ITV

Tag: MSO

  • TRAI advises govt to aid TV infra sharing, ease ‘permissions’

    NEW DELHI: The Central Government should encourage sharing of infrastructure, wherever technically feasible, in TV broadcasting distribution network services, on voluntary basis including sharing of head-end used for cable TV services and transport streams transmitting signals of TV channels, among MSOs.

    In its recommendation to infrastructure sharing in the broadcasting sector, the Telecom Regulatory Authority of India said the MSO registration condition regarding ‘having an independent digital head-end of his own and provide digital addressable cable services from his head-end’ should be suitably amended so as to enable sharing of head-end.

    The Headend-in-the-sky (HITS) or the MSOs should be allowed to share the HITS platforms on voluntary basis, in flexible ways, for distribution of TV channels. The sharing of transport streams transmitted by HITS platform, between HITS operators and MSOs should be permitted.

    Direct-to-Home operators willing to share DTH platform and transport stream of TV channels, on voluntary basis should be allowed to do so with prior written intimation to the Information and Broadcasting Ministry and TRAI to ensure efficient use of scarce satellite resources.

    The distributors of TV channels should be permitted to share the common hardware for their Subscriber Management Systems applications and Conditional Access Systems applications.

    While sharing the infrastructure with another distributor of TV channels, the
    responsibility of compliance to the relevant Acts/ rules/ regulations/ lic·ense/ orders/ directions/ guidelines would continue to be of each distributor of TV channels independently.

    The recommendations are the result of a reference from the Ministry of 29 April 2016. The Ministry had also sought recommendation of the Authority on the amendment that may be required in the Cable TV Networks (Regulation) Act 1995 and Rules made thereunder to facilitate the infrastructure sharing.

    The Authority examined the issues in sharing of infrastructure in TV broadcasting distribution sector comprehensively for all types of predominant TV broadcasting distribution networks. TRAI undertook a comprehensive consultation with the stakeholders by issuing pre-consultation paper, consultation paper, and conducting an open house discussion with them before finalizing its recommendations on “Sharing of Infrastructure in Television Broadcasting Distribution Sector”.

    At the outset, TRAI said TV broadcasting sector has witnessed tremendous growth in the last decade. There has been an exponential increase in the number of satellite TV channels.

    The objectives of the recommendations are to ease policy environment for facilitating sharing of infrastructure in TV broadcasting distribution sector on voluntary basis. The sharing of the infrastructure in TV broadcasting distribution sector would not only help in enhancing available distribution network capacities but also would result in reduced Capital Expenditure (CAPEX) and Operative Expenditure (OPEX) for the service providers thereby bringing down the price of broadcasting services to subscribers.

    In addition, it would lower the entry barrier for new service providers and provide space on broadcasting distribution networks for niche channels- necessary for satisfying the diverse needs of general public – to reach targeted customers. Lowering of entry barriers in the distribution space could propel competition in the market and more choices to consumers due to presence of multiple operators in single territory.

  • Don’t compete with Den Enjoy, Delhi HC restrains two MSOs

    NEW DELHI: The Delhi High Court has restrained Omeshwar Singh and UCS Broadband Company from “commencing any business which directly competes with the business” of M/s Den Enjoy Cable Networks Private Limited till the next date of hearing.

    Justice Vibhu Bakhru also ‘directed’ Den Enjoy to “take the necessary steps to invoke the Arbitration Clause.”

    While issuing notice to the respondents and listed the matter for 11 May 2017, the respondents were asked to file their reply within two weeks, and a rejoinder if any could be filed within a week thereafter.

    The Court, in its order of 21 March 2017, also noted that “it appears that Omeshwar Singh is attempting to avoid his contractual obligations by using the corporate façade of UCS Broadband Company for improper purpose.”

    However, the Court also said this was only “prima facie view at an ad interim stage, and would not preclude the respondent from raising all contentions which would be considered at a later stage.”

    (Earlier, on 11 March 2017, the Court had “dismissed as withdrawn” a petition on this issue after Den Enjoy sought liberty to withdraw, and file a fresh petition.)

    Den Enjoy had filed the case against Singh for engaging in competing business in complete disregard of the non-compete terms of the Share Subscription Agreement. It was alleged that Singh, through his company UCS Broadband, not only obtained / applied for Digital Access permission but also approached cable operators of Den Enjoy and broadcasters for content.

    Omeshwar Singh is a founder shareholder, and had been Den’s agent from Lucknow. He presently holds 16.33 per cent shareholding in Den Enjoy.

    Omeshwar Singh’s counsel Vineet Bhagat had made an appearance as a result of a caveat filed by him through his counsel apprehending such a petition. The Court noted his argument that Section 27 of the Contract Act was clear that pre-compete condition was void and against the law. Bhagat said enforcement of any no-competition clause would amount to creation of a monopoly. He also argued that the agreement between Den Enjoy and the respondents was only related to Lucknow.

    Den Enjoy Cable Networks Pvt. Ltd. is a joint venture company (JVC) of Den Networks Ltd. The company is engaged in the business of providing cable television services in Lucknow.

    Den Enjoy, in a press release issued later, also said the order had come after its counsel Arun Kathpalia submitted that Singh is a director and one of the major shareholders of the company, and drew attention of the court to the clause 24 (non-compete) of the Share Subscription Agreement reached between the company and shareholders of the company.

    However, Singh told indiantelevision.com that he had resigned from UCS Broadband Company on 30 July last year and even sold his shareholding in October 2016.

    Singh also claimed that UCS was not using his Lucknow residential premises as its office, though the judge had noted that respondent’s counsel had not disputed this fact in Court. He said that he been living at different premises since April 2012.

    Meanwhile, a UCS Broadband official informed indiantelevision.com that it has already obtained a licence to operate in Tanda in District Ambedkar Nagar (Uttar Pradesh) which falls under DAS Phase IV.

  • Den demerger from Skynet approved, saving on AGR

    MUMBAI: Cable television service-provider MSO Den Networks has stated that it has received shareholders’ nod to demerge its broadband/internet service provider arm Skynet Cable Network. Den Networks, on 11 March 2017, wrote to the National Stock Exchange and the Bombay Stock Exchange Limited about the conclusion of court-convened meeting.

    According to a source among Den shareholders, the demerger had been prompted because of adjusted gross revenue (AGR) of eight per cent levied on the broadband business Skynet. Prior to the demerger, this AGR was being levied on Den as a whole whereas it is not applicable to cable TV.

    The company had convened a meeting of its shareholders following the orders of the National Company Law Tribunal for this purpose. “The scheme of arrangement has been approved by members of the company,” said Den Network in a regulatory filing signed by company secretary Jatin Mahajan.

    In September last year, Den Networks’ board had approved to demerge Skynet Cable Network. It was done to “enhance competitiveness and greater accountability”, “achieve structural and operational efficiency”, and to have “a focused attention in the ISP business,” it had said. Its broadband/ISP arm had a turnover of Rs 40.63 crore in FY 2015-16 and contributed 3.53 per cent shares in its total revenue.

    In the 11 March 2017 meeting, it stated thus: “This is to inform you that, pursuant to an Order by the Principal Bench of the National Company Law Tribunal (“NCLT”), New Delhi, a Meeting of the Equity Shareholders/Secured Creditors and Unsecured Creditors of DEN Networks Limited (“DEN”) has been conducted at PHD Chamber of Commerce, No. 4/2, Sin Institutional Area, August Kranti Marg, New Delhi- 110016 on Saturday, 11th March, 2017, for the purpose of considering and, if thought fit, approving with or without modification(s), the arrangement embodied in the Scheme of Arrangement of DEN or Transferor Company and Skynet Cable Network Private Limited (“SYKNET” or “Resulting Company”), through which Internet Service Provider (ISP) Business / Broadband Undertaking of DEN will demerge into SKYNET, a wholly owned subsidiary of DEN.”

  • Indian and Chinese companies tie up for pre-integrated VAS Ready STB

    Indian and Chinese companies tie up for pre-integrated VAS Ready STB

    NEW DELHI: Technology company specializing in digital media Corpus and Chinese digital products supplier Jiuzhou are to offer an STB solution bundled with Value Added Services (VAS) applications to enable operators monetize their digital investments and achieve faster ROI and profitability.

    This solution is available for MPEG-4 standard definition and high-definition version with ABV and NSTV conditional access systems.

    Thus, Indian cable TV Muti system operators can opt for the pre-integrated VAS Ready STB as it will increase their per subscriber valuation with revenue generation potential on each STB deployed.

    The STB comes with bundling of software for Adnet, Horoscope, Darshan, LifeStyle, Cooking, Box Office, TV Anywhere, and Real Estate.

    The pre-integrated VAS Ready STB from Jiuzhou offers ad revenue across STBs; additional benefits to user with VAS application; quick and easy development, rich UI and EPG; faster UI changes and a support system for STB software feature changes like barker channel, Mosaic, etc.

    Corpus Software Pvt. Ltd CEO Sachin Tummala said, “We are happy to be the trusted partner of Jiuzhou by delivering the right customer experience. This partnership is indeed proves fruitful in helping it expand the strategy for Indian MSOs both in terms of operations and delivering value to their subscribers.”

    Jiuzhou STB Business Unit GM Huangwei said, “Corpus is a forward-looking company capable of providing suitable and reliable solutions to blend with Jiuzhou products. As Jiuzhou localization plan goes deeper, we believe our mutually beneficial partnership with Corpus can be stepped to a higher level.”

  • Entertainment tax: MSOs & LCOs must collect & pay, HC halts Delhi ‘action’

    MUMBAI: The Delhi High Court has held that MSOs (multi-system operators) and LCOs (local cable operators) distributing television signals to subscribers directly are liable to collect and pay entertainment to the government.

    The court’s decision came on pleas filed by four MSOs – Hathway Cable and Datacom Ltd, DEN Networks Ltd, IndusInd Media and Communications and SITI Cable Network Ltd. They had moved the court challenging the levy of entertainment tax and vires of the Delhi Entertainment and Betting Tax Rules.

    The four had sought quashing of the Delhi government’s 17 December, 2012, circular and show cause notices issued in January 2014 directing them to deposit tax beginning April 2013. Delhi had threatened to halt cable TV transmission of the MSOs by closing their headends. The government had stated that the assessment of the MSOs bared that they had been indulging in tax fraud in crore since April 2013.

    A bench of justices Sanjeev Sachdeva and Badar Durrez Ahemed, however, quashed the Delhi government’s December 2012 circular and show-cause notices served by its Department of Entertainment Tax asking the MSOs to to pay entertainment tax or face action.

    Terming the circular as “without any authority of law”, the bench said, “To be clear, MSOs to the extent that they directly provide cable service to the subscribers without the intervention of any LCO (local cable operator), would be regarded as the proprietors under Section 7(1) and would be liable to collect and pay the entertainment tax to the government,” PTI reported.

    “However, where the MSOs provide the service through the LCOs, the individual LCOs having its own subscriber networks, would be regarded as the proprietors in respect of their individual networks and would be liable to collect the entertainment tax and pay the same to the government.”

    The court made it clear that as far as the assessments related to deposition to tax to the department are concerned, the MSOs “would have to take their own remedies against the assessment orders and/or appellate orders in view of the decision arrived at in this case”.

  • DEN is focused on upping subscription revenue & be future-ready: SN Sharma

    In the Indian broadcast and cable industry, SN Sharma is regarded as a sharp planner, quick on the uptake and a `yaron ka yaar’ (a true friend). However, as with any successful corporate exec, Sharma too has had his share of critics throwing allegations; most of them have not stuck, though. Otherwise, DEN Networks Ltd promoter Sameer Manchanda, known for his sharp understanding of human nature and a tough taskmaster, wouldn’t have got Sharma back for a second stint as a CEO to spruce up a company that had been performing below expectations on various counts.

    At the helm at DEN at an exciting phase of evolution of Indian cable sector, Sharma has got his work cut out — reduce the losses, wherever they are, and use his wide influence and network amongst the cable operators to sign up with the MSO. No wonder, his return to DEN from Reliance Jio last year, reportedly, convinced various cable operators to host few parties as they think `acche din’ (good days) are finally here. However, a small slip on Sharma’s part can shatter these high expectations of his employers and cable fraternity.  

    In a conversation with Indiantelevision.com’s Consulting Editor Anjan Mitra, Sharma holds forth on an array of subjects from reasons behind renewed focus on core business of the company, shedding loss-making investments, the way Indian landscape is changing with digitization, company’s insistence on cable subscription collections and getting future-ready. Edited excerpts from the interview.

    How would you view the cable industry at present in India?

    The cable industry in India has evolved over the years, but I would say it took some definite shape 2012 onwards in two ways. Till 2012 it was all analog though there were some attempts to bring about CAS (conditional access system) in the past, which just did not take off. So the analog regime continued till 2012 without any subscription revenue being captured by MSOs before that.  If at all something was being collected, it was in the range of Rs. 5 per subscriber. Various constituents of distribution networks — MSOs, LCOs, broadcasters and subscribers — were playing their own games. MSOs managed to survive those turbulent days because of the carriage fee charged from broadcasters. Part of that carriage money went back to broadcasters as subscription charges of their TV channels and, in the end, a broadcaster kept majority of the subscription revenue collected from subscribers. To add to the industry’s woes, the technology available was basic and there were no ways available, or being deployed, to get a count of the subscriber base or churn.

    Come 2012 and three metros matured quite ably into digital markets. People saw some change happening as the legacy businesses signaled evolution. With the sunset dates being announced by the government and regulator, there was a new hope that change is ultimately here and the industry will have to adapt itself.

    Q: What did this great hope for change bring about and what were the failures?

    Based on the hope that the Indian broadcast and cable industry was finally undergoing a major change towards digital that would bring about transparency in the whole eco-system, investors supported MSOs with their investments. The MSOs, in turn, invested in the digital cable infrastructure, building it up from the scratch literally, along with deployment of digital set-top-boxes. But in their hurry to capture subscribers, which was based on the presumption that subscription revenue will flow in, majority of the boxes were subsidized that ultimately went to add to the losses for MSOs.

    MSOs simply failed to monetize the digital structure despite investing in it, while monetization of the analog areas too dipped. Reason being legacy business models pushed back at changes that were sought to be brought about. Broadcasters, though, were smarter. Sensing that subscription revenues will be upped that can get them a bigger share of the revenue pie, excel sheets were spruced and changed accordingly to hike channel tariffs. However, the change being hoped for was not adequate. It’s difficult to change an existing system, especially so in India. It’s a human tendency. It took even the MSOs and LCOs some time to fully comprehend the new digital structure,including things like SMS, CAS and other technologies employed. Making the LCOs understand that a new structure will benefit them also and they too needed to change was a bigger challenge. Still, things started to look up by early to middle of 2016 when we at DEN took the initiative to start pushing the subscription (collection) process.

    Q: You mean though green shoots of changes were seen since 2012, things on the ground changed faster from last year?

    The period 2013-2016 did see some changes on the ground too and it would be wrong on my part not to admit them. For example, efforts made in Phase I cities yielded dividends. In some parts of these cities, MSOs did manage to get a share of Rs. 100/subscriber/month. However, phase 2 and 3 were struggling and we could only manage Rs. 35 and Rs. 20 per subscriber, per month, respectively.

    What’s the big attitudinal change that DEN undertook when it realized subscription collection could be upped?

    I don’t know whether it’s an attitudinal change or not, but our new resolve made more business sense. We took the initiative of announcing that whosoever wanted to do business with us had to adhere to our applicable subscription charges. When I rejoined DEN mid 2016, mandate given to me was simple: push for hike in subscription revenue collection from the ground. I had open sessions with all our business associates in a transparent manner and conveyed to them clearly where and what we have invested and what were our expectations from associates. We got support from our associates on the concept that we were selling them.

    Apart from the requirements of the organization, there were compelling reasons too for getting in place a structure quickly and focus on subscription revenue. Delivery technologies were changing fast and there were pressures from DTH operators. These platforms were aggressively selling to consumers their services at rates that were very competitive.  Broadcasters, on the other hand, were demanding a bigger share of the revenue pie. Now, all these pressures were not only visible on the ground, but were being felt by LCOs too. All these factors put together, along with support coming in from TRAI that helped with small tweaks in regulations (like swapping of boxes) in 2016, also made the LCOs understand the importance of getting a proper structure in place. When I re-joined, I ensured that all agreements with LCOs and our business associates were put in place in a transparent and orderly manner.

    If you were asked to encapsulate DEN’s message to all business associates, what would that be?

    We gave a message to business associates, distributors, LCOs and JV partners that had four components. First, the need of the hour was to survive and catch up with companies’ bottomlines. Second, there was a present and clear competition from newer technologies. Third,  DTH players were certainly making concerted efforts to snare more subscribers as they had the advantage of starting from a digital base, unlike cable TV that is trying to make the switchover from analog to digital. And last, there was a need to upgrade technology and infrastructure and, for doing that, financial investments were necessary.

    Not that these factors were invisible to our business associates. It’s a basic lethargy to change and lack of proper understanding of the importance of the change needed that kept LCOs from undertaking business restructuring. Unless transparency is brought about in the eco-system, future investments will not be available and unless that happens to grow the business in a modern world, LCOs and MSOs would find it difficult to survive. As an MSO, we have got the boxes seeded and it won’t be out of place to demand a fair share of the revenues collected.

    How successful has been DEN in these new initiatives aimed at business restructuring?

    In a six-month journey, in phase 1 areas where ARPU is Rs 100, DEN is able to capture Rs. 125 per subscriber; phase II ARPU has increased from Rs. 45-65 to between Rs. 90-100; phase 3 subscription has risen from Rs. 30-40 to Rs. 65-75. In phase IV where the digitisation process started this year, we have crossed an ARPU of Rs.35-40 per subscriber per month already. Future path is now chalked out as TRAI and broadcasters too are not distinguishing whether the content is being shown in urban centres or semi-urban areas as far as tariff structures are concerned. LCOs and subscribers in all phases have realised that MSOs cannot keep on subsidising the content for LCOs and consumers.

    Earlier, MSOs was getting close to 10 per cent of subscription revenue collected from the ground. But then TRAI in a fair manner handed out a formula based on which every stakeholder was to get a share from the subscription revenue pie. I believe if you follow regulations, life would be simpler. DEN signs inter-connect agreements with all its partners and if there are defaults, then signals are switched off. The seriousness of our intent is loud and clear — if you sign up, we’d do business; if you don’t sign up with us, we would switch off DEN’s signals. Such a stand has resulted in DEN collecting close to 40-45 per cent of the consumer subscription revenue now.

    If LCOs, associates and consumers understand the gravity of the change taking place, why differences amongst stakeholders persist and there’s a resistance to TRAI’s tariff guidelines?

    The biggest change is the consumer who has realized that if good services are to be had, then there’s a price attached to availing those. Kudos to the regulator too that it has kept modifying its regulations from time to time as per the need of the day. In an analog regime, it set out guidelines suited for that phase. When digitization rollout started happening, TRAI was aware there would be phases of overlap of analog and digital during transition. After completion of three phases of DAS, the regulator came out with a comprehensive tariff and inter-connect structures for a digital era, which was challenged in the court. I would say the regulator has done a great job. Sooner or later stakeholders will adjust to each other’s needs because a clear road map has been etched out by the regulator.

    (This interview was taken before Supreme Court recently allowed TRAI to announce its tariff, interconnect and QoS guidelines, even while a case questioning TRAI’s power to regulate tariff issues relating to copyrights and IPR is pending final disposal at Madras High Court)

    As a big MSOs, what are DEN’s views on TRAI’s suggested regulations on tariff, inter connections and quality of services?

    We are very much excited with this revised proposed tariffs and I would say the guidelines are well drafted.  Some stakeholders may ask for some tweaks, but on a broader perspective the guidelines point to the right directions. For example, for the first time TRAI has not only given importance and value to distribution pipes that MSOs own, but has clearly spelt out what needs to be paid for using these distribution pipes. This is a big transformation as, till now, MSOs were the only ones making investments and attempting to bring about transparency in the eco-system. As increasing value-added services (VAS) are delivered via this pipe, the importance of it would be further highlighted.

    What would be the areas of push for DEN in phase 3 and 4 of digitisation?

    In phase I and II areas, DEN has five million boxes seeded in the market, while our share in phase III areas is another five million boxes. Our total universe is approximately 13 million, including some phase IV areas. But out of that total universe, a portion is still analog, while the total number of digital boxes is a shade over 10 million. So our present focus would be to take care of the analog boxes that are already in our kitty as subscribers, while aggressively adding more in the remaining period of last phase.  

    Apart from the boxes, I reiterate, overall focus of DEN is increasing subscription revenue collection from the ground in a transparent manner, taking the share that’s due to us. This focus has resulted in LCOs too hiking their subscription rates within the regulatory framework. This is also a change as LCOs earlier in a monopolistic regime, never had to market their services, which they are doing now after regulatory pushes and visible changes in consumer consumption pattern. Today’s consumer of video is savvy, both from the point of regulations and technology available to them like mobile devises at affordable prices. Today, a customer even from smaller towns and cities is willing to pay for the experience as he values the experience. If the experience and service is good, a customer doesn’t mind paying. Adoption of new technology of cable TV will be faster if consumers are properly and extensively educated, along with effective marketing of services.

    Would MSOs be able to charge consumers Rs. 500 per month, at par with OTT services, after digitization is complete; at least in phase I and II areas?

    Consumers in phase I and II areas definitely have higher purchasing power than others, but you have to appreciate that the increase in ARPUs in these two phase-areas is also because work has been continuing over several years. Still, to answer your question, I don’t see MSOs charging Rs. 500 per month for their services immediately. However, with HD services, over a period of one year the charges may rise to Rs. 400 per month. But then LCOs too need to bring in more HD boxes.

    Q: Would you agree with visionary Subhash Chandra when he recently told cable ops they were not keeping pace with consumer behavioural changes globally and the boxes presently being deployed were very basic and tech is changing faster than business models are made?

    Of course yes. Subhashji sees the future much before others do and he’s correct in highlighting such global trends. At DEN, we are very conscious of technological changes coming in to our life and are ensuring that we keep pace with the times. Keeping these global trends in mind, we recently announced a new HD service subscription. It is consumer and LCO friendly and in next six months, DEN will push HD boxes extensively. The HD box is feature-rich and would help us in increasing subscription too.

    Our HD box features include HDTV /SDTV MPEG-4 H.264 AVC & MPEG 2 decoding; SD video up scaling to HD resolution via HDMI port, improving picture quality; SPDIF output to connect external HI-FI system or home theater for Dolby pass-through; USB 2.0 for external PVR/recording function by connecting USB pen drive as low as 4GB or USB HDD up to 1 TB and audio, video and photo play back via USB drive. Additional features (Wi-Fi and Bluetooth) related to two- way functionality are under development and would be available in a month’s time. This will help to use mobile handset as STB remote with an application and enabling interactive applications like You Tube, etc.

    Then DEN is also working on a hybrid open STB where the features likely to include STB acting as home gateway for video services in the homes with an Android Open Service Platform (AOSP) and DVB-C support; enhanced 2D & 3D graphics support with latest open GL ES 2.0 / 3.0 to support high quality games; USB 3.0 to connect external HDD to enable high speed data transfer for recording and playback and integrated Bluetooth and Wi-Fi to support two-way communication.

    We aim to seed in the market at least one million HD boxes over the next 12 months. I was surprised to get feedbacks from consumers and partner LCOs after touring small towns. There’s a fairly good demand for HD boxes in such places too. And, sitting in metros, we used to think consumers in small towns of India would not be able to afford HD boxes, which are certainly costlier than the normal boxes given to them earlier.

    Any plans for 4K boxes?

    We do plan to launch 4k boxes over the next six months as per evolving technologies and global trends very much visible in markets like the US and Europe. Such boxes would be rich in features like digital video recorder, in-built apps and go a long way in changing consumer experience. Though, we do foresee inadequate supply of 4K programming, consumer behaviour is changing and, according to our assessment, there would be a sizable number of buyers for high-end boxes, including HD, if properly marketed to consumers.

    DEN launched its broadband services with much fanfare, but losses have increased. Would you continue with it?

    We have already broken even in our broadband business as of Q3 of FY 2017. Our YTD Q3 losses are at Rs. 110 million vs. Rs. 650 million in the previous full year. We have done some experimentation in Delhi and Kanpur and not only do we plan to continue with the service, but expand it too. We plan to launch our broadband services in 15 to 20 new small towns over the next six to nine months as overall capex on rollout and subscribers is dropping. With an ARPU of Rs. 750 per month per subscriber in Delhi, we see that there would be demand for such a quality service. We plan to target smaller towns in phase II and III areas of digitization. The broadband EBITDA broke even for Q3 FY’17 despite the freebie blitz unveiled by some telcos.

    (According to data available, DEN added 20k broadband subscribers in Q3 FY’17 with the total subscriber base being 159,000; the figure for homes-passed standing at 864,000. While the year-on-year growth for broadband business was 82 per cent as on Q3, the total revenue and ARPU for the quarter were Rs 210 million and Rs 752, respectively.)

    Does DEN own OFC or leases it from associates?

    Our ownership of optic fiber is a combination of several methods. DEN itself owns several thousand kms of fiber, while we also lease from others in an attempt to future-ready our delivery pipes. Then we also use telcos’ fiber to deliver our services employing an IP technology. Our and our associates’ fiber pipes are now almost 300 to 500 meters away from each home of our direct and indirect subscriber.  That is how close we are to our consumer and, with time, we’d like to move closer. As technology marches on, a cost-value analysis will permit us to be as near as 200 meters of the last mile, which can be coax cable too. But I must insist that Indian cable distribution after digital rollout started is undergoing a huge transformation and is, exceptions notwithstanding, now ready to adopt all the future technologies, including providing high-speed broadband and other VAS, which are now surfacing globally.

    Another of DEN’s new initiative is to join the already crowding space of OTT services.  What are the reasons for doing so when bigger players are searching for revenue models?

    OTT is an additional service that can be delivered over the delivery pipe that also will supply hi-speed broadband. We are not looking at OTT space from the perspective of additional revenue. This service is to give comprehensive experience to our existing consumers as of now and highlight the fact that DEN is available to them on the go, apart from at home and work place. We currently have almost 130-140 live channels, 10,000 hours of quality video content and approximately 2,000 movie titles. Our overall approach is to be future-ready and establish consumer loyalty for DEN services. The OTT service and the app can be upgraded with new features and TV channels. However, we are not looking at getting into production of original content for the OTT service.

    How is DEN utilizing the funds from investors, both foreign and domestic?

    A major part of the investments have been in the cable business. As monetization of the company’s businesses happen, especially with digital rollout, there has been a reinforcement of confidence of investors. In the last couple of quarters, the increase in subscription revenue has not only made our investors look positive, but we also see movements in investment community that is looking at this sector in a positive way.

    Is DEN looking to raise additional funding to fund growth in areas like media and sports?

    DEN has invested in media and non-media ventures, but we are evaluating some of the investments at this point of time. Let me first clarify, DEN as a corporate entity has not made any investment in (Arnab Goswami’s) Republic TV. We invested in domestic football league and in a JV with Snapdeal for a home shopping channel. However, our experiences now tell us that we should focus on our core business, which is cable TV distribution. We have conveyed to the Board of Directors that we are actively exploring suitable exit modes involving both these investments. As we are left with only 20 per cent stake in the football venture, no cost accrues to us.

    How would you describe DEN’s bottomline?

    It is a healthy and growing bottomline.  Our consolidated 9-month EBITDA for the current financial year stands at Rs 870 million positive vs. the EBITDA loss of Rs. 1070 million during the same period in the previous year. As of now, cable business has grown well and turned around.  Last year, the losses were heavy because of our other loss-making businesses like broadband and investments in ventures like football and TV shopping channel. With football (investments) been dribbled away and broadband segment stabilizing, I would hope to close the FY 2016-17 (ending March 31,2017) on a high, though it may not be big. The journey from here should be smooth — minor negatives because of initial losses earlier, notwithstanding — and our renewed focus on core business of cable TV distribution with an agenda to correcting the subscription revenues should help.

    (According to figures available with investors, DEN’s digital subscribers contributed Rs. 10.2 crore or Rs 102 million in Q3 of FY 2016-17 to the overall quarterly revenue kitty. Cable subscriptions registered a growth of 15 per cent quarter-on-quarter. Not only DAS phase 1 EBITDA stood at 30+ per cent, DAS phase 3’s monetisation was Rs. 65, inclusive of taxes, as on December ’16.)

    Q: What is your medium to long to term vision for DEN?

    I would like to convert 50 per cent of my SD box consumers into HD subs in five years’ time, while I would like to convert at least 10 per cent of the SD boxes into HD over the next 12-15 months. These conversions will also help in upping subscription revenue collections.  In five years’ time, I would also like to have one million 4K boxes seeded in consumer homes and be elated to have a total subscriber base of 20 million.

     

  • Faced with deadline, MIB says all provisional MSOs will be deemed regular

    NEW DELHI: Faced with just less than one month to go before total switch-off of analogue signals, the Government today decided that all provisional multi-system operators will be deemed as having regular licence for ten years.

    Stressing that the period of ten years commences from the date they got registered as provisisional MSOs, the Government said that this will not apply to MSOs which stand cancelled or cancelled.

    However, if the continuation of registration of any MSO is at any time found to be or considered detrimental to the security of the State then the registration so granted is liable to be cancelled/suspended, the order placed on the Ministry website mib.nic.in specified.

    All other terms and conditions depicted in the provisional registration letter(s) Wlll continue to apply.

    Earlier on 27 January.2017, it had been decided that all registered MSOs are free to operate in any part of the country, irrespective of registration for specified DAS notified areas granted by this Ministry.

    However, they have to submit the details of Headend, SMS, subscribers list and a self-certificate that they are carrying all the mandatory TV Channels, within six months from date of issuance of MSO registration, to the Ministry, failing which the MSO registration is liable to cancelled/suspended.

    Hence, all deemed regular registered MSOs also are required to submit the details to the M/o within six months.

    The Government had itself extended the last date of the last phase of digital addressable system for cable television covering rural India on 31 March 2017.

    According to the Ministry, it had given registration to 1182 MSOs by the end of February 2017, which included 230 which had valid ten-year licences.

  • TRAI tariff order’s impact on the industry

    MUMBAI: How will Trai’s Telecommunication (Broadcasting and Cable) Services (Eight) (Addressable systems) Tariff Order, 2017, impact the industry and listed television eco-system companies?

    Leading institutional broker Kotak Institutional Equities (KIE) believes that the implementation of would enhance the bargaining power of distributors versus broadcasters, at the margin. KIE contends that while it is difficult to factor in all permutations and combinations and quantify the impact, Dish TV would most likely benefit. The impact on Zee would be negligible, if any, given the strength of its bouquet. Sun could potentially gain, but its upside is contingent on digitization in TN.

    KIE believes that flexibility to consumers will not reduce industry’s subscription revenue pool because there is a provision of access fee of up to Rs 130/month (excluding taxes). It says that even if a household subscribes for 10 popular pay channels on a-la-carte basis, it may result in subscription fee of more than Rs 100 (excluding taxes). It is unlikely that value subscribers (base pack/ low-ARPU subscribers) would be able to optimize subscription spends. If at all, they may receive less content for the same price going forward. However, there is room for premium subscribers (HD, multiple TVs) paying more than Rs 500/month per STB to optimize its subscription spends especially in case of nuclear families in urban markets..

    “We expect distributors to price and package channels such that consumers continue to find bouquet appealing. We also believe industry will not encourage or promote a-la-carte buying: (1) LCOs would likely discourage a-la-carte buying, (2) difficulty/hassle in opting for a-la-carte (through SMSes or call centres) will act as a deterrent,” says a KIE report.

    The regulation could possibly reduce scale led advantages of distributors. The permissible discounts would likely be on penetration milestones (percentage penetration as against absolute scale). Thus, the scale-led advantage of larger distributors can moderate. However, it will be difficult to track and monitor placement and marketing deals which may be used as an avenue to pass on scale-related benefits.

    KIE believes that it is likely that strong players will become stronger and weak players will become weaker. There is a high possibility that low-ARPU subscribers may get less content for the same price whereas premium subscribers may be able to optimize their subscription spends because of uniform pricing across urban markets and rural markets notwithstanding difference in purchasing power.

    Also, standalone channels and small broadcasters may be forced to pay higher carriage to maintain reach (at present DTH garners negligible carriage; post implementation DTH may demand higher carriage). Some channels may not be able to absorb the increase in costs. Small distributors, who do not have wherewithal for technological changes, may find it difficult.

    On upselling and HD push, the KIE paper says, “Access fee under the new regulation would contribute meaningfully to distributors’ revenue stream. Additionally, DTH should also see a sharp increase in carriage revenues. Given this, it has to be seen if the distributor ecosystem remains as focused on upselling and pushing HD. We believe the incentive for them to upsell is lower under the new regulation.”

    KIE is unsure if the regulations would weigh on long-term ARPU growth. Intuitively, more flexibility to choose content can make optimization of subscription budget easier at household level. It contends that barring top channels, price of most pay channels would be negligible and many channels would convert to FTA. Monetisation of niche channels may be difficult at the margin.

    The broking house feels that implementation of regulation would force cable to push package tiering and raise cable tariffs in line with DTH provided that LCOs align with it and broadcasters do not make any payments to cable other than prescribed by the regulation. The time lag between technical implementation of digitization and monetization is 1-2 years. In fact even after 3-4 years, Cable tariffs and MSOs ARPU in phase I-II markets lag expectations.

  • Cable TV price may reduce as TRAI issues tariff, QofS, interconnect regulations after SC nod

    MUMBAI: Cable TV prices are now expected to reduce after Telecom Regulatory Authority of India yesterday issued a series of orders relating to digital addressable systems.

    Broadcast carriage regulator TRAI had lined up a slew of guidelines relating to tariff, quality of service and interconnections, including proposing maximum retail price (MRP) for channels being bundled in genre-wise bouquets, freeing unbundled premium channels of  price caps and reining in the last mile cable operator (LCO) from breaching revenue-gravy trail.

    Sources in TRAI had indicated the regulator had favoured introducing MRP for TV channels that broadcasters offer in a bouquet to MSOs so the prices could be conveyed to a consumer in a transparent manner for him to make an empowered choice. Though broadcasting companies do submit annually a-la-carte rates of their respective channels to TRAI, the regulator was of the opinion that a consumer doesn’t ultimately get to choose the channel of his choice transparently.

    Following the green signal from the Supreme Court yesterday morning, TRAI issued a series of orders relating to digital addressable systems.

    Apart from the Tariff order which had been issued on 10 October last year, the regulator also issued the DAS Interconnect Regulations which had been issued on 14 October last year, and the Standards of Quality of Service and Consumer Protection (Digital Addressable Systems) Regulations which had been issued on 10 October last year.

    In separate press releases, TRAI said the three documents issued in October last year were in draft form. Earlier, the regulator had issued consultation papers on the issues and finalized the regulations after receiving responses from stakeholders and open house discussions, the final regulations have been issued. The regulations had been issued after However, a cursory glance shows that the regulator has stuck to its draft with some incidental changes.

    The orders can be seen at:

    http://trai.gov.in/sites/default/files/Tariff_Order_English_3%20March_2017.pdf

    http://www.trai.gov.in/sites/default/files/QOS_Regulation_03_03_2017.pdf

    http://www.trai.gov.in/sites/default/files/Interconnection_Regulation_03_mar_2917.pdf

    Earlier, both Star India and Vijay TV had filed a petition in Madras High Court under the Copyright Act on the ground that TRAI could not issue orders that would affect content but could only issue regulations relating to distribution and other matters.

    After the High Court stayed all orders issued by it, TRAI appealed to the Supreme Court which this morning said that TRAI was free to issue its orders. However, it said the case in the High Court would continue and would have to be completed within sixty days.

    Both channels were also given leave to amend their petitions in the event of TRAI issuing any orders.

    Also read:

    TRAI tariff & quality of services regulations

    TRAI issues comprehensive interconnect draft guidelines

    Offer Premium channels as a la carte, don’t bundle: TRAI

  • We believe the new cable TV tariff order will benefit everyone – Hathway Cable video CEO TS Panesar

    Tavinderjit  Panesar is in the hot seat. As the CEO of the video business of the listed MSO and Rajan Raheja group company Hathway Cable & Datacom, he has to steer it in challenging times.

    The company’s share price has been waddling around in Rs 30-40 price range despite being spoken of as one of the jewels in India’s cable TV sector, and attracting investment from international firms.

    But, digitisation has put the entire sector under pressure; especially phase III  and phase IV. Phase I and Phase II, while they have been reported as completed, have not resulted in the sector getting the same organised structure that the telecom sector is. Then, ARPUs from subscribers have increased only marginally, even as investments in infrastructure in terms of STBs, content from broadcasters, customer service, and programming have been going up.

    To top it all, Indian broadcasters have objected to the draft tariff order that the industry regulator TRAI has issued, and have taken the matter to court. Which has left the distribution sector between a rock and a hard place as no one knows which direction tariffs will take.

    In such a scenario, the feisty industry veteran will have to bring all his 13 years and more of TV distribution experience to bear in order to deliver what he has been brought in for. He took over as the CEO of the video business from Jagdish Kumar who departed from the company in November 2016.

    Indiantelevision.com’s Parvinder Sandhu got into a conversation with Panesar to discuss about the industry, its state and the way forward. Excerpts:

    How would you view the overall status of the cable industry?

    The pay TV industry is consistently growing year on year in India and digitization has given a further boost to this sector. BARC data  indicates that the total number of pay TV subscribers have risen to 183 million  this year from 152 million in 2016. And there is still much more potential in this industry and enough room for everybody to grow.   In spite of the growth prospects, MSOs are still facing a lot of operational challenges like increasing content cost, inefficient ground collection mechanism and many more. However, from last few years, MSOs have also started adapting to newer and improved technologies and automation systems, thereby able to offer services which are at par with DTH providers.

    Today, the MSOs main task is to improve operational efficiency by controlling or reducing the content cost which has reached to level where it neither can be absorbed by the business nor can be passed on to the customer and by improvising processes and systems on the ground. First time in the MSO industry, Hathway has implemented a portal for LCOs through which he can manage his business very efficiently. This has helped us in building trust with the LCO and resulted in improvement in collection efficiency for both, LCOs and us. We are hopeful that the new regulations which are currently being deliberated upon will be implemented thus helping everyone to become profitable across the industry.

    With the right steps, there is a bright future for all value chain members i.e. broadcasters, service providers and consumers.

    Are DTH services with their competitive pricing of services, threatening MSO business?

    Historically, cable TV provides more value for money than DTH. Today also, it is our constant endeavour to maintain the same.

    Cable TV has unique advantages over DTH, like personalised 24*7 service to customer by our LCO, no service interruption due to weather, no limitation of bandwidth & hence being able to provide better quality service etc.

    Hathway understands the ease of interaction DTH subscribers enjoy with them which MSO industry is also trying to develop through the LCO network using technology and automation. Hathway was the first to create an interactive portal called Hathway Connect for its LCOs making their lives easier, convenient and more efficient. Using this portal, LCO can provide DTH-like experience to customer during his interaction. An LCO has access to every information of their customer which is very useful while interacting with customers. He can do the transaction instantly for the customer through this portal thereby provide necessary comfort to him. This has helped the LCOs run their business efficiently and effectively, in turn offering better quality and high standard & customer delight.

    For online payments, we have also integrated our systems with various payment gateways like Bill Desk & Citrus along with wallets like Mobikwik, Free Charge, SBI Buddy, Oxygen, Airtel Money etc. to ensure ease of business for the LCOs and renewal for customers.

    We have also recently launched our Value Added Services — Hathway Special catering to customers looking for additional services over and above broadcaster channels.

    We have also expanded our HD channel offering matching the  DTH offering

    In short, cable TV has also started providing similar experience like DTH to their subscriber and hence there is no threat to cable TV from DTH.

    There has been lot of hype in India for the two years about Make In India, a pet initiative of PM Modi. Has it resulted in any gains for the set-top box manufacturing?

    The Government’s flagship ‘Make in India’ initiative has helped India garner visible momentum, energy and optimism in key sectors. India is on the path to becoming an elite manufacturing hub through this initiative and box manufacturers have also definitely got a boost. During the inception of digitization the I&B ministry was talking very proactively to ministry of micro, small and medium enterprises to work out ways for the Indian industry to take advantage of the digitization process. While there are many indigenous box manufactures in India, some of the critical components of the set top boxes are yet to be developed locally. This is why most of the set top boxes are still being imported currently.

    What percentage of STBs would be imported by Hathway? Does it source boxes from few Indian manufacturers?

    We look forward to using a completely made in India box. However, till many key components are not developed indigenously we will have to import boxes to maintain competitive pricing and quality of service

    Essel group chairman Subhash Chandra recently said that STBs being used in India are still very basic, a far cry from technological developments around boxes globally. Would you agree with such an analysis? And, if yes, does such basic boxes hinder in providing better consumer experience in India?

    A true visionary and media veteran Dr. Chandra has always envisioned positive growth for the sector. He was one of the first to acknowledge the fact that with superior set top boxes the industry will definitely see more progress. As he correctly said the set top boxes being imported are very basic, and that there are more advanced boxes which can help in creating a better viewing experience for the end consumers.

    Though India is considered a price sensitive market, what, according to you, does the Indian consumers really want — affordable products or high-priced products that can give better consumer experience and a plethora of services?

    India is definitely very prudent when it comes to pricing mainly due to affordability factor. However, the aspirational level of the Indian consumer is always very high, and hence he always look for advance technologies for better quality and ease of operation. Also, there is more younger population in India which is always looking for technology and innovations.

    Since inception, DTH is thriving more on technologies and hence expensive right from installation to monthly subscription compared to cable TV.Cable on the other hand is always more value for money than DTH, be it the pricing orchannel offering or the wider bandwidth thus offering better picture quality.  We can boast of personalized service which our LCOs offer to the end consumers. They are available 24/7 to address all consumer concerns. In last few years, the MSO and the LCO also have started improving service levels to consumer using various technological initiatives and streamlining processes thereby giving better value for money than DTH which the consumer is looking for.

    How is Hathway tackling the challenges of digitisation and technological developments in media that’s happening nationally?

    For a country as diverse as India, to bring about any change will, of course, have its own set of challenges. Although, mandatory digitisation of cable TV has opened up a whole new world of possibilities ensuring that the broadcasters reap benefits with strong growth in both advertising and subscriptions without any incremental investments, service providers like Hathway are at disadvantage the most with  increasing content cost for the same ground collection. While we have aligned our LCOs to streamline collections through our Hathway Connect portal, as much as possible, there is still scope for improvement. We are also ready for “cashless” operation and promoting it to support India’s central government initiative. Our systems can accept all types of online payments from LCO or customer. We are constantly realigning our business to be able to monetize on digitisation.

    What would be Hathway’s total subscriber base? Are they all direct subs or also through franchisees/JV partners, if any?

    We have a total subscriber base of more than 12 million including our JV partners and subsidiaries.

    Does Hathway prefer directly selling to consumers or likes taking the JV route?

    Both LCOs and JV partners have contributed to our growth and we acknowledge the positive impact both brings to Hathway. Each has their own strengths and we have been fortunate to be able to capitalize on the same. We will continue to operate using either LCOs or JV partners as per need to consolidate and strengthen our base.

    With new video delivery techs, like OTT, coming in and catching consumer’s fancy, how do traditional MSOs like Hathway remain relevant? What innovations do you need to do?

    With the surge of smart phone consumption in India, we have over the last few years noticed a shift in viewership patterns. Consumers today are very discerning towards the content they view. There is a paradigm shift in wanting to watch content on the go like news and sports as averse to a daily soap.  The shorter format content is preferred over hour or half hour duration content. This phenomenon is more wide spread with the millennial groups and it is only fair to look at OTT as solution for this. OTT has the potential to tap into this entire younger generation and will help in brand positioning. OTT is definitely in the pipeline for us and we will be launching the service soon.

    For an MSO, what are the other  areas of monetisation or earning revenues apart from traditional services like cable TV and broadband delivery into homes?

    In cable TV, we are looking at innovative way of increasing the top line with value added services.  We have already launched paid value added services under the umbrella brand as Hathway Special. These services will be ad free and can create good attraction for customers. We are planning to expand these services up to 30. Beside these services, we also have our in house channels which can generate ad revenue as additional revenue stream. We are also trying to find new ways to utilize our EPG properties for advertising which can be useful to build up revenue further. At the moment, business is not profitable for us and we are looking at many avenues to improve the revenues so that we can re-invest into the business.

    TRAI has floated a consultation paper on infrastructure sharing by various delivery platforms in India. is such a technically, financially and practically feasible?

    There has not been much movement in this. It’s a good initiative and we are open to it.

    That brings me to the issue of tariff structure proposed by TRAI, which has been put on hold due to a case in Madras HC, as to how does Hathway view the draft tariff proposals? Why are some stakeholders upset with the proposals?

    The tariff structure proposed by TRAI will help in creating a level playing field for all as the consultation paper reviews the existing tariff arrangements and seeks to develop a comprehensive tariff structure for addressable distribution of TV broadcasting services across digital broadcasting delivery platforms (DTH, cable TV, HITS, IPTV) at wholesale and retail levels. If implemented, it will bring in more transparency and fuel growth by regulating the broadcast distribution system. The order will help to create a more symbiotic ecosystem unlike current price unregulated one.

    Under the current dispensation, the broadcaster is free to negotiate every year with service provider for their content due to which there is year-on-year increase in content cost without any linkage to revenue generated by that content. It has reached to the level where it is becoming difficult for MSO to absorb this cost increase without affecting revenue from customer and market forces do not allow to increase revenue from customers.

    We are hopeful that the new regulation will put things in right perspective. The new tariff order gives the consumers the power to choose what they want to watch and ensure content is being distributed with fair trade margin, thus balancing the entire ecosystem. This might be leaving the broadcasters with the fear of losing out on market share or reach of their channels and hence advertising revenues because of which they are opposing the implementation.

    However, we feel that new tariff order will bring in much needed transparency in the distribution system in which every key member will be benefited. This forward looking order has been conceived to ensure growth in the industry while improving the current scenario for the broadcasters as well as for the DPOs. We are hopeful that the new tariff order sees the light of day and helps in regulating this entire ecosystem.

    What are the expansion plans of Hathway?

    While we are open to mergers and acquisitions, we will take viable and judicious financial decisions.  But, our main priorities are optimising our operational efficiency as it will help cut back on unnecessary costs for us. We are continuously devising innovative ways to increase efficiency while reducing cost. We are also continuously expanding and upgrading our technical infrastructure to improve customer delight and reduce customer churn.

    Does it make business sense for an MSO to have in-house TV channels also? Does it add value and add to the revenue kitty?

    This is one of the major differentiators between DTH and Cable TV. We are at an advantage over DTH due to adequate bandwidth that we have with the flexibility of adding in-house services. Not only does it help in creating niche content for our subscribers but also helps in generating additional revenue for us.