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Tag: Carriage Fee

  • TRAI issues consultation paper discussing target market, placement issues between broadcasters, DPOs

    TRAI issues consultation paper discussing target market, placement issues between broadcasters, DPOs

    MUMBAI: The Telecom Regulatory authority of India (TRAI) released a consultation paper on ‘Issues related to Interconnection Regulation 2017'. The objective of the move is to consult all the stakeholders on issues related to target market, placement and other agreements between broadcasters and distributors.

    The authority has received representations from quite a few regional broadcasters highlighting their concerns regarding the declaration of the target market by distributors of television channels (DPOs). As the existing regulations provide freedom to DPOs to declare their target market for the purpose of ascertaining the carriage fee, some of the DPOs have declared multiple states (or entire country in some cases) as their target market.

    In this context, regional broadcasters are compelled to pay very high carriage fee. This has created a negative economic barrier for regional channels thereby limiting their presence on smaller distribution platforms as proposition to pay carriage fee for national market makes it unviable for such channels.

    Not only does this put undesired financial burden on regional broadcasters, it makes them prone to undue arm twisting by the distributors, as their subscription continues to remain lower than the minimum prescribed threshold of five percent (5 per cent ), which is the limit under which a DPO is not mandated to carry any channel.

    "Further, the placement agreement, marketing agreements or any other technical or commercial arrangements between broadcasters and distributors (apart from RIO-based agreements) are in forbearance. But now, quite a few complaints have been received from various broadcasters whereby it is being alleged that some DPOs are resorting to pushing for marketing/placement/promotion agreement, by exploiting the available forbearance,” TRAI said in a press release.

    Recently, Telecom Disputes Settlement and Appellate Tribunal (TDSAT) also recommended the authority to examine the issue. According to a TDSAT order dated 29 July, the main challenge appears to be the wisdom of the regulator in giving liberty to DTH operators to declare their target areas.

    Adhering to the orders, the authority had several meetings with each group of stakeholders in the industry including news broadcasters, broadcasters, DTH operators, MSOs and regional broadcasters to discuss their viewpoints and come forward with a balanced solution that is in the interest of both the concerned parties (DPOs and regional broadcasters).

    According to some of the broadcasters, the decision of declaration of target market should be left upon them as it is their channel and they should have the freedom to decide that which sector of the population will opt for their channels. Almost all the regional broadcasters want that the target market should only be their respective state or city or territory and they should not be asked to pay carriage fee for the entire universe (PAN India).

    However, DPOs have a different opinion. According to some of the distributors, the cost of infrastructure associated with running a channel is significant. In case the provision related to target market is altered to states, it will alter their revenue structure. According to them, any reduction in the revenue stream from carriage fee will result in additional subscription cost for the consumers. Moreover, any smaller target market will mean more and more broadcasters will achieve subscription threshold of 20 per cent. As soon as the subscription crosses the threshold, their carriage fee revenue will reduce to zero. As per extent provisions, a broadcaster is exempted from payment of any carriage fee if the monthly subscription of his channel in the target market exceeds 20 per cent.

    As per TRAI, MSOs declaring its target market as the area covered under a head end or any smaller area within the total area covered by a head end can be an alternative. Another option which has been highlighted as a possible altenative is linking carriage fee to cost of carrying a channel. In this option the cost of carrying a channel may be worked out and the amount of carriage fee that a broadcaster may be required to pay the distributor may be capped at that level.

    The highlighted questions are primary issues for consultation:

    1. Do you think that the flexibility of defining the target market is being misused by the distribution platform operators for determining carriage fee? Provide requisite details and facts           supported by documents/ data. If yes, please provide your comments on possible solution to address this issue?

    2. Should there be a cap on the amount of carriage fee that a broadcaster may be required to pay to a DPO? If yes, what should be the amount of this cap and the basis of arriving at the           same?

    3. How should cost of carrying a channel may be determined both for DTH platform and MSO platform? Please provide detailed justification and facts supported by documents/ data.

    4. Do you think that the right granted to the DPO to decline to carry a channel having a subscriber base less than 5 per cent in the, immediately preceding six months is likely to be misused? If yes, what can be done to prevent such misuse?

  • Parliamentary panel pushes for TRAI’s empowerment

    Parliamentary panel pushes for TRAI’s empowerment

    MUMBAI: Parliament’s Standing Committee on Information Technology and Communications (SCIT) wants more regulations for the broadcast industry. Finding the current powers given to the Telecom Regulatory Authority of India (TRAI) inadequate, it has recommended that either the scope of its authority be increased or the broadcast industry be given its own regulator.

    In the committee’s report on ‘Status of Cable TV Digitisation and Interoperability of Set-top Boxes’, it noted that since 2004, when the TRAI was entrusted with the responsibility to oversee the broadcast sector, the industry has seen enormous growth in the number of satellite TV channels, DTH services, digitisation of cable TV networks, and TV ratings agencies. With its limited ability, TRAI has efficiently handled issues to bring about transparency and non-discrimination, improve the quality of service and allow the sector to grow.

    It noted that TRAI recommendations were the basis for the government to form several policy decisions. “The committee is, however, constrained to note that TRAI at present has got very limited powers due to which enforcement of its regulations, directions and tariff orders becomes difficult,” the panel mentioned.

    Several services providers have freely violated TRAI orders and cases against them were filed in pertinent courts. The committee doesn’t find this an effective way to get the broadcast industry to fall in line with rules. The TRAI’s recommendations of modifications to its Act are under consideration by the government.

    The committee has suggested the government to evaluate the need for a separate regulator for the broadcast industry and, until such a time, the TRAI be empowered for effective enforcement of its regulations.

    It appreciated the efforts taken by TRAI to regulate pricing of set top boxes, but strongly recommends for unbundling of hardware and associated services and making provision for itemised billing for hardware as well as associated services such as installation, activation and maintenance and providing more option to the customer to procure similar compatible hardware from the open market.

    The TRAI’s effort on addressing carriage fee details was also lauded by the committee. It stated that “despite extreme reluctance on the part of broadcasters to share the details of the carriage fee”, it has now addressed the issue in its new regulatory framework capping it at 20 paise per subscriber per channel and which is expected to further decrease till zero when 20 per cent of subscribers will be available on the platform who choose the channel. Though this decision is being scrutinised at the High Courts of Delhi and Chennai, the committee hoped the TRAI’s efforts will go a long way in addressing the issue to the satisfaction of all stakeholders.

    Also read:

    TRAI on carriage fee, other issues in draft interconnect guidelines

    TRAI tariff order’s impact on the industry

  • TRAI on carriage fee, other issues in draft interconnect guidelines

    NEW DELHI: After taking in to consideration the comments of the stakeholders and internal analysis in TRAI, the draft regulations [the Telecommunication (Broadcasting and Cable Services) Interconnection (Addressable Systems) Regulations, 2016] along with its explanatory memorandum have been prepared.

    The basic principles of non-exclusivity, non-discrimination, transparency, level playing field and fair completion have been retained in these draft regulations.

    Some of the new features of the draft regulations are as follows:

    (i) A common interconnection framework for all addressable systems namely DTH, HITS, DAS and IPTV.

    (ii) “Must carry” provision for all addressable systems, on first come first serve basis. DPOs to publish information about its platform including available capacity and declare the rate of carriage fee.

    (iii) No carriage fee is to be paid by a broadcaster if the subscription of the channel is more than or equal to 20 per cent of the subscriber base.

    (iv) The rate of carriage fee has been capped at 20 paisa per channel per subscriber per month. Further, the carriage fee amount will decrease with increase in subscription.

    (v) The distributors of TV channels may offer discounts on the carriage fee rate declared by them not exceeding 35% of the rate of the carriage fee declared.

    (vi) The interconnection agreements to be signed in accordance with the Reference Interconnection Offer (RIO).

    (vii) Broadcaster to offer to a distributor, a minimum of 20% of the maximum retail price of its pay channel(s) or bouquet(s) of pay channels as distribution fee. They may also offer discounts on the maximum retail price provided that the sum of discounts and distribution fee in no case shall exceed 35% of the maximum retail price, so declared.

    (viii) Standard format of application for DPOs for obtaining signals of television channel(s) from broadcaster and standard format of application for a broadcaster for access of network from distributor for re-transmission of a television channel(s).

    (ix) Format of subscription report to be provided by a DPOs to a broadcaster including free to air channels.

    (x) Updation in the technical specification for addressable systems.

    (xi) The framework for subscription audit & technical audits.

    (xii) Extension of Model Interconnection Agreement (MIA) and Standard Interconnection Agreement (SIA) framework applicable for MSOs to HITS and IPTV operators.

    Keep tuned in for more details.

  • TRAI on carriage fee, other issues in draft interconnect guidelines

    NEW DELHI: After taking in to consideration the comments of the stakeholders and internal analysis in TRAI, the draft regulations [the Telecommunication (Broadcasting and Cable Services) Interconnection (Addressable Systems) Regulations, 2016] along with its explanatory memorandum have been prepared.

    The basic principles of non-exclusivity, non-discrimination, transparency, level playing field and fair completion have been retained in these draft regulations.

    Some of the new features of the draft regulations are as follows:

    (i) A common interconnection framework for all addressable systems namely DTH, HITS, DAS and IPTV.

    (ii) “Must carry” provision for all addressable systems, on first come first serve basis. DPOs to publish information about its platform including available capacity and declare the rate of carriage fee.

    (iii) No carriage fee is to be paid by a broadcaster if the subscription of the channel is more than or equal to 20 per cent of the subscriber base.

    (iv) The rate of carriage fee has been capped at 20 paisa per channel per subscriber per month. Further, the carriage fee amount will decrease with increase in subscription.

    (v) The distributors of TV channels may offer discounts on the carriage fee rate declared by them not exceeding 35% of the rate of the carriage fee declared.

    (vi) The interconnection agreements to be signed in accordance with the Reference Interconnection Offer (RIO).

    (vii) Broadcaster to offer to a distributor, a minimum of 20% of the maximum retail price of its pay channel(s) or bouquet(s) of pay channels as distribution fee. They may also offer discounts on the maximum retail price provided that the sum of discounts and distribution fee in no case shall exceed 35% of the maximum retail price, so declared.

    (viii) Standard format of application for DPOs for obtaining signals of television channel(s) from broadcaster and standard format of application for a broadcaster for access of network from distributor for re-transmission of a television channel(s).

    (ix) Format of subscription report to be provided by a DPOs to a broadcaster including free to air channels.

    (x) Updation in the technical specification for addressable systems.

    (xi) The framework for subscription audit & technical audits.

    (xii) Extension of Model Interconnection Agreement (MIA) and Standard Interconnection Agreement (SIA) framework applicable for MSOs to HITS and IPTV operators.

    Keep tuned in for more details.

  • FY-2015: Inflection point for DTH companies in India?

    FY-2015: Inflection point for DTH companies in India?

    BENGALURU: Is FY-2015 the inflection point for direct to home (DTH) companies in India? The answer seems yes, if one were to go by the financials declared by three listed operators for the quarter and year ended 31 March, 2015 (Q4-2015 and FY-2015 respectively) – Airtel Digital TV, Dish TV and Videocon d2h. And the players are gung-ho about the future. Subscriber growth and higher ARPUs (Average Revenue Per User) are some of the factors that have brightened the picture for this segment of the carriage industry in fiscal 2015.

     

    Note: 100,00,000 = 100 lakh = 10 million = 1 crore.

     

    This report covers only three of the seven DTH service providers in India since the other four – Reliance Digital TV, Sun Direct (about 97 lakh subscribers as on 31 March, 2015), Tata Sky and DD Free Dish are not listed on the bourses and their financial numbers are not available.

     

    The Numbers

     

    Dish TV

     

    Dish TV’s standalone and consolidated net Total Income from Operations (TIO) in FY-2016 at Rs 2781.64 crore was 10.9 per cent more than the Rs 2508.97 crore in FY-2014. Standalone TIO in Q4- 2015 at Rs 754.72 crore grew 18.5 per cent as compared to the Rs 636.91 crore in the corresponding year ago quarter and was 10.3 per cent more than the Rs 684.26 crore in Q3-2015.

     

    According to Dish TV, the DTH sector is a direct beneficiary of a positive consumer sentiment. The company achieved strong subscriber growth of 1.5 million net subscribers during the year. Fiscal 2015 also saw Dish TV swing to net profit, a first for any DTH company in India.

     

    The biggest among the three in terms of revenue as well subscribers, Dish TV at the close of FY-2015, reported standalone net profit after tax (PAT) of Rs 35.01 crore in Q4-2015 and a standalone PAT of Rs 1.01 crore in FY-2015 as compared to a standalone loss of Rs 154.21 crore in FY-2014. For Q3-2015, Dish TV’s loss was just Rs 2.87 crore as compared to double-digit crore loss numbers in the previous or like-to-like quarters. Dish TV also doubled its subscriber growth to 15 lakh in FY-2015 as compared to the previous year. As on 31 March, 2015, the company reported a net subscriber base of 1.29 crore, having added 4.04 lakh subscribers in the last quarter of 2015.

     

    Dish TV also reported higher ARPU of Rs 179 in Q4-2014 as against Rs 177 in Q3-2015 (1.13 per cent increase in ARPU) and was 5.3 per cent higher than the annual ARPU of Rs 170 reported in Q4-2014.

     

    “As digitization spreads far and wide, we continue to believe that there is sufficient headroom to further explore price differentials between key urban markets and their rural counterparts. All pack prices, for new as well as existing subscribers of Dish TV, have been moved by Rs 10 each in the 42 cities under phase I and II. We are confident that pack price hikes, higher HD uptake, as well as industry level developments such as initiation of packaging in cable will be key contributors to ARPU expansion going forward,” said Dish TV managing director Jawahar Goel.

     

    Post a successful absorption of higher pack prices in Delhi, Mumbai, Pune and Kolkata, Dish TV initiated another price change during the current month. In less than three months since it was first introduced, differential pricing – an industry first from Dish TV was rolled-out in the balance 38 cities covered under DAS phases I and II with effect from midnight on 12 May, 2015.

     

    Last year Dish TV launched a second brand, Zing, in the Indian DTH space. A resounding success, Zing cemented Dish TV’s supremacy in the DAS Phase 3 and 4 markets with custom-made content, hardware and service packages for the regional audience, says the company.

     

    Airtel Digital TV Services

     

    Airtel’s Digital TV Services (DTH segment) revenue grew 19.2 per cent in FY-2015 to Rs 2475.9 crore from Rs 2077.1 crore in FY-2014. The segment reported 11.8 per cent growth in number of subscribers with 100.73 lakh subscribers on 31 March, 2015 as compared to the 90.12 lakh subscribers at the close of the previous year. ARPU in FY-2015 at Rs 214 was five per cent more than the Rs 203 in FY-2014. The segment reported slightly higher monthly churn of one per cent as compared to 0.9 per cent in FY-2014.

     

    The DTH segment reported an operating profit of Rs 8.1 crore in Q4-2015 as compared to an operating loss of Rs 36 crore in the immediate trailing quarter. For FY-2015, Airtel DTH reported a lower operating loss of Rs 158.1 crore, for FY-2014, operating loss was three times more at Rs 481.2 crore.

     

    EBIDTA and EBIDTA margins in FY-2015 at Rs 675.2 crore (27.3 per cent of total revenue) were more than double (2.02 times) the Rs 334.7 crore (16.1 per cent of total revenue) in the previous year.

     

    Videocon d2h

     

    Coupled with higher ARPU for FY-2015 at Rs 196, and Rs 202 in Q4-2015, Videocon d2h reported 32.5 per cent growth in revenue from operations in FY-2015 at Rs 2337.7 crore as compared to the Rs 1764.4 crore in FY-2014. The company’s subscription revenue increased 38.3 per cent in the current year to Rs 2058.1 crore from Rs 1487.7 crore in the previous year.

     

    Videocon d2h says that it was able to push through an inflation linked ARPU increase in February 2015. As a result, Q4-2015 ARPU was Rs 202, up 11.7 per cent from FY-2015.

     

    Videocon d2h closed fiscal 2015 with 101.8 lakh subscribers as compared to 84.4 lakh in the previous year. It claims market leadership in subscriber growth in FY-2015 with 26.4 lakh gross subscribers and 17.4 lakh net subscriber additions. Subscriber churn per month increased fractionally in FY-2015 to 0.8 per cent as compared to 0.76 per cent in the previous year.

     

    The company reported lower net loss in FY-2015 at Rs 272.7 crore as compared to the Rs 319.5 crore in the previous year. Adjusted EBIDTA increased 55.3 per cent in the current year to Rs 609.1 crore (margin 26.1 per cent) from Rs 319.5 crore (margin 34.1 per cent), the company said in its earnings release on NASDAQ.

     

    Videocon d2h CEO Anil Khera said, “The Pay TV segment in India is positioned for extraordinary growth over the next few years with millions of new TV homes being created on account of the strong economic outlook in India as well as the Government of India’s initiative to roll out its digitalization mandate across the country. We believe that 9 to 10 crore homes will be making the switch to digital platforms, which will be available to the DTH and digital cable operators. We are well positioned to benefit from this and we believe we will take the largest share of this opportunity, as we have in the past. With strong economic growth outlook for India, overall media sector is expected to grow in the years to come. We believe this will help grow ARPU, TV penetration and increase HD uptake leading to stronger revenue growth for Pay TV in general and Videocon d2h in particular.”

     

    End points

     

    The last quarter of fiscal 2015 (Q4-2015) has shown better than average results in the case of all the three DTH players examined in this report. PAT in Q4-2015 eliminated the loss Dish TV incurred in the first three quarters of FY-2015. In the case of Airtel DTH segment, EBITDA for Q4-2015 increased to Rs 207.8 crore as compared to Rs 96.7 crore in the corresponding quarter last year. The reported EBITDA margin improved significantly to 32.7 per cent in Q4-2015, as compared to a margin of 17.9 per cent in the corresponding quarter last year.

     

    As mentioned above, Airtel DTH turned EBIT positive to Rs 8.0 crore in the current quarter, as compared to EBIT loss of Rs 110.7 crore in the corresponding quarter of last year. Comparable numbers for Videocon d2h have not been made available since the company debuted on NASDAQ on 1 April, 2015 and has disclosed only a limited amount of information about its annual numbers.

     

    The Indian carriage universe has 16.8 crore households. DTH operators have continued to focus on improving realisations by increasing penetration of HD channels, premium channels and value added services (VAS) according to the FICCI-KPMG Indian Media and Entertainment Industry Report 2015. However, they may have to rework their channel packages to be more relevant and affordable for phases III and IV subscribers. A case in point mentioned above is Dish TV’s sub-brand Zing, which caters to specific linguistic needs of subscribers and offers regional specific packs as a part of all available packs.

     

    Also, all major DTH operators have launched apps for mobiles and tablets through which subscribers can watch live TV for an additional fee and DTH operators have the advantage of monetising these viewers because of their existing payment relationships with their subscribers. 

     

    The FICCI-KPMG 2015 report also says that battle for subscribers in phases III and IV of DAS in India is expected to be more keenly fought between MSOs’ and DTH players. While DTH players managed to get only 20 to 30 per cent of the subscribers converting from analogue to digital in phases I and II, they are in a much better position in phases III and IV due to inherent technology advantage of DTH in sparsely populated areas and also due to their balance sheets being healthier than the MSOs’.

     

    The Ministry of Information and Broadcasting extended the deadlines for phases III and IV to 31 December, 2015 and 31 December, 2016, respectively, and there could be another delay by 12 months according to experts, which means that phase IV rollout could complete only at the end of 2017 or even 2018. The benefits of digitisation in these phases in terms of improved addressability and ARPU is expected to take much longer. At the end of 2019, the FICCI-KPMG report expects digital cable subscriber and DTH subscriber ratio to be 55:45 with 9.4 crore digital cable subscribers and 7.6 crore DTH subscribers.

     

    HITS (Headends in the Sky), if it takes off even in a small way, could affect the fortunes of both the DTH and the cable TV industry. Let’s wait and watch how the Hinduja Group, which has a license to launch HITS and is a major player in the cable TV business, plays this out. Jain TV, the other licensee for HITS, has made a miniscule dent. IPTV is still at less than an infancy stage in the country.

     

    If DTH companies can sustain, innovate in technology and offerings and grow from here, FY-2015, and maybe Q4-2015 could really be the turning point when at least one segment of the carriage business in India has started making money. Only time will tell…

  • DTH could push HD penetration in next one year: MPA

    DTH could push HD penetration in next one year: MPA

    MUMBAI: As the year comes to an end, the multi system operators (MSOs) have finally come out with their packages and the pricing module for the Star India channels, after the broadcaster decided to give its channels only on Reference Interconnect Offer (RIO) basis.

     

    But according to Media Partners Asia (MPA) while Star has the right intent, it has to remain flexible on the incentives offered for better ground adoption. From the operator’s viewpoint, the Star scheme needs to address the following issues:

     

    1. Despite availing of the maximum discount on the scheme, the content cost for operators remains higher than previous CPS deals, exacerbated as operators are not receiving any carriage fees.

     

    2. The scheme does not factor in volume discounts on the basis of an absolute number of subscribers offered through a given operator network.

     

    3. Channel pricing is based on filed RIO rates. These are not reflective of consumer preferences. For instance, Star Plus which enjoys 2x the viewership of Life OK, has a lower price than Life OK.

     

    4. To generate higher discounts, the scheme demands carrying maximum channels with 90 per cent penetration. This will result in a rich basic pack offering which will disincentivise future upselling to an operator’s high value packages.

     

    5. Even if operators are able to pass through content costs to subscribers, MSOs face the risk of paying more and collecting less as the current backend systems for operators are not robust and transparent enough to collect and pass on revenues for channels on an a-la carte basis.

     

    6. The scheme does not factor in HD channels. MSO action plan and execution risk Star has been transparent on rates and discounts for its channels. Some national MSOs have accordingly started to work on their blueprint of tiering channels through a broad revenue share arrangement with local cable operators (LCOs). On the backend, according to MPA, the operators now critically need to have their technology systems in sync with consumer preferences, collected through KYC (Know Your Customer) forms. They will also need to decentralise control by extending their consumer databases to respective LCOs to enable the upgrading and downgrading of packages as per consumer choice. As backend systems get re-engineered, MSOs will need to concurrently conduct roadshows and training programmes for LCOs. MSOs will also need to undertake marketing campaigns to create awareness on a consumer’s need to make choices on revised cable packages.

     

    MPA also feels that MSOs intend to pass their increase in net content cost to consumers by undertaking an average price hike of Rs 40-60 ($0.7-1) per month. Even if consumers accept the price increase, the risk to MSOs lies in collecting their legitimate share of incremental revenues from LCOs. In order to offset this, MSOs plan to shift to trade prepaid services, which should have positive consequences.

     

    Long term implications for the Pay TV industry

     

    Broadcasters: Currently, all broadcasters are looking to reduce carriage fees and bring it to parity with DTH in terms of total payout. A number of broadcast networks are taking a wait-and-see approach. Having already eliminated carriage in DAS markets, if Star manages to obtain reasonable viewership for its driver channels with a nominal growth in subscription revenues, MPA believes that others too will broadly follow Star’s approach.

     

    According to MPA, non-carriage discounted rate schemes could become the template for future content deals. This will have direct implications on several advertisement-skewed and reach-dependent genres, such as news and music. Channels in such genres might then remain feasible by converting to free-to-air. Launching new channels will become difficult and as a result, the industry could see rebranding and a frequent change in the programming mix of existing channels.

     

    MSOs: As carriage and placement revenues start to dry up, the priority for MSOs for the next 12 months will be to shift to establishing robust back-end systems for better subscription monetisation in phases I and II. Consequently, voluntary digitisation and reach expansion in phases III and IV could take a back seat. MPA in its report also points out that national MSOs have already invested and outsourced backend systems to renowned IT vendors, which need to now streamline the secondary point network in order to attain authenticated customer information and deliver strong customer support services.

     

    “Critical is the increasingly important need to successfully rollout trade prepaid services and rationalising content cost by identifying active paying subscribers which will address the current cash flow crisis and determine the future feasibility of an MSOs business model.

     

    As the industry shifts gears, we may see more consolidation of cable players which fail to invest and execute on establishing B2C processes,” says MPA.

     

    DTH: Over the last 30 months, the DTH industry had implemented a 53 per cent increase in its base pack pricing. Just when it seemed that rate hikes on base packs had hit a ceiling, the price hikes implemented by MSOs provided the DTH industry with additional headroom to undertake further price increases. In addition, with tiering of channels on cable, the value gap in the form of realisation per channel between cable and DTH operators will narrow, feels MPA.

     

    As per MPA, a lighter base pack for both cable and DTH will gradually result in the upselling of subscribers to high value packs, thereby boosting ARPU growth.

     

    Moreover, Star’s entertainment and sports channels have been key drivers for HD in India.

     

    MPA in its concluding remarks points out that acquiring Star’s HD channels on RIO makes it unfeasible for cable and thus enables DTH operators to push HD penetration aggressively for the next one year. Through attractive pricing and marketing, DTH operators could leverage HD to win some subscribers from cable.

  • South-based independent MSOs come together as South Indian Federation

    South-based independent MSOs come together as South Indian Federation

    MUMBAI: The independent multi system operators (MSOs) from the southern part of the country are working towards getting their act right in order to be able to successfully complete digitisation and also reap maximum benefits from it.

    In the latest, the independent MSOs from Bengaluru, Telangana, Andhra Pradesh, Tamil Nadu and Kerala met in the IT city to discuss issues relating to digitisation, deals with broadcasters and the carriage fees.  

    In the same meeting, the independent MSOs decided to form a South Indian Federation, which will be officially launched in Kerala in December.

    “The broadcasters deal differently with national MSOs and the regional independent MSOs. So, we have decided to come together as one team,” informs Sagar E Technologies executive director Sudhish Kumar.

    The federation will have 20 headends under it, currently catering to 30 lakh subscribers across Bengaluru, Telangana, AP, Tamil Nadu and Kerala.  “We have realised that coming together will not only help us get better deals from the broadcasters, but we can have representation even in the DAS task force,” he says.

    This group of independent MSOs is also looking at getting the value added services (VAS) on one platform, using one middleware. “A technical team has already been formed for this and they are working on getting the service in place,” says Kumar adding that having small number of VAS is not profitable. “If we come together, then we can attract bigger partners for VAS, which is an added revenue stream,” he informs.

    The independent MSOs in the south have realised that broadband is the biggest revenue spinner. “The ultimate goal of coming together is having a strong broadband infrastructure and consumer base,” concludes Kumar.

     

  • Carriage fee on a rise again?

    Carriage fee on a rise again?

    MUMBAI: Delayed digitisation of phase III and phase IV areas have marred the hopes of broadcasters, multi-system operators (MSOs) and the local cable operators (LCOs) alike. With implementation of digitisation in phase I and II, while broadcasters were enjoying the reduced carriage fees, MSOs were hoping for better on-ground collections with increasing transparency. But all this has taken a U-turn with the Ministry of Information and Broadcasting announcing 2016 as the year when India will be fully digitised.

    The MSOs who have invested heavily for digitising phase I and II markets are still waiting for reaping the benefits of it. And now even the broadcasters who saw some reduction in carriage fees (industry sources peg it between 10 per cent to 30 per cent) during the first two phases have gone back to basics.

    If one has to go by the Media Partners Asia (MPA) report, the cable TV industry has seen a 14 per cent jump in carriage fees. The reason for the jump in carriage fee could be many. Here are a few reasons which we understand could be playing a role in the changed carriage fee pattern:

    1)    Delayed digitisation: The MSOs have already invested heavily in phase I and II and have also borrowed money for phase III and IV markets. Now with the government announcing the final dates for digitisation as 2015 for phase III and 2016 for phase IV, MSOs fear that the LCOs will not increase their collections from the ground.

    2)    Low ARPUs: Even in phase I and II areas, the ARPU hasn’t gone up as expected by the MSOs. And so they haven’t been able to recover the money they had invested.

    3)     New channel launches: Broadcasters launching new channels need greater reach and visibility and so pay more in order to get carried by the platform and also to ensure that it is available to all the subscribers of the platform. This in turn sets a benchmark for the other players also.

    4)    Lack of transparency: Even though one of the aims of digitisation was bringing in transparency and addressability, both haven’t happened as yet. The cable operators have not been able to get the consumer application forms filled and thus, are still unaware of the choice of consumer. Also, there is still under declaration of consumers. 

    “This is true especially for news channels, niche channels and the new channels that have been recently launched. While the existing channels have not seen any hike in carriage fees, broadcasters that launched new channels in the different genres, right from GECs to regional to music and movies have seen a jump in carriage fees, which ranges from 15-25 per cent,” says a distribution head on condition of anonymity.

    Another source close to the development agrees and says, “Yes! The carriage fee for broadcasters launching new channels have gone up. This can be anywhere between 20-25 per cent, depending on the distribution strategy of the broadcaster and the visibility it is looking for.”

    Many in the industry blame the new channel launches for the increase in the carriage fee. “While for the news channels the carriage fee had seen a drop by 10-15 per cent, the new channels that are being launched every now and then, sets a different benchmark. Since broadcasters want better reach for their new channels, they pay huge sums as carriage fee to MSOs and this affects the news channels as well,” says a news broadcaster.

    Even at the recently concluded MIPCOM 2014, Colors CEO Raj Nayak during a panel discussion had stressed that there needs to be complete implementation of digitisation. “While in the phase I of digitisation, the carriage fees had come down by 20 per cent, it has now gone back to square one and this is a dangerous trend,” he had then said.

    Viacom18 group CEO Sudhanshu Vats feels no different. In his recent interaction with Indiantelevision.com he had said, “Carriage, rather than continually coming down, has begun to rise again in recent months.”

    According to India TV chairman and editor-in-chief Rajat Sharma, when digitisation kickstarted, news broadcasters expected consumers to get better quality channels and carriage fees to disappear. “For the MSOs, it is the carriage fee from the news channels that helps them sustain, since they pay the GECs huge sums for getting their programming on their platform,” opines Sharma.

    Unlike the expectations by many, carriage fees haven’t yet been abolished.  “When phase I of digitisation was implemented, carriage fees did come down in terms of what was being paid in the four metros. The national level MSOs saw the benefits of digitisation and passed on some of that benefit to broadcasters. However, with phase II, it hasn’t happened. On the contrary they are going up and extortionist demands are being made again. Perhaps because in other parts of the country the MSOs are in partnership with local or regional players who do not want to let go of carriage fees even though that was meant to be a natural outcome of digitisation,” informs NDTV executive vice chairperson KVL Narayan Rao.

    Rao further adds, “It is impossible for news broadcasters to withstand payment of high carriage fees. Other components of digitisation like buoyant and fair subscription revenues, have not kicked in either. Something needs to be done about these aspects immediately. Carriage fees in particular have to be rationalised.” Rao also pegs the carriage fee increase between 10-30 per cent.

    As for Focus Network group CEO Neeraj Sanan, carriage fee revenues for MSOs are likely to reduce. “However the carriage paid by a broadcaster to an MSO, will increase post first year of DAS due to aggregation at MSO level and the ever increasing number of channels,” he adds.

    Even the MSOs agree that the carriage fee has seen an upward trend. “This is true mostly for the new channel launches. Broadcasters want better reach for their new channels and are ready to pay more carriage fee for those channels. The new channels are seeing a hike in carriage fee by about 20-25 per cent,” concludes the MSO.