Broadbandindia Magazine » Publishers’s view

MSOs and LCOs -Future moves?

BroadbandIndia — Wed, 11 Jan 2012 13:28:39 +0000

The Government of India has shown some progress with its much-awaited plans for cable TV digitization. The recently passed ordinance that amends the Cable Television Networks (Regulation) Act, approving the timeline the Ministry of Information and Broadcasting (MIB) and suggesting for mandatory digitization has been converted into a law recently. According to the ordinance, analogue signals will be completely switched off by December 31, 2014. It seeks to introduce addressability in the cable TV network, wherein all TV channels will be provided to houses through set-top boxes (STBs).

Digitization is a once-in-a lifetime opportunity for MSOs to realize their vision of directly engaging with end customers. Though the ordinance has put forward a humungous task ahead for the MSOs, the process of transformation will have to be viewed strategically to position an MSO for long-term sustainability. MSOs will need to alter their perception from a largely business-to business (B2B) focus dealing with a few thousand local cable operators (LCOs), to largely a business-to-customer (B2C) focus, dealing directly with millions of customers.

An MSO will have to redefine the potential role of LCOs in a digitized world. However, a key question will be of how willing LCOs would be to relinquish their stronghold over end customers and what measures are agreed upon between MSO and LCO to protect LCOs existing income. MSOs will need to partner with LCOs for roll out of STBs, education of consumers and servicing customers. LCOs will also play a role in collections and increasingly ARPUs. MSOs can use digitization as an opportunity to enter new markets, but first, they must protect existing markets from competition. Digitization can also be used as an opportunity to move to a complete prepaid model (like DTH) and reduce collection hassles. A number of critical decisions on business strategy and operations lie in store for MSOs and LCOs to capitalize on the digitization growth curve.

Ramesh Jalan
Publisher
E-mail: rameshkumarjalan@rediffmail.com
rkjalan@broadbandindiamagazine.com

Concerns on the Digital push

BroadbandIndia — Mon, 12 Dec 2011 06:38:34 +0000

With the Indian Government approving the ordinance on pan-India digitization of cable network by 2014, MSOs and DTH players are betting big on the cable market in the country and sees tremendous potential to bag a high proportion of subscription revenues. However, it would be the small, local cable operators who would control the crucial last mile to the home. Market watchers don’t believe the service will take off nearly as quickly it has in the U.S. and other TV-loving countries and the great Indian digital divide being bridged within such aggressive timelines. Instead, they see digital cable gaining ground mostly in the nation’s handful of very big cities. Why so slow? For one thing, India has a huge amount of cable systems, many, if not most, of them tiny local operations with just hundreds, or even scores, of subscribers. The move to go digital would force cable companies to install addressable digital set tops in subscribers’ homes, potentially raising the cost of delivering pay TV service considerably.

To make matters tougher, the government’s strong existing price controls for pay TV programming keep Indian cable operators from raising their monthly service rates much, even if their own programming delivery and other operating costs jump dramatically. So MSOs seeking to go digital face a likely cost squeeze, where they’re forced to subsidize digital cable set-top installations without being allowed to charge much more for the extra channels and enhanced service. Though Trai has promised to float a consultation paper to examine various issues of cable operators and MSOs in the digital makeover, it is yet to be seen how all the issues would be effectively addressed. Holding the move to digitalization to be irrevocable, Trai said that it was essential to adjust to “what is going to come.”

Ramesh Jalan
Publisher
E-mail : rameshkumarjalan@rediffmail.com
rkjalan@broadbandindiamagazine.com

Tough Digital Path for Cable

BroadbandIndia — Sat, 12 Nov 2011 12:58:31 +0000

It has been on the anvil for sometime now. The government has been thinking about a major push to drive digitisation of Cable TV in the country, Now, ninety million homes receiving tv programmes via analogue cable networks will need to mandatory shift to digital set-top-boxes beginning March 2012, with the government approving complete digitisation of TV transmission over a two year period. The digital technology will offer improved quality of transmission and greater choice of content, albeit at a higher cost to consumers. Consumers can avail of digital cable, broadband and telephony services, all bundled in a single connection.

MSOs will need to invest Rs 25,000 cr. to carry out digitisation. The sector would see a new wave of consolidation in the digitisation regime. Unlike DTH, the cable companies have not made investments ahead of time. Butbeing wired companies, cable tv networks have an inherent technology advantage over DTH. They have to capitalise on this and act swiftly and decisively to counter DTH’s invasion further. While DTH has grown to 30 mn, only 9 mn of this has come from urban areas, Analogue has added 20 mn during this period. But now, they should sharpen their focus further on digitisation and stop adding analogue weight. They do not have luxury of time, if DTH does not kill them, Internet will as watching television on the move picks up. From the government’s end there should be some time relaxation for local cable operators given that they are under-invested and need so much capital investment to process through this. They should provide infrastructure and increase FDI limits to enable operators to move to digital platforms.

Ramesh Jalan
Publisher
E-mail : rameshkumarjalan@rediffmail.com
rkjalan@broadbandindiamagazine.com

Regulate yourself or someone else will

BroadbandIndia — Fri, 14 Oct 2011 06:40:07 +0000

With rising number of complaints from consumers about misleading ads, the government is considering setting up a regulatory body to curb such advertisements on television and print media. The influence of advertisements on consumer choice is undeniable. And it’s this fact that makes it imperative that advertisements be fair and truthful. Misleading and false advertisements are not just unethical; they distort competition and of course, consumer choice. False and misleading advertisements in fact violate several basic rights of consumers: the right to information, the right to choice, the right to be protected against unsafe goods and services as well as unfair trade practices. A number of laws, regulations and codes regulate advertisements and protect the interests of consumers, but only two laws – the Consumer Protection Act and the Monopolies and Restrictive Trade Practices Act- provide for compensation to the consumers affected by false and misleading advertisements. In fact under both the laws, false and misleading advertisements are defined as “unfair trade practices”.

Since advertisements are basically meant to promote a product or a service, one does see some exaggeration in the way they describe the virtues of the product. But when it goes beyond that and deliberately utters a falsehood or tries to misrepresent facts thereby misleading the consumer, then it becomes objectionable. While in some cases, falsehood or misrepresentation of facts is obvious, in most cases, one has to go behind the advertisement to find out whether it is uttering falsehood or truth. And this is where the problem lies. By the time an unethical advertisement is exposed, it would have already done the damage. It is for this reason that the government is trying to inculcate self-regulation among its members so that such advertisements do not appear at all. “Regulate yourself or someone else will” is its constant refrain.

Digitization needs Time

BroadbandIndia — Mon, 12 Sep 2011 05:52:07 +0000

Digitization continues to be a cause of woe among the cable operators as govt. shows no signs of framing a bail-out package for them to convert from analogue to digital. The cases of voluntary digitization are seen among the large MSOs in Indian metros and big cities. The MSOs have started to undertake infrastructure upgrade and installation of digital addressable system even in non- CAS areas. However, there is a need of comprehensive licensing policy from broadcasters downward to local cable operators, as at present the operators just have to register with the district authorities and start the service. However, the real challenge is to digitize the analog TV networks in small towns and rural areas, where cable TV operators, in most of the cases, are not under any regulatory framework but are providing services as registered cable operators. These cable operators do not have financial resources to upgrade the networks. India is a country with about 70% of population residing in rural areas and about 45 million families living below poverty line. In these rural areas, digitization with addressability cannot be a viable solution in the near future, unless special packages are made available to them at affordable charges.

Similarly, to meet the investment requirement for digitization, FDI limit should be enhanced from the present level of 49% to 74 %. A uniform policy for cable TV operators throughout the country is required. Estimates say by 2015 there will be well over 400 million digital TV homes, including 40 million taking IPTV, which in turn will generate revenues of more than US$ 40 billion. Total digitization should be gradually rolled out in phases. In semiurban and rural areas, where the demand for premium channels is low, analog network should continue for some more years as complete digitization is not practical in next three years. Though complete digitization is an ideal step, but developed markets have shown that digital and analog homes can co-exist. In India too, the first step that should be aimed for is to have both available and then take it from there to a complete switchover. This would also ensure some realistic timeframes for the people to adapt to digital in a few years.

Ramesh Jalan
Publisher
E-mail: rameshkumarjalan@rediffmail.com
rkjalan@broadbandindiamagazine.com

EDITOR’S DESK

BroadbandIndia — Thu, 11 Aug 2011 08:49:42 +0000

High Definition TV viewing is becoming a rage in the country. Media firms and television manufacturers are trying to cash in on this growing trend, as consumer awareness and aspirations are on the rise in India.While ESPN, StarCricket and Star Movies have launched HD versions recently to add to the increasing number of HD channels in India, almost all the direct-to-home (DTH) service providers are also coming out with HD platforms.TV manufacturers, like Sony, Panasonic, LG and Samsung which are witnessing HD sets accounting for up to 30 % of total sales are also intensifying efforts to encourage buyers to go for HDTV sets.All leading DTH service providers such as Airtel Digital TV, Reliance DTH, Dish TV, Sun TV, Tata Sky and Videocon d2h are offering HD set-to-boxes.HDTV offers higher resolution than SDTV (standard- definition television), providing a far better viewing experience, with crisper picture quality and sound.
Earlier this year, Star India, the fully-owned subsidiary of global media firm News Corp, had also launched five of its channels in HD.

Dilip K. Mahendra
Editor
Email: dilipkmahendra@rediffmail.com
dkmahendra@broadbandindiamagazine.com

Difficult phase for LCOs

BroadbandIndia — Wed, 10 Aug 2011 12:53:31 +0000

Consolidation is the buzzword in the Cable TV Industry today. After the Star-ZEEL joint alliance Media Pro, now four major national operators propose to join hands and consolidate over 25% of the country’s TV subscribers. They are Digicable, Hathway, InCable and DEN. The recent acquisition of Digicable by RCom is a prelude to the shape of things to come in the merger and acquisition in the industry. The growing number of alliance is definitely posing a big concern for local cable operators, who fear getting squeezed between broadcasters and the MSO combines. The government is also doing little to help the last mile cable operators, who are still about 60,000 in number countrywide.

Experts say that with digitization, no one can have a monopoly with the bouquet concept losing its relevance. However, the recent tiff between stakeholders on digitization is not helping the process of digitization either. In such an industry environment, the only route for local cable operators is to look for consolidation options with each other and combine their budgets and get better negotiation power to reduce costs. Though CAS (conditional access system) is also paving the way for consolidation, still cable operators need to find money to subsidise set-top boxes (STBs), set up a digital system, and build a proper service network. Digital cable is a game for those who have deep pockets. Cable operators will not only have to subsidise the boxes but the service as well. The govt. should undoubtedly look to amend the Cable Act that allows only 49% FDI in the business as against 74% FDI for MSOs. This will help cable operators to raise debt and work out digitization moves to stand on their feet against big consolidated groups in the industry. Also, time is a big factor. If we think that digitization can be achieved overnight, it is an impossible task. The Govt. should work on setting realistic timeframes to ensure a steady progress for the cable operators.

Ramesh Jalan
Publisher
E-mail: rameshkumarjalan@rediffmail.com
rkjalan@broadbandindiamagazine.com

Rebrand and Deliver

BroadbandIndia — Thu, 14 Jul 2011 09:38:55 +0000

Rebranding is the new buzz word these days! From news to entertainment, most channels are rebranding or rechristening themselves to showcase their content. So either you have a new brand name, new logo or, in some cases, new tagline. In an attempt to capture more eyeballs and reestablish its numero uno position among general entertainment channels, Zee Enterprises announced the rebranding of its flagship Zee TV. Travel and Living, the lifestyle channel from the Discovery fold, is also the latest in a series of such instances. This comes close on the heels of Star Plus unveiling a new logo and tagline.

There’s more. Nick has come up with a bolder logo to align itself with the global network; News X recast itself as IMN News and Bloomberg UTV is now ‘blunt and sharp.’ However, for all the channels, their new faces go much beyond a new logo or tagline. All of them are doing this to showcase their new content with their new programming strategies. Ditto for Star Plus. The new logo, a ruby red star, and tagline ‘rishta wohi, soch nayi’ is just the beginning and was prompted by Colors gaining a leadership position for most of 2009 and the initial months in 2010.

Makeovers are also prompted by the need to re-align the channels to be in tune with the global network and relect the highest standards of an international network. Bloomberg UTV which went in for a comprehensive revamp exercise spread over six months is an example for this. Rebranding exercises are not a one time effort during a channels lifetime. To keep pace with the modern trends in the market, each channel will find greater need to redefine their looks and content atleast every 4-5 years. For Zee, the rebranding exercise now was an absolute necessity as the last re-branding exercise took place in 2005. Zee Network, with all its channels is sporting a new identity, in the form of a new logo, all blue logo and a new tagline: “Ummeed Se Saje Zindagi”.

Ramesh Jalan
Publisher
E-mail: rameshkumarjalan@rediffmail.com
rkjalan@broadbandindiamagazine.com

Tough time ahead

BroadbandIndia — Wed, 08 Jun 2011 10:08:24 +0000

Media Pro Enterprise, a 50:50 Joint Venture between Zee Turner and Star Den is all set to revolutanize the indian distribution landscape. The landmark move marks the coming together of Star and Zee after nearly 12 years. The vision is to create efficiencies in the distribution sector, incentivise digitisation, address piracy issues and enable a content revolution in India. Around 80% of the estimated 14 cr. television households in India are still connected by analog cable. Several cable operators do not report actual revenues and digitisation and consolidation in the industry is expected to plug in the leak of revenues to broadcasters. The one word that clearly comes up while talking about this JV is monopoly. The coming together of two giants would offer them better position in the market and give more negotiating power. Eyeing the potential of the deal, other firms like OneAlliance also want to be part of the consolidation which could further strengthen the distributer’s stand in the industry.If OneAlliance joins, the JV will distribute nearly 100 channels and will have the negotiating power to face the pan-India MSOs who have been increasing carriege fees year after year. MSOs and cable operators see this as a clear case of cartelisation. Independent and local cable TV operators would be hurt the most. The Competition Commission of India should examine the deal which could clearly wipe out competition and impose a lurking danger to the future of local cable operators.

Ramesh Jalan
Publisher
E-mail: rameshkumarjalan@rediffmail.com
rkjalan@broadbandindiamagazine.com

Revised Dates for Digital Plans

BroadbandIndia — Mon, 16 May 2011 12:57:43 +0000

Digitalization is the buzz word in the broadcasting sector. Following Trai’s recommended sunset date for completion of digitalization in the country, the I&B Ministry has come out with a new timeline for a four-phased digitalization process with addressability in cable TV systems. The Ministry is mooting for 2014 as the new date. However, this has failed to excite industry experts as this does not signify any major shifts though the intention is seen in positive light.

The execution and implementation still remain a bigger challenge to address. With little support from the opposition, the govt. already has enough to worry about. Timely execution, possibility of delays and high capital investment for upgrading equipments are among a few to start with. The digitalization of metros in Phase I is expected to be quicker as the process here has already started and MSOs are willing to shell out investments in this area.

One of the other things that will boost the digitalization revolution is the outlook of the investment community for this industry. The sector represents immense potential as a business that will drive consumption in the market and is a very high potential segment. All the key players including cable and satellite companies and DTH companies would directly benefit out of the process. The govt. should make sure that in the race to implement digitalization, cable operators are not left behind to struggle with the big players.

Ramesh Jalan
Publisher
E-mail: rameshkumarjalan@rediffmail.com
rkjalan@broadbandindiamagazine.com