Abbas as the managing director of the company for an additional period of three years with the effect from 1 October, 2015.

     

    Abbas, who is also a director in the company, has been with Catvision since 8 June, 1985.  He has 30 years of experience including more than 25 years in the cable TV industry.

     

    Before joining Catvision, he worked with Network Ltd. in its marketing department, where he was closely associated with the sales and marketing of electronic typewriters and subscriber-use telecom equipment from 1980 -1985.

     

    He is professionally qualified technocrat and holds B.Tech from IIT Kanpur and MBA from IIM, Calcutta.

  • 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!

  • Once we move to gross billing, revenue will increase three-fold: V D Wadhwa

    Once we move to gross billing, revenue will increase three-fold: V D Wadhwa

    These are changing times for the Indian cable TV industry, what with gross (consumer) billing starting in phase I cities and 27 January being the last date for submission of duly-filled Consumer Application Forms (CAF), following which, multi system operators (MSOs) will need to start major switch-off of signals.

     

    In all of this, Essel Group-owned SitiCable Network, earlier known as Wire and Wireless (India) Ltd, has proved to be a game changer of sorts. Under the leadership of chief executive officer V D Wadhwa, the company has been at the forefront of change; whether it is giving access to the Subscriber Management System (SMS) to local cable operators (LCOs), launching local cable TV channels or the latest plan to launch a service on iOS and Android for consumers to view TV content on their Apple devices and smart phones.

     

    An alumnus of Harvard Business School and a fellow member of the Institute of Company Secretaries of India, Wadhwa served as managing director and CEO for business operations in India and SAARC countries with the Timex Group before taking charge as the CEO of SitiCable Network in May 2013.

     

    An avid squash player who dabbles in adventure sports, travelling and driving, Wadhwa took some time out from his busy schedule to speak to Seema Singh of indiantelevision.com on gross billing, setting up of cooperatives and the road ahead for SitiCable.

     

    How has phase I and II of digitisation been for SitiCable? How much has been invested and what have been the returns?

     

    We have approximately 10 million subscribers in the analogue universe. Of these, we have seeded 3.6 million Set Top Boxes (STB) in phase I and II of digitisation. The total investment so far has been to the tune of more than Rs 500 crore.

     

    As far as the returns are concerned, the investment has been done with a payback period of four years. Expecting anything in the short term is not a realistic scenario. No one gets returns on investments immediately.

     

    How many set top boxes will be needed for completing phase III and IV? What is the proposed investment for these phases? How are you looking at generating investment in the company?

     

    Phases III and IV of digitisation has a total universe of about 90 million. Of these, we are targeting 6-7 million homes. At a gross level, we will require an investment of Rs 1200 crore. On a net basis, we are expecting an investment to the tune of Rs 600 crore.

     

    The funding of Phase III will be largely done through warrants’ funding of Rs 243 crore, which is likely to be invested by promoters before March 2014. Balance funding requirement will be met through internal accruals and raising of further equity, as may be required.

     

    By when do you think you will be able to reap the benefits of digitisation? By what percentage do you see the revenue going up?

     

    The benefits of digitisation have already started trickling in and the full benefits will be visible from FY16.

     

    Once we move to gross billing, the revenue will increase over threefold of what it is currently. Right now, whatever revenue is booked in the books of accounts is on net and not gross basis. Last year for the year ended March 2013, our top line was Rs 483 crore. In the last two quarters, we have achieved revenue of over Rs 300 crore and this growth trend in the current quarter continues. Once gross billing starts, the revenue will increase to over three-fold. 

     

    Have you come to any consensus on revenue share and billing with Last Mile Owners (LMOs) in Maharashtra? Are you going to allow LMOs to bill in Mumbai? By when do you see billing starting in Mumbai?

     

    We have a 33 per cent revenue share with all our local cable operators (LCOs) and we do share 25 per cent of the carriage revenue with them, which is not the case with other Multi System Operators (MSOs). So, we are not facing any problem anywhere in the country. We have also given access to the Subscriber Management System to LCOs. Our approach is to consider the LCO as an integral part of the business and both the MSO and LCO have to co-exist. We, therefore, believe in empowering the LCOs by training them and providing them the backend support to enable them provide better customer services. This is the biggest advantage for SitiCable and this is helping us to significantly improve our subscription revenues as compared to other MSOs.

     

    Now that billing has started in Phase I cities, how has the response been? Do you think billing has succeeded in bringing in greater transparency? How is it helping the MSOs?

     

    It is too early to comment. The LCOs are not habituated to the system of gross billing. According to me, it will take at least two to three months for billing and collection to stabilise as per package. But there is gradual acceptance among the LCOs for the gross billing regime. .

     

    Also, I would like to add that in Delhi, between Hathway Cable & Datacom, DEN Networks and SitiCable, we have engaged Mckinsey to help us stabilise the gross billing and gross collection. They will ensure that all MSOs follow the common policy of billing, collection and dunning. Since gross billing started in December, it is expected to stabilise in the current quarter.

     

    The Telecom Regulatory Authority of India (TRAI) had given 27 January as the deadline to MSOs for collection of all Consumer Application Forms (CAFs) and feeding of details in the SMS for phase II cities. Are you switching off signals or is the process complete?

     

    We received 94-95 per cent CAFs in phase I cities and for the remaining, the signals have been switched off. So in that way, we have completed 100 per cent CAF in phase I and submitted the compliance report to the TRAI. For phase II, 91 per cent of CAF has been completed. The regulator for all these months has been patient in giving us extensions. And, I personally believe if the deadline goes on getting postponed, the work will never be completed. The ultimate solution for these problems is to switch off signals for those who have not filled the forms and that is what we are doing, which is in complete compliance with TRAI’s order. In fact, in the last one week, we have switched off 50,000 subscribers nationally. This is to ensure that compliance as per TRAI regulation is achieved.

     

    Where do you see entertainment tax headed? What led to taking the matter to court? Do you think the ruling will be passed in your favour? Do you believe that entertainment tax should be reduced?

     

    As per the law, the MSO is responsible for entertainment tax. We approached the Delhi High Court, since we have always been collecting and depositing entertainment tax, and we did not want to face any coercive action being taken by the tax authorities. As per our information and inputs received from the market, other MSOs are also collecting tax from LCOs regularly. While the H’ble high court has asked SitiCable to keep submitting the entertainment tax, the high court has given the stay against any coercive action being taken by the Tax Department against other MSOs since they have taken the plea that they are not invoicing and collecting tax so far. No decision has been taken on who will be responsible for collecting and paying the entertainment tax as yet.

     

    In SitiCable, we firmly believe that the payment of entertainment tax should be with the MSOs. Since the invoice is being raised by the MSO and the LCO is collecting the subscriber fee, I feel the power of collecting and depositing entertainment tax should be with the MSOs.

     

    I have a very different view on entertainment tax. I do not understand why a consumer needs to pay both service tax and entertainment tax. When we provide them with cable TV, what is it? Is it a service or entertainment? Even for movies, consumers pay only entertainment tax, then why is it that the consumer has to pay entertainment tax and service tax for cable TV. We have raised this issue on several occasions to both the Information and Broadcasting Ministry and the TRAI, but without any heed.

     

    The tax rate has to rationalise across the country. In UP, the monthly entertainment tax is 25 per cent of the subscription fee, while in Maharashtra, it is Rs 45; Delhi – Rs 20; Bengaluru – 6 per cent of the total subscription fee; and Kolkata, it is Rs 10. This differential tax structure will not allow the industry and gross billing to stabilise in these respective states.

     

    I am hopeful that the tax will come down once the process of digitisation is complete. Currently, the tax department is unable to gain significantly due to digitisation. With complete digitisation, there will be transparency and hence, more tax collection. Then there will be rationalisation of tax.

     

    By when do you think the process of digitisation will be complete?

     

    There is no reason why digitisation will get delayed. The I&B Ministry is dedicated and so is the TRAI. Even the MSOs are gearing up for funding, getting STBs and seeding them. So I don’t see any delay in completion of digitisation.

     

    Is the cable TV industry prepared to offer consumer service as available internationally?

     

    I think there is a long way to go for that. We are taking one thing at a time. Currently, the Indian consumer is not even habituated to gross billing and taxation. The Indian cable TV market has not matured enough to be able to offer services like those internationally. Once gross billing is stabilised and every one becomes habituated with the system, only then we can move forward.

     

    However, from the Value Added Services (VAS) point of view, we have started broadband service in the east and soon, we will be starting in the north. Also, we will be providing content on multiple screens to our subscribers.

     

    Is broadband a key play in your revenues going forward? How will it be delivered?

     

    Of course, broadband will play a key role. We will also soon introduce Docsis 3.0, which is the future. Besides broadband, by the end of this quarter, the content available on TV will also be available on iOS and Android platforms. The technical team is working on it and if there are no glitches, we will be launching the service on both the platforms together. We are the first cable TV operator to have thought of this service.

     

    Do you believe building local cable TV channels is the way forward? How much will you invest in this? And what is the monetisation opportunity?

     

    Local cable TV channels help in connecting with the consumers. We plan to launch four to five channels in each geography. While we have seven channels in central India, seven in Jaipur and four in Delhi, we plan to continue with this in other parts as well.

     

    Launching local cable TV channels does not cost much since we already have a studio facility in areas where we have a presence. Such endeavours give a competitive edge over the Direct-to-home operator, since they cannot operate a local channel with local content and the MSO, as they do not have the facility for launching a local channel or have a rather small presence.

     

    A local channel helps in giving out local news in local languages and most people prefer this. Then, advertisements help in generating revenue. So commercially launching such channels makes sense for the MSO.

     

    How do we see the national landscape panning out: will there be a few key national MSOs? Who will these be?

     

    Like in phase I and II of digitisation, the market will be dominated by four national MSOs: Hathway, DEN, SitiCable and InCable. It is only after complete digitisation that the country can expect foreign players to enter the market. These foreign players will bring better technology, transparency and competition. This will prove beneficial for the national players as well.

     

    How do you see the MSOs coping with phase III and phase IV? Will DTH benefit? Or will we see new local players emerging?

     

    While in phase III, the existing MSOs will play a major role and benefit, phase IV will witness DTH playing a major role. In phase IV, with towns having 5,000-10,000 households, it will not be commercially viable for cable TV operators unlike DTH players.

     

    Local players may emerge in some markets, but as seen in phase I and II, the industry has been going through consolidation since digitisation requires huge Capex. The local players emerge since they can manage initial investments. But, they are not technology ready to serve consumers. Also, this is a highly regulated industry, which will be difficult for them to cope with. Considering they do not get placement fee from broadcasters, they can operate for a maximum of one to two years. 

     

    What challenges do you anticipate in Phase III and Phase IV?

     

    Content is the biggest challenge. Currently, the ARPUs for phase I and II cities is not more than Rs 150. If it remains the same for phase III and IV, it will be difficult for us to operate in these towns. Broadcasters need to have differential pricing for these markets.

  • Cas workshop on 12 February in Mumbai

    Cas workshop on 12 February in Mumbai

     MUMBAI: While the first phase of Cas (conditional access system) rolled out on 1 January, the Indian cable TV industry is now looking at headends outside these areas in smaller cities and towns which are now keen to transition to an era of structured organizations and revenues that digital cable provides.

    Several large cable TV headends countrywide now plan to install digital headends.These new headends require a complete technology shift To facilitate the transition, Satellite and Cable TV magazine is organizing a workshop on “Cas and digital CATV” at the Hyatt, Sahar International Airport, Mumbai on 12 and 13 February.

    The workshop will have a round table discussion on Cas roll out by WWIL MD Jagjit Singh Kohli, Hathway Cable & Datacom MD and CEO K Jayaraman, Incablenet head Ravi Mansukhani and Trai representatives.

    Additional sessions will have international speakers from SIMAC Netherlands, Teleste Finland, Rover Italy, Telemann Korea as well as leading industry players such as NDS, Magnaquest, Catvision and others.
     

  • WWIL Q3 net loss at Rs 159 million

    WWIL Q3 net loss at Rs 159 million

    MUMBAI: Wire And Wireless India Limited (WWIL), Zee Group’s demerged cable company, has posted a consolidated net loss of Rs 159 million for the third quarter ended 31 December 2006.

    The consolidated revenues stood at Rs 513 million for the quarter and Rs 1.5 billion for the nine-month period. Operating losses were at Rs 33 million after expensing Rs 38 million for office infrastructure. Being the first year of operations for WWIL, the previous period figures are not available.

    Commenting on the results Zee chairman Subhash Chandra said, “WWIL has just begun its rollout of digital cable services in the three metros of Mumbai, Delhi and Kolkata and it is encouraging to learn that we have been able to capture almost half of the market in these areas. Our analogue cable business continues to lead industry in connecting millions of television homes. The business initiatives of WWIL towards digitization of cable homes and upgrading of cable infrastructure would become visible in the performance from FY2008 onwards.”

    Added WWIL MD Jagjit Singh Kohli, “There is more than expected demand for set top boxes in Mumbai, Delhi and Kolkata. We expect that the industry will need at least 6 million set top boxes for complete roll out in these three metros. Demand for digital signals is equally strong in other cities, not notified under CAS. We see cable providing lot more value added services through digital mode. WWIL is heading towards its goal at an accelerated pace.”

    WWIL claims to have deployed 200,000 boxes. Said Kohli, “We believe there is a vast opportunity in cable TV industry, which is going through a rapid phase of consolidation and digitization simultaneously. Our goal is to add 3.4 million subscribers in next two years. Looking ahead, we are confident that continued execution of our distribution strategy would result in a revenue growth faster than that of industry.”

  • LMOs And The CAS Conundrum

    LMOs And The CAS Conundrum

    Nothing can get more complex than this. It is not only the pay-TV broadcasters and the government who are wanting to take time out for implementation of conditional access system (CAS). Opposition is coming from within the value chain of the cable TV industry itself with the distributors and the last mile operators (LMOs) expressing concern over CAS.

    “CAS is not good for consumers, distributors and last mile operators. It will lead to too much of confusion in the market. Besides, broadcasters are not providing a la carte rates,” says Cable Operators and Distributors Association (Coda) vice president Ravi Singh.

    Clearly, the mood among the cable operators is not to rush with CAS. They would rather wait to see if direct-to-home (DTH) picks up once Tata Sky launches its service later in the year. Their fear of CAS is grounded in the fact that they will lose control of their subscribers to the multi-system operators (MSOs). And in the transparent system of digital cable, they will have to open up the unreported subscribers to the MSOs.

    Cable operators’ fear of CAS is grounded in the fact that they will lose control of their subscribers to the multi-system operators
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    To counter this “two-way defeat,” the distributors and last mile operators are willing to vote CAS out. So how do they plan to compete with DTH? By dropping prices of analogue cable while throwing the offer open for digital service without CAS.

    Quite a miserable situation to be in if you are a MSO as you will be hurt both ways. In the scenario of a price drop, the MSOs will have to absorb the slippage. And in case of digital cable without CAS, they will have to invest while facing the uphill task of luring subscribers away from analogue. Particularly in a market that has grown a spoilt breed of over 52 million (NRS says its 61 million) cable TV consumers who are used to a large menu of channels on a comparatively low monthly subscription fee.

    The LMOs, in fact, have an open-ended strategy. If DTH starts pocketing cable TV subscribers, the gameplan is up for change. They will bend and cooperate with the MSOs, becoming a part of an organised distribution system with margins well-defined and structured.

    Yes, broadcasters have been dilly-dallying on CAS. But MSOs have not made it any easier for them with such statements as “the true value of pay channels has come to the surface in Chennai where consumers have thrown them out.”
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    But wait. Having enjoyed the spoils of a long grown unorganised industry, the distributors and LMOs do not want to let go so soon. Coda, an association of cable operators and distributors in Mumbai, is even talking of setting up a digital headend in a CAS regime. This is nothing new. In 2003, when the CAS topic was hot, Coda made similar rumblings that threatened but sounded empty. But this time, there is a significant change. There are around 50 distributors in Mumbai and they have invested in fibre. What this means is that they are connected by fibre with each other, except in small patches where work is going on, and have the infrastructure to put up a digital network.

    “We will jointly invest in a headend and run it as partners,” says Coda president Ganesh Naidu.

    Talk is easier than action. Investments on setting up a digital infrastructure is not all; a sizeable chunk of money needs to be set aside for subsidising set-top boxes (STBs). Then there is the issue of professionalising customer care services like a call centre and technical team for maintenance. Besides, negotiations with broadcasters can be a tedious process. And who can forget management issues between as wide a body as the distributors and the LMOs?

    Behind the garb of an entrepreneurial spirit may lie the hidden agenda of bargaining for a “pound of flesh.” The distributors, who feel insecure of their role in a CAS system, want to ensure that their place is protected as a bridge between the MSOs and the LMOs. They, along with the MSOs, have been asking for more, as share in terms of commission from conversions into digital consumers.

    The MSOs can take the blame for not ironing out differences with their distributors and LMOs. Even as the time frame for implementation of CAS is set for delay, there is no effort to fix the margins. The argument on offer: such margins can be settled only after the broadcasters come out with their proposals.

    Yes, broadcasters have been dilly-dallying on CAS. But MSOs have not made it any easier for them with such statements as “the true value of pay channels has come to the surface in Chennai where consumers have thrown them out.” Perhaps, MSOs went overboard thinking that this would win them support from the consumers and, hence, the government as it would imply cheaper cable subscription fees. The sad fate of CAS is that consumers didn’t quite agree with this.