Tag: IDOS

LMO – consumer collaboration is key to successful digitisation: IDOS

GOA: Collaboration is the only way for the Indian digital industry to go forward – particularly if it involves the last mile operator (LMO) as well as the subscriber. This was the core of the opening of the Indian Digital Operators Summit (IDOS) 2015 organised by Indiantelevision.com along with Media Partners Asia on the theme of ‘Defining the Digital Future.’

Speakers at the summit, which is being held at The Lalit, Goa from 24 – 25 September, stressed that it was time to stop fighting with each other in courts or other forums and to move forward together since digitisation was inevitable.

Speakers in the opening session of IDOS 2015 were clear that though the government was the largest gainer by way of taxes etc, it could not be depended upon and it was for the stakeholders to move forward on their own if the Phase III and IV digitisation deadlines set by the government had to be achieved.

Describing the scenario as a marathon race, Viacom Group CEO Sudhanshu Vats said it was critical for all stakeholders to collaborate and yet compete at the same time.

The industry also needed to keep in mind the fact that the consumer is running ahead and everything depends and changes according to what he wants.

In order for the market place to evolve, it was imperative that all stakeholders moved forward in a collaborative spirit. The policy makers, unfortunately, are the last in this race as they are slowest. So frustration will set in if everyone looks to the government as the winner.

“Digitisation is being looked at myopically but it is necessary to look at it along with the consumer. Over the Top services will shortly take over in a big way. It is therefore important to realize that while each platform has a different technology, it’s important to keep pace. Players have to be pro-active and customise for all the 1.2 billion viewers,” Vats said.

Walt Disney India MD Siddharth Roy Kapur said it was important to see how consumers were rapidly moving from just a single screen scenario to usage of multiple platforms. “That is the reason why I prefer to use the expression ‘video content delivery business’ instead of television business. There is a strong need to put consumers at the centre of the whole media business,” he added.

However as a result of multiple screens coming in, the level of attention span per screen has been declining. “Stakeholders have to keep this in view while planning their strategies. Content creation therefore has to change accordingly and companies need to find ways to get the consumer to value the content,” he added.

He also stressed on the need for companies to look at each other as partners and move ahead to derive more value and average revenue per user (ARPU).

Hinduja Group’s Grant Investrade MD Tony D’Silva said his company had carried out various studies before launching their Headend In The Sky (HITS) platform – NXT Digital. “All these studies showed that the last mile operator, who had built this industry with his sweat and blood, had to be taken along, and the consumer was a key stakeholder,” he said.

It was clear that the first beneficiary through taxation, service tax, entertainment duty or licence fee was the government. However, the government has done little to support the industry. On the other hand, the second beneficiary was the broadcaster, which received 75 to 80 per cent of the revenues. “He therefore must play a key role in this journey,” D’Silva said.

Considering what these stakeholders – government and broadcasters – get, it was necessary that the two help other stakeholders if digitisation had to be achieved.

Digitisation will also help bring about transparency in a scenario where the LMOs had been declaring just around 15 – 20 per cent of their subscriber numbers.

NXT Digital has been designed in a manner in which the LCO/LMO does not lose proprietorship of their business and did their own broadcasting deals as well as pricing and packaging as per market rates. The HITS platform also enabled LCOs to obtain set top boxes at their own convenience with easy funding and set up local channels in order to compete with other digital platforms like direct-to-home. NXT Digital had worked out a fee of just Rs 50 per subscriber per month and is offering 500 channels.

It also ensured encryption at three stages: in the NXT system, at the LCO level and at the STB-end. GPS had been provided to the STB to ensure any movement was detected. It is therefore clear that the LCO has to be helped if Digital Addressable Systems (DAS) has to succeed. Perhaps the biggest problem was to get the consumer to pay, and the LCO needs to be aided in this task.

In a presentation of the present scenario, MPA executive director Vivek Couto said that it was important for stakeholders to get their act together as digital penetration was only at 50 per cent so far. “It is also necessary to remember that Phase III and Phase IV comprise a large chunk than the first two phases,” he added.

According to Couto, around 70 per cent of the content contribution was coming from players like Viacom, Sony, or Fox. Adding that the low rate of internet connectivity around the country was a major issue, he said, “The Indian pay TV business will remain competitive and reach its peak in the next three years, but research and collaboration is very critical for this.”

Indiantelevision.com founder CEO and editor-in-chief Anil Wanvari said in his opening remarks that in order to meet their targets, stakeholders had to have commitments and take tough decisions. “However, the large number of legal cases and problems of agreements between various stakeholders must make them realise that DAS will not succeed in this manner,” Wanvari emphasised.

At the same time, Wanvari was also of the opinion that LCOs and LMOs had to change and forge partnerships in order to move forward.

The government on its part must do something about taxation along with opening up for greater foreign direct investment (FDI).

September 25, 2015
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.

November 18, 2014
IDOS 2014: SureWaves all set for the big digitised wave

GOA: Localisation is the new mantra, which businesses across the world are adopting to survive the highly competitive market scenario. Who would have thought of a paneer burger from the house of KFC?

Taking a cue from that, national advertisers are increasing their spending on local cable television channels as it garners high viewership due to the locally relevant content it airs. The aim is simple: to target consumers in specific geographic areas.

SureWaves MediaTech CMD Rajendra Khare during a fireside chat with Indiantelevision.com founder, CEO and editor in chief Anil Wanvari at IDOS 2014 spoke on ‘New drivers of monetisation for cable TV’.

Cable reaches the remotest of hinterland and the national advertisers are looking for growth from these markets. “SureWaves is already on its way to becoming a game changer as far as geo-targeted advertising in the country is concerned,” he said.

“The local content aired by the MSOs and the LCOs or the niche satellite channels has a great connect with the local audience. Not only in India but world over, people care more about what’s happening in their locality rather than what’s brewing at the national and global level,” he added.

SureWaves MediaTech, a Bangalore-based digital media-technology company, offers the SureWaves Media Grid, an integrated advertisement aggregation, content delivery, network management, media planning and reporting platform. SureWaves provides real-time data monitoring of ads, which has, for the first time, made cable TV advertising accountable.

Elaborating more about the company Khare said, “We build cloud based technology. We have our own devices, which we install at the studios of our channels partners.” The company positions a propriety device which is connected to the grid and the TV channels.

It is learnt that the company has partnered with many channels, irrespective of the people watching those channels. “Here the national advertiser, who wants a large audience, benefits the most as the business house gets combined viewership of end number of channels together,” he said.

As for the local channels, they are happy with the new advertising revenue coming in from the big players. The local channels till all these years never got access to the advertisement revenue from the national advertisers. So that problem is now getting solved. “We are solving the problems of the parties. Advertisers are experimenting with our platform,” he said.

“This is the robust monetisation model that channel partners sign with us. We are accountable and instantly can see whether the advertisements are aired or not,” he highlighted.

Stating the TAM report, Khare said that nationally these channels command around 4.5 per cent of the channels’ share and nationally it is top five channels. “The combined viewership of local channels is very large. As a standalone, these channels don’t get the national advertisers’ revenue as the national advertisers contribute a big chunk to the national television advertising spent,” he said.

With the digitisation process in full swing, the country is expected to see satellite channels increasing, and post digitisation, the solution provided by the company would be more sought after. “In the digitised era, more niche high definition content would be there,” he said.

Talking about the challenges, he agreed that it is problematic as some local broadcasters’ air pirated content. However, he further added that it is easier to screen content.

He concluded by saying that the company is working on a solution to create content for the broadcasters, who are its partner.

September 30, 2014
IDOS 2014: Industry solutions to distribution dynamics gain momentum

GOA: The India Digital Operators Summit (IDOS) 2014, the largest TV distribution summit in India ended with significant progress and a level of stakeholder unity on the way forward for digitisation in India, embracing voluntary and mandatory DAS, ground level pricing, interconnect and revenue sharing between LCOs, LMOs and MSOs and broadcaster support for standard, uniform pricing based on addressable deployment. Key stakeholders also agreed that it’s critical to further improve hygiene in Phase I and II of DAS while various ecosystem entities, including DTH pay-TV operators, domestic STB manufacturers, alternative TV distribution platforms (HITS, Free Dish) along with the cable fraternity agreed that ahead of the delayed DAS mandate, voluntary DAS has legs in Phase III and Phase IV.

IDOS 2014 had a full attendance of the who’s who of the industry with more than 300 professionals from the digital TV landscape making their way to the beautiful picturesque resort of Hotel Leela in south Goa.

The summit which kickstarted with the biggest opening night party organised by HBO on 25 September, saw some eye opener facts presented by Media Partners Asia executive director Vivek Couto on the current status of Indian cable TV industry. He said, “Out of the 262 million households in the country only 162 million houses have a TV. Of this, 27 million is taken up by the free to air service providers such as Freedish via satellite and 7 million by terrestrial DD, while the rest comes under cable and satellite.”

He also informed the gathering that over Rs 32000 crore has been invested in digitisation since 2005 with a bulk of the investment coming from the DTH operators followed by the MSOs and LCOs since 2011. Out of this, over Rs 11000 crore in the last 24 to 30 months has been invested by MSOs and LCOs.

He pointed out that while the cost of all the pay channels on a wholesale basis is Rs 922 to digital platforms, the highest pack price is Rs 550 which is an anomaly and needs correction. “Wholesale channel rates should be reflective of retail prices,” he highlighted. “The sector needs to move towards retail pricing to foster trust between broadcasters, cable TV operators, and LCOs. Retail pricing will make rates transparent. Competition amongst six DTH, two HITS, five national MSOs and several regional ones and the local cable ops will keep retail rates in check.”

Another important point that came out during the session was that carriage fees which were declining before the digitisation mandate have now reversed their path following completion of phase of phase I and phase II . “The carriage fee has gone up by 14 per cent on Q1 of FY15 over the previous corresponding quarter,” he informed.

Indian Television Dot Com founder CEO Anil Wanvari suggested the way forward for the cable TV fraternity. He said, “The first thing is to look at digitisation and pay TV with a changed mindset that it will be beneficial to all. The government could look at setting up a digitisation transition fund that will help educate, train, provide seed capital to go digital – this is specially relevant in phase III and phase IV areas. The fund could be discontinued once the transition is completed successfully, say in the next four to five years. A mechanism needs to be put in place to reward people who follow the rules and ensure strict penalties for those who don’t.”

Apart from this, Wanvari also suggested that Subscriber Management System (SMS) should be set up with correct KYC details and bills be issued to consumers. The government or regulator could also look at laying down standards and tech specifications for set top boxes (STBs) which were in keeping in making the customer technology-future-proofed for at least three to four years and to ensure quality control. That’s if the mandate of made in India set top boxes is to become a reality. “The first wave of digitisation has seen low end zapper boxes being shipped in from China – of maybe not the best quality – and being dumped on to the Indian customer to meet the so-called deadlines in phase I and phase II,” he said. “Which is not fair on the lay customer who may have to go in for a new one in the not to distant future.”

“On the pricing front, industry could be allowed to price their content based on market demand,” Wanvari added. “The prepaid model as followed by DTH with recharges being made available from your kiranawala (neighbourhood store) or paanwala will allow for more transparent collection from the ground for MSOs and the cable sector. The base pack price could rise; and content costs on cable could be brought on a parity with DTH. On the other hand, different packages could be made available to the consumer.”

One key take away from the three day summit was the fact that right from the broadcaster, to the MSOs, DTH operators and also a few local cable operators, no one is happy with the delayed digitisation. The captains of the industry expressed similar opinion to what the Telecom Regulatory Authority of India chairman Rahul Khullar has been airing on several occasions, that ‘delayed digitisation sends out a wrong message to the world and helps no one.’

Many also felt that the Average Revenue Per User (ARPU) needs to go up from the current Rs 150 to Rs 250-Rs 300. “ARPUs can see an upward trend only if there is trust amongst the various stakeholders,” said IndiaCast CEO Anuj Gandhi.

Star India president and general counsel Deepak Jacob during a session suggested putting together a commercial model which is uniform. While Siti Cable CEO VD Wadhwa opined to opt for voluntary digitisation, if the broadcasters and LCOs support the MSOs.

“IDOS is a great platform for the industry to express their point of view, which for this year was delayed digitisation. I am very pleased with the discussions and the quality turnout at IDOS,” said Wadhwa.

“As a first timer, I got to learn a lot through all the sessions that were conducted. Given a chance, I will keep coming back,” said Scripps Networks Asia Pacific managing director Derek Chang.

“The session on STB was very informative and there is no other platform where all the stakeholders can meet and discuss the issues related to the cable TV industry,” said Times Television Network MD and CEO MK Anand.

The highlight of IDOS 2014 was the closed door interaction with TRAI chairman Dr Khullar via videoconference with the various industry stakeholders.

September 27, 2014
IDOS 2014: MCOF’s vision for DAS phase III and IV

GOA: Maharashtra Cable Operators Foundation president Arvind Prabhoo has expressed complete dissatisfaction at the extension of the digitisation dates in phase III and phase IV. While the Information and Broadcasting Minister Prakash Javadekar has said that the delay in digitisation is because he is looking at indigenisation of set top boxes (STBs), Prabhoo feels that even before the Indian STB manufacturers come up with their quality boxes, the international vendors will start chipping in boxes, which will be over priced.

According to Prabhoo, the postponement also sends a signal that there is a dichotomy between the regulator and the industry. The MCOF president was expressing his views during the just concluded IDOS 2014 in Goa.

“The worst impact of this delay will be on the last mile owners (LMOs), who will now face stiff competition from the direct to home (DTH) players because they will now have almost a year or year and a half to start marketing their product,” informs Prabhoo.

The LMO, for Prabhoo is an entrepreneur “and we have been saying this since last year.”

Many LMOs have started realigning themselves at district level as well as state level. “The last mile owner has realised that alignment and realignment will happen and it is good for him. We know that a lot of LMOs, who have a good standing in the community will get funds for fellow LMOs,” opines Prabhoo.

He also highlights that a lot of technology solutions will be provided by LMOs, which will be much cheaper than what is currently available. “And if we adopt technology, I think it will become a great time for LMOs and independent headend operators.”

Prabhoo through IDOS 2014 has also requested the Telecom Regulator Authority of India (TRAI) chairman Rahul Khullar to open up the ISP licences for cable television owners. “It is after this that the broadband and digital India dream can materialise,” he says.

He opines that while the extension has been given, the challenge can be seen as an opportunity. He is aware of the challenges, considering the different demographics for phase III and IV markets. “There are almost 5000 headend owners; we might have to cut this down to maybe 50 headends. That’s going to lead to unemployment. Also revenue differentiation will be there,” he highlights.

Prabhoo disagrees with the perception that the ARPU is less. “There is going to be a viability concern because of transportation cost. We have requested the TRAI chairman to also allow us to use the national optical fibre system and subsidise rates. If that happens and cost of transportation goes down then these headends could be a viable proposition,” he says.

According to him, players who were earlier in the B2B space and have applied for a DAS licence, when they begin to expand in phase III and IV areas, they won’t have any legacy issues. MCOF claims to have helped the LMO and independent headend owner by tying up with telecom skills department to re-skill employees because digital era is different than their analogue culture. “We are revenue driven and not valuation drive. So, those who want to see actual revenues coming in, should partner with us,” says Prabhoo.

Learning from the mistakes of phase I and II, this time it will emphasise on data services. One of the major issues was about customer ownership and MCOF says that this will keep the ownership with the LMO with a fee based OSS and BSS services such as headend operation, billing etc. “We are looking at reducing a tier in the broadcaster, MSO, LMO, customer tier thus enabling lower MRP and much higher revenue share to the LMOs,” he concludes.

September 27, 2014
IDOS 2014: News broadcasters still struggling to make money

GOA: The news television industry has been witnessing losses for several years now. To throw some light on what are the hurdles and what needs to be kept in mind while forming regulations, NDTV vice chairperson KVL Narayan Rao, Times Television Network MD and CEO MK Anand and BBC World News India COO Naveen Jhunjhunwala took the stage at IDOS 2014 for the session ‘News Television- a specialised beast’ that was moderated by Castle Media founder Vynsley Fernandes.

The session took off with a keynote from industry veteran Rao, who spoke of the issues facing the most competitive news industry. “News has always been a high cost, low return industry and since 20 years, there has been an unholy dependence on advertising revenue in an environment that doesn’t seem to be changing,” he said while adding that one needs to consider the importance of news in such a landscape. “Not a single news operator in this country is making money,” he stressed.

The recent extension to digitisation has also not gone down well with Rao, who just this week stepped down as the president of the News Broadcasters Association. “Digitisation was to finish by this year but has been extended till 2015 and 2016. To say the least, I am very disappointed with this decision,” he said.

As far as regulations are concerned, he says that content should always be kept separate from carriage. “The business environment that we are operating in is one where we pay a large amount of money as carriage fees. For most news broadcasters, one third of operating cost goes as carriage fees while 90 per cent of revenue is generated from advertising and in some cases 100 per cent. All news broadcasters today pay a large amount as carriage fees and it is a terrible burden that we find impossible to bear,” said he. All the stakeholders must see the way the news channels operate and not look at regulations in isolation.

News channels during primetime end up showing only panel discussions because of the lack of resources. The western countries have subscription revenue of up to 60 to 70 per cent. All these issues were meant to change after digitisation with subscription revenues kicking in and carriage fees eventually coming down. However, Rao hopes that the new government helmed by Narendra Modi would do all it can in its new ‘Digital India’ plan.

He spoke of the statement by the Editors’ Guild regarding denial of access to journalists by government and increasing number of significant government authorities taking to social media to give information. He says that this serious issue needs to be addressed since news is not about press releases but rather about ‘ferreting information out’.

Adding to the issues faced by the industry was Anand. He said that the last six months have seen a loss of collective bargaining due to the deaggregation paper by the Telecom Regulatory Authority of India (TRAI). “The paper has hit news broadcasters and unless one diversifies into entertainment, it is difficult to survive,” he said. In order to make money, the idea is generally to go heavy on branding and marketing and create an aura around the channel. The lopsided ad sales revenue also adds to the woes.

Jhunjhunwala said that the BBC has been broadcasting news for decades and the technological advancements have allowed it to make it smoother and more cost effective.

The ad cap has also hit them hard by restricting advertising air time to 12 minutes per hour. Here, the panel agreed that there are times when channels go live for hours without showing any ads and there is no provision to make up for the lost time. Fernandes questioned that in such a scenario, could there be alternative sources of revenue that can be put into use. Rao said that now, to monetise news one needs to generate revenue through different streams such as sponsorships and associations. “But how can you not have subscriber revenue?” he questioned.

Fernandes then questioned if there should be a limit on the number of channels that exist to which Rao said that the government should not curtail the number of channels because it is a free market. However, he feels the politicians and political parties should not be allowed to be in news.

Anand said that the regulator could think about regulating carriage fees with some focus on news channels. He also pointed out that a decade ago, ad spots on news channels were sacrosanct but today it is being sold at one third the rate.

Jhunjhunwala said that the government could look at raising the FDI limit on news to bring in more investment. There were talks of raising it to 49 per cent but no one has addressed the issue.

Rao finally concluded by saying that though the digitisation deadline has been extended it will hopefully iron out things.

September 27, 2014
Siti Cable commercially rolls out its DOCSIS 3 broadband service in Delhi NCR

GOA: Delayed digitisation is the hottest topic of discussion in the cable TV corridors.

With digitisation comes the hope of increased Average Revenue Per User (ARPU) and also the realisation that it is broadband that will help the multi system operators (MSOs) to increase their ARPUs.

Siti Cable is doing just that. The MSO, which for the last two months had been piloting and testing its DOCSIS 3 technology in the Delhi, NCR region, has now officially launched it in the region. Confirms Siti Cable CEO and executive director VD Wadhwa, “Yes, we have commercially launched the service in these areas.”

The MSO though has started with Delhi-NCR; it will soon take the service to every city where it has a subscriber base of more than 50,000.

It is estimated that the MSO is investing anywhere close to Rs 35 lakh to Rs 40 lakh in markets with 50,000 subscribers. According to Wadhwa, as a thumb rule, of every 100 cable TV households, close to 10-15 per cent convert to broadband households. “We are taking the figure at 15 per cent,” he says.

“Upgradation of homes passed cost close to Rs 500 per subscriber. So if, of the 100 households, 15 per cent opt for broadband, then we are looking at an investment of close to Rs 5000 per subscriber,” he informs.

The speed for DOCSIS 2 will go up to 40 mbps, while for DOCSIS 3 will go up to 100 mbps. As for the pricing, Wadhwa says, “Our pricing will be highly competitive. We are just in the phase of finalising the tariff plan. We will have different packs for different subscribers.”

September 27, 2014
IDOS 2014: ‘Digitisation delay is good if industry fixes issues’

GOA: The cable TV industry, which had earlier expressed disappointment over the government’s decision to postpone cable TV digitisation in phase III and IV, now believes that delay in digitisation is good if the industry, after getting a breathing space, fixes various issues, which it witnessed in the phase I and II.

The extension would not strain the financial health of the industry as the need of the hour is to see digitisation on track after the timeline shift and create value and increase the Average Revenue Per User (ARPUs).

Some experts feel that the additional inventory carrying costs and investments in infrastructure that the industry is incurring now, would impact their topline and thus have a brunt on the bottomline.

Also, with the stable government now at the centre led by NDA, media companies can raise capital and the industry is quite bullish about the valuation benchmark.

The government had previously set a target of digitising the cable TV services in the entire country by December 2014. Information and Broadcasting Ministry recently issued a notification as per which the deadline for the areas which came in phase III was extended from 30 September 2014 to 31 December 2015 and phase IV for December 2016.

“Delay is never good. But, if one implements the learning from the first two phases, it may have a positive impact. Phase I and II haven’t so far reaped any fruits with zero value creation. The players are still fixing billing and other issues,” says HSBC Analyst Telecom associate director Rajiv Sharma, during a panel discussion on ‘Ecosystem Economics of the Future’ in Goa at IDOS 2014.

According to Exponentia Capital principal Neeraj Bhatia, the delay is a welcome development. “It was required considering the ground reality. The earlier deadline was impractical,” he adds.

“The earlier phases involved capital expenditure as more revenues were flowing through the system. MSOs were collecting less and paying more, as a result of which they saw no net benefit. So we started to question the business model and whether digitisation had anything for MSOs,” opines Bhatia.

“We are not ready for phase III and IV,” he informs.

The delay has given a breathing space to the MSOs to figure out the next step. “One needs to take a stand on various economic issues. This includes gross billing among others which impact people,” says Axis Bank group head strategic corporate group Salil Pitale.

Citing reasons for the problems faced in other phases, Sharma informs that the cable industry is a fragmented one with just six big MSOs, around 6,000 other MSOs and 70,000 LCOs.

According to the experts, value creation comes from customer ownership and thus investors will continue to invest.

The rollout of the next two phases, after the delay will be smoother as it could bring some consensus amongst stakeholders. In phase III and IV, the stakeholders should ensure that revenue comes from day one and not after two years, opines Sharma.

“While there was a tug of war between the MSOs and LCOs in the earlier two phases that need not be the case going forward. Both need to look forward and pool money,” says Bhatia.

The extension has also thrown an opportunity for MSOs to opt for voluntary digitisation, feel the experts.

There are a few financial investors who are getting excited about the growth story that digitisation proposes. “Delay is good as it also allows the MSOs and LCOs to resolve the billing issue,” explains Bhatia.

There are mixed opinions on the extension of digitisation deadline. The big question now is: ‘Can the cable TV industry fix the issues in the next one year by executing the lessons learnt?’

September 26, 2014
IDOS 2014: Trust amongst stakeholders holds the key to increasing ARPUs

GOA: The broadcasters, multi system operators (MSOs) and the local cable operators (LCOs) need to trust each other to solve most of the issues that affect the cable TV industry. While the dialogue between the trio has begun, there is still lack of trust and this has to change, is what the industry stalwarts expressed at the ongoing India Digital Operators Summit (IDOS) 2014, organised by Indian Television Dot Com and Media Partners Asia.

“The current reality is that the players within the chain have at least started talking to each other, which was missing earlier. So with digitisation, this is one of the most positive moves that has happened,” says IndiaCast CEO Anuj Gandhi. He also emphasises on the need for the MSOs to resolve the jigsaw puzzle with the LCOs to ensure better Average Revenue Per User (ARPU). “The MSOs need to get the LCOs on table and understand their issues,” he says while adding that the last mile needs to be seen as partners in the cycle.

Agreeing with him was Hathway Cable and Datacom MD and CEO Jagdish Kumar, who feels that the last mile needs to get returns on the services he provides. “But that will need collective work. We need to grow the ARPUs from the current Rs 180 to Rs 250-Rs 300,” he says.

For Siti Cable CEO VD Wadhwa, the reason for lack of trust lies in the history of cable television ecosystem. “Historically, the understanding has been that the last mile retains a large part of revenue. Now with digitisation, underdeclaration is not possible and so the LCO is suffering from fear psychosis that he will lose his subscribers,” he says.

The Siti Cable CEO also feels that there is a need for MSOs to give the LCOs access to the SMS so that they can feel a certain ownership towards their customers. “There is a need for a policy which is well documented, transparent and honoured,” he adds.

From the time government announced digitisation of cable TV homes, it is the regulations and the courts that have been driving the business. “Let’s not get the regulator involved in areas where we can resolve the issues. We need to put together a commercial document which is uniform across,” opines Star India president and general counsel Deepak Jacob.

One of the biggest concerns for the stakeholders is increasing the currently low ARPU. “The DTH industry has done well on this front. While we started with Rs 150 in 2008, we have gone up to Rs 200-Rs 220 in phase III and phase IV markets, where the cable industry still has a ARPU of Rs 150,” informs Videocon d2h CEO Anil Khera. He also feels that the cable industry cannot have different rates for different markets.

The DTH industry faces a huge threat from Freedish, which is becoming a great proposition in phase III and phase IV. “I see more threat from Freedish, if the platform gets the general entertainment channels onboard. According to me, all these channels should be made ‘pay’ on Freedish as well,” opines Khera.

While talking of the threats the industry currently faces, Jacob also highlights the threat that comes from state governments playing a role in the content and distribution market. “The Tamil Nadu and Punjab markets are pretty much locked because of the monopoly of the state government in the region. The disease is growing, with more states looking at the same. We should ask the government to implement recommendations to curb this,” he says.

Another point discussed during the session on ‘Unity and the way forward for the next five years’ was if the DTH operators have an opportunity in phase III and phase IV markets with the extension of digitisation dates. Says Dish TV CEO RC Venkateish, “DTH in phase I and II continued doing what it did when it had started. But phase III and IV is a different kettle of fish and so we at Dish launched Zing. The delay means loss in momentum.”

Hathway is looking beyond cable in the phase III and IV markets. “We are looking at broadband as the margins from here are far higher than cable,” informs Kumar who says that while broadband currently is at 20 per cent, it will increase significantly in the future.

As for increasing ARPUs, Gandhi suggests that there is need to look at the basic packs. “We need to work on making the basic pack light, so that consumers see value in the higher packs,” he says. According to him, the MSOs like the DTH operators should start getting into a multi-year or five year deals with broadcasters, rather than the one year deal that they have currently. “This will help him sort his content cost and also give them more confidence, which they can then pass on to the LCOs,” opines Gandhi.

The MSOs have taken a lot of debt for digitising phase I and phase II. “Now when we approach the investors, we will need to have a roadmap for them to invest,” informs Kumar.

Can phase III and phase IV be underestimated, answers Jacob, “We shouldn’t underestimate these two phases. The households in phase III spend close to Rs 300-Rs 350 on telecom and VAS services, while phase IV spends some Rs 250 on it. And these households are trying to watch all the content on their phone. So this is the matrix the cable TV industry should follow.”

September 26, 2014
IDOS 2014: How can the pay TV industry be made better?

GOA: India Digital Operators’ Summit 2014 kicked off at The Leela in Goa on 25 September. Opening the conference, Indiantelevision.com CEO and editor in chief Anil Wanvari and Media Partners Asia (MPA) executive director Vivek Couto gave a brief on the state of the TV nation and transition to the broadband digital economy.

Wanvari highlights how the state of the industry was a few years ago and what it has become now after the advent of conditional access system (CAS) and digital addressable system (DAS). Content makers aka broadcasters have been demanding more revenue from the pay TV industry. While the capex and opex for them has been high, the return continues to be low. The MSOs and DTH operators have been investing to expand their headends and build subscriber base respectively. “While it is a good business now, the real question is if each one of us is willing to make it a great business?” he asks.

In order to strengthen the business, Wanvari recommends a few suggestions that could help grow the industry. The first thing is to look at digitisation and pay TV with a changed mindset that it will be beneficial to all. The government could look at setting up a digitisation transition fund that will help educate, train, seed capital and reward people who follow the rules and ensure strict penalties for those who don’t.

Subscriber management system (SMS) should be set up with correct details and billing of the services provided to customers. The government could also look at laying down minimum standard rules for set top boxes (STBs) to ensure quality control. His final suggestion is to leave pricing to the market rather than initiate 10 to 15 per cent price rise every now and then.

Providing a glimpse into MPA’s study on the pay TV industry in India, Couto says that out of the 262 million households in the country only 162 million houses have a TV. In this, 27 million is taken up by the free to air service providers such as Doordarshan and Freedish while the rest comes under cable and satellite.

Couto highlights that over Rs 32000 crore has been invested in digitisation since 2005 with a bulk of the investment coming from the DTH operators followed by the MSOs and LCOs since 2011. Out of this, over Rs 11000 crore in the last 24 to 30 months has been invested by MSOs and LCOs. “India offers scale but limited monetisation,” he says. What digitisation will do primarily is increase transparency, addressability, tax collection and employment. Over 120 million STBs are needed over 10 years and nearly 47 per cent share of the total market will come through broadband.

The tiff between the three stakeholders continues with the LCOs fighting for revenue share, MSOs facing crash crunch and broadcasters worried about increasing carriage fees which the MPA report stated as having increased by nearly 14 per cent in Q1 FY2015.

In terms of scale, India struggles as the country with the lowest average revenue per user (ARPU) but it has one of the best channel services. Couto says that it is time for the industry to move to retail pricing than stick to wholesale tariff because the competition will keep the prices low. The need of the hour is for MSOs and broadcasters to come together and design packages, incentivise upselling, indentify opportunities for sub segmenting and create new genres. The key to which lies in raising prices to consumers.

September 26, 2014