With Telecom Regularity of India(Trai) trying to build consensus among 7 DTH operators on the commercial interoperability of 25 million DTH settop boxes out there, Nagarajan Kanthan, Reliance Communication, regional head (DTH), South,feels that interoperability of set top boxes similar to Mobile Number Portability would enhance competitiveness of the players that are wishing to reach 36 million households in 2012.He talks to S Saroj Kumar of FE on interoperability issue and other emerging business models in the Indian DTH industry that is adding a brisk one million subscribers a month. Excerpts:
What is your take on set top box interoperability that Trai is mulling to introduce ?
Trai is building consensus among operators on the commercial and technical feasibility of making set top boxes portable similar to mobile number portability in the telecom space. In set top interoperability, a DTH customer can retain the box and switch to the operator of his choice that suits his pocket and satisfactory delivery of service. There is a hitch in technical interoperability as different DTH brands are airing their signals in different broadcast technology formats like MPEG2 and MPEG4 making seamless adaptability of the boxes impossible in the interoperability regime.If consensus is build and set top portability is made possible by finding a solution to the technological connundrum then DTH market would witness a fresh lease of provider competitiveness where subscribers would make a beeline to an operator offering best possible deal in the market.
But set top interoperability is opposed by certain section of industry players ?
Trai is contemplating on interoperability to address the exit option sought by customers. I personally feel that when the industry grows from the thin volume to head dizzying number the customer will always look for ways to switch to an operator who offer the best bargain. Why should a customer incur cost every time he decides to change his operator? I certainly believe that industry would abide by Trai’s ruling over interoperability.
Could the set top boxes be offered free to increase DTH subscription when cable vis-a-vis DTH monthly subscription charges are not that steep especially in urban areas ?
One need to understand that there is a cost involved in manufacturing and shipping of the set topboxes from places like China. Though it is offered free in some markets like Middle East, but any such move in a country like India would add to the burden of the industry that is already reeling under the incidence of high taxation. The highly capex intensive industry is already incurring an array of high taxes like entertainment tax, broadcast licence fee and transponder fee. With a low customer ARPU revenue market, it is a very difficult proposition to toy with such kind of ideas.
How is the cable to DTH churn rate and how is Rcom sales ?
Out of the 126 million cable homes, DTH climbed from 14 million in 2009 to over 25 million in 2010 indicating 78% growth with operators adding about 1 million customers a month. It is encouraging that industry is growing at a scorching pace. Rcom has made substantial moppings during festival season like Diwali, Pongal and Newyear. During Onam this year we added close to 32,000 connections in Kerala. Close on heels of Christmas and New year we will be appending our offer with 6 to 8 High Definition channels with the GEC category like NGC. Our South ARPU especially Tamil Nadu’s is Rs 180 to Rs 190 that is close to national ARPU of Rs 185 to Rs 200.
What is happening on the digitalisation space ?
The digitalisation market is set to explode due to factors like TRAIs diktat on completing the analogue to digital process by 2013 and the rising sales of LCDs and LED boxes in the market. There will also be uptick in High Definition channel demand among customers. But HD growth in terms of numbers would be moderate due to imminent transponder congestion as HD consume more of transponder band space than ordinary channels that embed a transponder. We also foresee the revealing of true numbers in the under-declared cable subscribstion market in post digital era.
How is the MDU channel helping your business in South ?
The Multiple Dwelling Unit(MDU) business is gathering pace in cities like Chennai in South. We have recently signed an agreement with realty firm Gem Grove for MDU covering 1,500 aparments under construction by them in the city. MDU i.e having one dish and splitting the connection to different individual houses in an apartment is also fast spreading in tier-I, tier-II cities like Salem and Trichy. So far we have 100 MDU installations in Southern region. MDU enable living space specific services like security surveillance making possible DTH viewers to keep a vigil on those entering and exiting their apartments.