ITV

Tag: LMO

  • ‘A revolutionary year that was also one of the government’s total failure to control the broadcasters’

    ‘A revolutionary year that was also one of the government’s total failure to control the broadcasters’

    One healthy thing is that the industry is moving… maybe slowly in some areas, but it is definitely moving, which was not there earlier. The manufacturers lobby which had become stagnant are looking forward again. Fibre optical networks are spreading.

    New technology is coming, and words we had never used two years ago, like IPTV & Mobile TV, are now common usage. DTH has been launched already and this will give competition to the cable sector and they will be bound to improve their services. HITS is on the way and if it is operated on C band then it will be good for the cable industry, but if it is put on Ku band, that will kill the cable industry. That will be a disaster.

    If it is on C band, digitalisation will become faster, but if it is on Ku band, all the DTH players would start giving out their signals, because they are already on Ku band. And the consumer will also suffer because one after another DTH players will come and ask for money for their channel bouquets if the subscribers want them, so this will hurt the latter’s interests.

    But I must say that Trai has given importance to the last mile operator, and this has been a major positive this year, they have realised the worth of the LMO and understood that it is the last mile people who have created the industry. They know now that the LMO is the one who gives the connection and actually works in the field.

    Thus, to get 25 per cent to carry pay channels on the network was worthwhile. That was not there at all and that is a great achievement. You can say this is only in the CAS area, but a beginning has been made, that these people ought to get this much, which is a model now. So now we can take this forward and at least demand what we deserve. When voluntary CAS is extended to the 55 cities, we shall at least get some margin for letting them use our networks, based on this model.

    Again, Trai for the first time has worked out the pay channel rates. Rs 5 for CAS areas and even for the non-Cas areas they have set an upper cap and declared the prices. Yes, of course the broadcasters will protest because they do not want to be controlled. The problem for the cable operator is that he never, before this, knew what he was going to charge the customer, who also never knew what he was being charged for and at what rate.

    But the best came from the High Court, the order that CAS had to be rolled out. The courts, whether TDSAT or High Court or Supreme Court has been acting only in public interest, and two of the major decisions related to fixing the price of a sports channel, when Neo wanted to charge an astronomical price but was not allowed, and when the court upheld the government Act on sharing sports events of national importance with Doordarshan.

    But beyond the rosy developments, the two worst things that happened this year were failure to extend CAS, and the failure to control the broadcasters. And in fact non-extension of CAS is mainly due to resistance from broadcasters lobby. They have earned too much of money in a non-addressable system and wants the market to stay that way.

    I feel sad also that the government this year did not heed to our demand, the only demand, that we be given funds for going digital, which would have really helped, but that was turned down. It is small money and the government should have facilitated the LMOs by telling banks to make it easy for them to get small loans to facilitate digitalisation.

    For the government this was a year of failures on several fronts, I am a member on three government committees, and all three here failed to deliver because of lack of will of the government and the most dangerous development is vertical integration, creating absolute monopolies, and the governments failure to implement cross-media restrictions.

    As far as CAS is concerned, extension, even under voluntary effort will be good for the industry. But even if an LMO, say in a place like Kota in Rajasthan ushers in voluntary CAS, the broadcasters will not give him the decoders under one pretext or the other, saying that his SMS or some other system is not accurate and he is still under-declaring his subscriber base. The government has thus squarely failed to reign in the broadcasters on all fronts.

    In passing, I must say one thing: the image of the LMOs so far had been that we are rowdy, uncontrollable. But in a series of meetings the government has seen who is rowdy, the journalist broadcasters or cablewallahs and officials are now saying, at least the LMOs have some dignity! That is why the goodwill for us has increased in the government quarters.

  • ‘A revolutionary year that was also one of the government’s total failure to control the broadcasters’

    ‘A revolutionary year that was also one of the government’s total failure to control the broadcasters’

    After working for decades on the analogue system, 2007 was a huge learning year. Whether from the regulator or from the ministry’s side, or from the Prime Minister’s Office, this was a revolutionary year.

    The major thing, of course, was the implementation of CAS, though implementation was partial, but this implementation was a slap on the face of people who put in all their efforts to derail it. More than anyone else, even more than the broadcasters, the ones who tried their level best to stop CAS were the distributors of the MSOs.

    Broadcasters and distributors both lose out if CAS comes in, and the broadcasters are hit because they are earning both from subscription as well as advertisement, and now SMS revenue stream.

    One of the ugliest efforts for derailing CAS this year was the press conference and the false survey report shown by a section of the NGO called VOICE. They said 70 per cent of the CAS subscribers wanted to go back to the old ways, but now it is clear that the so-called survey had been sponsored by a broadcaster and everyone knows who that is.

    It is the advertisers who would have gained because as of now they do not know where their money is going and where they should actually put that in, and SMS in CAS regime would tell the real story. This is why various advertiser groups have come in support of Cas.

    From the content side, again this was a very important year. The viewers were very unhappy with news content and the government tried to do something but eventually failed.

    All these news broadcasters are launching channels every day not to inform the people but to have more and more power, sometimes using that power to blackmail politicians and officials. There is an attempt to capture the media and have clout. If they were serious news people, then one broadcaster would not launch two or three news channels. They are also now launching regional news channels because they want to capture power area-wise and rule there. Apart from earning money, they want to control the mindset of the people.

    The government’s attempts to control these news channels failed miserably because the channels formed a strong lobby against the Content Code suggested by the government. This shows that the government is able to control only the farmer or the last mile operator, the cablewallah. Because as per the Cable Act, only the LMO will be targeted, whether it is for programming content that is unacceptable or the advertisements shown, over which last mile has no control.

    The LMOs do not have too much money, so they lose out in courts because they cannot hire top lawyers, and they cannot lobby with the government because they are not always qualified people or have a political clout. That is why they are the least heard, but this year, that is one big thing that has happened: the government, whether in the ministry or Telecom Regulatory Authority have at least started hearing us. I will tell you how.

    One of the most dangerous things that happened in this year is the total vertical integration of companies who have a finger in all the pies, being broadcasters, running MSOs, getting into DTH, IPTV and mobile TV. The government has failed to take steps against this monopolisation. Their officers are trying but the politicians are not allowing this.

    But two very important positives things happened this year, and if we have not started running, we have taken a few right steps. We are trying to control the broadcasters through some NGOs, and the government has started listening to us. They may not be doing much, but they are surely listening.

    One is the Content Code, and the second is digitalisation, which will help people watch more and more channels. The PMO has formed a committee on digitalisation. The other good thing is that the I&B ministry is trying its best to bring down the duties on the equipment, though finance ministry is not in a mood to listen.

  • WWIL in drive to acquire LMOs

    WWIL in drive to acquire LMOs

    MUMBAI: Wire & Wireless India Ltd (WWIL), the cable outfit of Zee Network, is on a drive to acquire last mile operators. The company is offering to cable operators a valuation of Rs 2,000-3,000 per subscriber. While WWIL will be a 51 per cent partner, the balance 49 per cent will be with the operators.

    “We want to expand the size of our network. We are making proposals to operators with decent size where we become partners with 51 per cent,” says WWIL CEO Jagjit Kohli.

    WWIL has acquired control over 5 Star which operates in Andheri, a western suburb of Mumbai, adds Kolhi. “We have also poached a few operators from Incablenet in Andheri East and others from multi-system operators (MSOs) are going to join us.”

    WWIL, which doesn’t have a presence in South Mumbai, is also targeting operators in that area. The MSO has linked up optic fibre and is keen to start operations in this lucrative part of the Mumbai market. The government has notified south Mumbai as the area where CAS (conditional access system) will kick off on 1 January.

    WWIL is also planning to launch a headend-in-the-sky (HitS) platform and has expressed its intent to broadcasters. “We are going to do HITS. This will provide us a wider footprint and hasten the pace for digitisation in the country,” says Kohli.

    The buzz in the market is that WWIL is booking seven transponders on Thaicom 5 for the HITS operations. When queried on this, Kohli declined to comment.

    The problem with HITS, however, is that broadcasters are reluctant to get into agreement with MSOs for providing their channels due to fear of piracy.

    Even as WWIL sweetens its proposals to rope in last mile operators, it remains to be seen how big the impact will be in the cable TV industry. If migration from rival networks take place, it will set the pace for a fresh bout of price and dirty wars on the ground. As Hathway Cable & Datacom managing director and CEO K Jayaraman had told Indiantelevision.com earlier in an interview: “As far as poaching of operators go, it is an open ground. Cable companies who focus on good service and have capital to create capacity will turn out winners. Competition is not a one-way street.”

  • 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.

  • CAS Ruling: MSOs now have the ammo to take on DTH

    CAS Ruling: MSOs now have the ammo to take on DTH

    It was one piece of news that cable TV networks were waiting to hear for long, too long in actual fact!

     

    Buffeted by potential competition from direct-to-home (DTH) operators, the timing of the Delhi High Court ruling that has ordered the government to enforce the rollout of conditional access system (CAS) in India within four weeks couldn’t have been more crucial. Tata Sky is preparing to launch in June and Dish TV, at present the only existing private sector DTH service provider, is expected to sort out programming contracts with Star India and SET Discovery by then.

     

    Cable TV can take DTH head on with its digital service. It has the firepower to do so, having built a rich battery of last mile operators (LMOs) who have serviced consumers over the years.

     

    Firstly, it can cobble together more channels than DTH can offer at the initial stage when the consumer is making the shift from analogue to digital. Already, some MSOs are making available a little under 150 TV channels. DTH operators, on the other hand, are limited by transponder space on satellite and can only ramp up under MPEG-4 compression technology.

     

    Second, cable TV can bundle broadband and, with preparation in future, telephony services.

     

    Third, it can develop interactive features with its fibre network.

     

    Fourth, it has manpower in place which can be quickly energised to push digital set-top boxes (STBs).

     

    Sure, MSOs and independent operators would have preferred the courts to have come up with the same verdict much earlier, after the government withdrew CAS in 2004. That would have given them a first mover advantage with a considerable time lag before DTH could kickstart operations.

     

    But there was one issue which had still to be sorted out for an effective rollout: LMOs felt insecure and did not back the rollout of digital cable. With competition from DTH looming large, they now have the support of their franchisee operators.

     

    But what if the verdict on CAS had come after Tata Sky’s launch and Dish TV’s content contracts had been stitched with Star and Sony? Cable TV operators would have been able to fight against DTH with two weapons in their armoury – analogue cable and voluntary digitalisation. On analogue cable, operators have the flexibility of dropping subscription fees drastically. With a price warrior in place through analogue service, digital cable could offer an alternate choice to consumers to combat DTH head on. On the flip side, the digital service would still remain unaddressable while DTH could provide consumers the choice of selecting channels and packages they want to pay for.

     

    Under CAS, cable operators do not have the flexibility of delivering pay channels on their analogue network. Consumers will have to select between DTH and digital cable for receiving these channels. They will, in other words, have to buy either a DTH or a cable TV set-top box.

     

    But delaying the direct knock-to-knock face-off between cable and DTH operators hardly serves any purpose. The business model for MSOs and independent operators can only get worse if no CAS is in place. Because the way out to stop DTH from invading into cable territory without a properly tiered and price-packaged digital service would have been possible only through rate drops. While LMOs would have been unaffected, the MSOs would have felt the pinch.

     

    Retooling business strategies and organising the sector is in the commercial interest of the cable operators. The hour has come to change the mindset and bring in quality and service-oriented practices. It will be meaningless to wish away competition from DTH and later IPTV providers.

     

    Several networks already have a stockpile of digital STBs. So far, they have been unable to place these boxes in consumer homes. Even Hathway Cable & Datacom, the more aggressive of the digital cable TV players, claims it has managed to distribute just 40,000 boxes. It would do better for operators to take a more positive view: that with CAS, digitalisation, either through cable or DTH or IPTV, would move faster.

     

    After all, the market is too big and diverse for any single player to cover it all.

     

    Ensuring a ramp up in supply of boxes, erecting a solid encryption system, and having a sound billing mechanism should be the focus areas. Also, it is crucial for operators to find more, better and premium content which can lure customers. They will also have to work out rental schemes and low up-front charges to subsidise the boxes in order to stay competitive with DTH.

     

    Another hard lesson to be learnt from this is that investments on old technologies won’t help. For those who have put their money on analogue STBs, the chances of surviving the battle look grim. Yes, there is a market for free-to-air analogue service. But no, not for analogue STBs as that will limit the channel offerings at a time when supply is growing rapidly.

     

    There will be competitive pressure for cable operators to upgrade their networks and services. Territorial monopolies will end and cable operators will also have to fight amongst themselves for retaining or acquiring subscribers.

     

    DTH, of course, retains one advantage. It has a national footprint while CAS is limited to the four metros in the first phase. This will give DTH economies of scale, but then it will still face the big hurdle of drawing in consumers to buy a box in the non-CAS areas.

     

    By bringing in CAS, the MSOs realise the entire business model changes in favour of them. Gaining control over the entire value chain across the network and having an addressable system will pump up valuation of cable companies and draw in global investors.

     

    The green signal on CAS couldn’t have come at a riper time. If there is any year which can drive digitalisation forward, this is it. In June-July, ESPN Star Sports will show live the football World Cup. The other key properties on the roster are ICC cricket Champions Trophy in September and the cricket World Cup early 2007 (both events on Sony).