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Written By Seema Singh
(Seema today is senior manager – PR & Communication at the Broadcast Audience Research Council. She wrote this article in 2013.)
Posted on : 05 Dec 2013 09:45 pm
MUMBAI: With no one giving them any guarantees about their long term survival under the government-mandated DAS regime, small time local cable operators (LCOs) are banding together as cooperatives in pockets nationally, agglomerating funds, and setting up their own headends. From Bengaluru to Kolkata to smaller towns, this is being mirrored across the country. Digitisation has spurred a new wave of entrepreneurialism in the cable TV business.
“Analogue cable TV spread like wildfire in the 80s and early 90s thanks to small time business men who invested and toiled away to deliver satellite TV via cable to homes,” says a cable TV industry observer.
“Now digitisation in its current form is designed to kill those very last mile operators, big or small,” points out Maharashtra Cable Operators Federation (MCOF) president Arvind Prabhoo.
“Some have given up and have joined hands with the MSOs, fearing the huge investments needed for digitisation and the backlash from the national MSO,” says the cable TV industry observer. “But don’t expect all the guys who have built the cable TV industry to what it is today to yield without a fight; hence the new wave of entrepreneurialism.”
Take the case of the Bengaluru boys. 70 independent cable TV operators got together to set up their own cable TV headend and distribution infrastructure in March 2013.
Explains one of the members – Sagar E Technologies’ executive director Sudhish Kumar: “There were two reasons: digitisation and revenue share. We had at several instances raised voice against the MSOs with regards to billing, ownership of set top boxes (STBs) and ownership of consumers. The TRAI suggested revenue share model showed that the revenue shared between the LCOs and MSOs will be 35:65 or 40:60. We were being given a small pie. The same was the case as far as cable TV carriage, placement fees or value added fees. We were to get nothing.”
Branded as Mirai Communication, the consortium is registered as a private limited company and has 10 directors. Its headend is located in Electronics City, Bengaluru. It is through this that the operator provides feeds across Bengaluru. “In Bengaluru we cover areas like: Central Bengaluru, Central Railway Station, Whitefield and ITPL among others,” informs Kumar.
And Kumar says its headend is future-ready technologically. “We have a Harmonic headend, costing Rs 3 crore, with a carrying capacity of 500 channels.”
Some 50,000 STBs imported from DTM, China with CAS from NSTV and SMS from Magnquest, have been seeded amongst its subscribers and the plan is to take the number to one lakh soon. Since some of the LCOs in the joint venture were link operators for the major MSOs in Bengaluru, their boxes have been replaced with the Mirai Communication STBs.
“These are standard definition high quality MPEG4 boxes with one GB of DVR,” informs chief technology officer Sriram. The price tag of each box is between $16 and $19 (around Rs 1200). The final cost works out to Rs 2000- 2500. This includes CAS, cost of headend, import duty and the cost of STB.”
Issues with DAS implementation and revenue share got us together to setup our own headend says Sudhish Kumar
The company has spent close to Rs 30 crore on the whole setup, which includes infrastructural help from Tata Teleservices, using the optical fibre it has laid across the garden city. “Though we have our own hybrid fiber-coax (HFC), we are using almost 400 km of Tata Teleservices underground OFC, since maintaining the network across the city is a huge task. It has given us drops at several points across the city through which the signal is made available to homes,” says Kumar.
So what are the challenges the group has faced? “Well, the current 10 directors got along to form a team. We then proposed what we were planning to do to others in the city. It was a challenge to bring everyone to come together, but it has worked out well since,” he informs.
Each of them was asked to choose between acting as a collection agent by becoming a link operator for a national MSO becoming an owner by becoming a part of Mirai Communication. “Though it earlier seemed like a herculean task, with 70 operators coming together, we realised that we had to pay only Rs 2000-2500 per box. We were anyways paying Rs 1000-1500 to the MSOs for seeding boxes. So, now by paying extra Rs 1000-1500, we could own the STB and also keep our consumers intact,” explains Kumar.
It was the Hyderabad based Fibre Optics that offered a one-stop solution and the challenge has not yet ended. “It is an ongoing task. We have managed to get feeds from all broadcasters. We are paying them for one lakh subscribers, when currently we have 50,000 subscribers. But, we hope to seed more boxes soon,” adds Kumar.
What is the revenue share between the 70 cable ops who have formed the consortium? “Well! It is simple. The operator gets a share against the active boxes which are part of his own subscriber network,” he informs. Mirai Communication has started generating bills. “The revenue has started rolling out now,” he informs.
Bengaluru’s operators are not the only ones, who have come together to setup their own headend. Following their footsteps are the 100 cable operators from Kolkata that recently announced the setting up of ‘Bengal Broadband’. As reported by Indiantelevision.com, the new entrant will be functional from FY2015 (LCO’s form ‘Bengal Broadband’ to be effective from FY15).
Says Prabhoo, “LMOs all over India like in Bengaluru and Kolkata must group together and form a co-operative model in such a way that even the smallest LMO can survive and sustain. LMOs must register under small scale industry so that they can avail of collateral free bank loan up to Rs 1 crore.”
We have seeded standard definition high quality MPEG4 boxes with one GB of DVR, informs Sriram
While the State Bank of India already is providing such facilities, MCOF is also in talks with IDBI Bank and Canara Bank to offer the same.
“Time is running out for the MSOs and if they do not learn to act fairly soon enough then many co-operative headends will come up in most cities of India. One may find another 100-200 headends coming up with 200-300 different cooperatives formed and that will continue for a year or two and then there will be consolidation. And I see it happening. These are large cooperatives with a 500,000 or million universe,” adds Prabhoo.
Kumar points out that they are already in talks with both independent MSOs across India and also LCOs in Mumbai, Delhi, Nasik, Kerala, Chennai, Hyderabad and Gujarat for setting up more such co-operative headends. “We are in talks with independent MSOs and asking them to collectively set up one headend for the entire country,” he concludes.
Change as we say is the only constant. Even in cable TV land.
