Well begun, but not half done

Written by Sudipta Datta | Updated: Oct 10 2012, 09:50am hrs
When the government passed an ordinance on compulsory digitisation of the television industrys distribution system by December 2014, most players in the industry saw it as a life-changing opportunity but realised that it wouldnt be easy to install millions of set-top boxes on time to make the switch. But implementation of even phase 1 of the projectdigitisation of four metros, Mumbai, Delhi, Chennai and Kolkatais proving to be a huge task. One deadline, June 30, has already been missed and now the industry is worried that the October 31 deadline too might be difficult to keep.

Already, the West Bengal and Tamil Nadu governments have written to the Centre to extend the deadline once again by at least three more months. Bengal urban development minister Firhad Hakim tells FE that many of the MSOs (multi-system operators) have not been able to supply set-top boxes to consumers. It is not possible for the MSOs to meet the deadline since they have received only 40-50% of set-top boxes (STBs), he says.

According to E&Y analysts, it is estimated that India has 127 million cable and satellite homes, of which around 32 million are direct-to-home or DTH, seven million digital cable and 88 million analogue cable homes. Industry estimates point out that the distribution business will need to invest around R7,500 crore in the digitisation process, with phase I in the four metros requiring R1,100 crore. Digitisation will bring transparency in the distribution system, consumers will have more choice and the quality of broadcasting will improve. But has enough been done to install set-top boxes in the four metros

Not enough STBs

In Kolkata, the Cable Operator Digitisation Committeeit has 1,500 members across the Kolkata Metropolitan Area (KMA)is meeting this week to take stock of how many installations the operators have managed so far. A state government official says if analogue signals are stopped from November 1, it will lead to a law and order problem in KMA. According to operators, KMA has around 40 lakh cable TV connections, and admit that only 32-35% have set-top boxes. Suresh Sethia, director of the largest MSO, Siti Cable, says, We have already delivered six lakh set-top boxes to our consumers and we are hopeful of delivering 2.5-3 lakh more boxes by end of October. According to Sethia, July-August saw a lack of demand from consumers in Kolkata, but it picked up again in October. Although 5-7% consumers will prefer to wait and watch the situation, most will shift to the digital platform by end of the month, he says.

Swapan Chaudhuri of Bengals Cable Operator Digitisation Committee says ground realities have not changed much since July, when the digitisation deadline was put off. The number of customers shifting to the digital platform has increased by a mere 5-7% in the last two months, he says.

Need another extension

A majority of the 800-odd local cable operators in Delhi say it cannot keep the October 31 deadline. There is a lot of confusion. Consumers in many colonies have two-three television sets and they have been paying a lot for their cable connections. When we go with a box, they either dont want it or ask questions on rates and so forth to which we dont have answers. With so much confusion, the deadline is likely to be pushed, says AS Kohli, president, cable operators association of south-west Delhi.

According to the Cable Operators Federation of India (COFI), the digital set-top box penetration in Delhi is only 40% of the two million cable homes (as opposed to 53% claimed by the latest I&B ministry data). An official document of the I&B ministry released after August 16 says there is a requirement of 13.3 million set-top boxes in the four metros. On September 17 the government pegged this number at 6.8 million. Thus, the estimates for the requirement of set-top boxes across the four metros were slashed by nearly 50% in less than a month. Which data should one believe, asks a senior analyst in Mumbai.

Confusion on size

Why this huge cut in size The initial estimate of 13.3 million set-top boxes was based on the submissions of the registered MSOs (across phase I) whereas the new estimate of 6.8 million is based on census 2011 household data (after deducting the number of DTH homes from the number of TV homes and adding 20% to that number to account for multiple TV homes). This has created a lot of confusion in the industry.

The irony is that LCOs (local cable operators) are not even part of the digitisation discussions conducted by the I&B ministry recently. Where are the a-la-carte rates for channels What answers do we give to consumers, says Roop Sharma, president, COFI.

Official sources in the government concede that the Tamil Nadu and West Bengal governments have renewed their requests to postpone the October 31 deadline by another three months. But broadcasters, especially the general entertainment channels, who have invested a lot, want analogue signals to be switched off at the end of the month.

According to Sharma, cable operators have decided not to deposit the subscription revenue to broadcasters for October. We are sending a letter to this effect to I&B minister Ambika Soni. If broadcasters switch off the analogue signal from November 1, there might be a law-and-order situation, she adds.

Lack of awareness

Jagjith Singh Kohli, MD & CEO of Digicable, says: Cable operators and MSOs are more or less equipped to meet the October 31 digitisation deadline. In Mumbai, 50% of the homes are already digitised. But the lack of public awareness about digitisation has been a major challenge. Educating the subscriber and making him shell out money for a set-top box has been difficult too.

In Mumbai, Hathway Cable and Datacom Ltd has decided to procure an additional 10 lakh set-top boxes (in addition to the previously planned 20 lakh installations) to meet the growing demand for digital cable. Over the next four months, Hathway will scale up availability of set-top boxes for the switchover to digital cable TV.

Commenting on the development, K Jayaraman, MD & CEO of Hathway Cable and Datacom, says, We have been preparing to bring consumers a seamless move from analogue to digital cable TV. The modified deadline presents us with a unique opportunity to reach out to and impact a greater segment of the market. We plan to deploy 30 lakh digital set top boxes across the two metro cities of Mumbai and Delhi. The rush for digital services will peak around the last fortnight of October 2012 and we do not want to disappoint the consumers and drive them towards the costlier option of DTH services.

DTH players hopeful

Shashi Arora, CEO, DTH/ Media, Bharti Airtel, hopes the deadline wont be extended again. DTH operators are well organised in terms of carrying set-top-box inventory, distribution infrastructure and reach in urban/rural areas and are quick in installation at the time of new connections, he says.

The digitisation of the cable network, says Arora, will translate into wider choice of TV channels, better quality of transmission, increased value added services and paying for what you view. For the industry, it will bring in greater consolidation, reduced dependence on viewership ratings and drop in carriage fees. Salil Kapoor, CEO, Dish TV, says consumers need to be aware to select the right set top box and services. A plethora of options are available in terms of selecting products and services, he says.

Impact of digitisation

According to Media Partners Asia (MPA), if key issues on capacity and aftersales services are addressed, the governments mandatory digitisation drive could be a significant catalyst for DTH to grab high-ARPU (average revenue per user) customers and increase reach in larger markets. MSOs envisage about 15-20% churn in cable subscriptions to DTH. Some operators suspect this could grow to 30% in the early stages of phase I deployment. There is also a need to ramp up aftersales service by DTH companies, as the lead time to address a given complaint ranges from three to five days and is subject to the minimum number of inquires received and the number of on-ground engineers. Satellite operators are also concerned about the capacity constraints to carry signals on the currently used FSS or fixed service satellite band. Amongst major DTH operators, Dish and Airtel are adequately placed in terms of channel capacity for phase I of mandatory cable digitisation.

With inputs from Ashish Sinha in New Delhi, Rohit Khanna in Kolkata and S Saroj Kumar in Chennai