CABLE TV DIGITIZATION

A Win-win for All

Amending the Cable Television Networks (Regulation) Act is helping the Indian government usher in cable digitization in the country in a big way

he cable industry in India has grown rapidly to an es mated 94 mn in 2011 from a triing 0.4 mn in the beginning of 1992. The total number of TV households in the county is es mated to be around 147 mn. Addi onally, the number of pay channels has grown steeply from 20 in 1995 to around 167 and there are more than 800 channels registered with the Informa on & Broadcast (I&B) ministry. Furthermore, the country is witnessing a dras c shi in consumer behavior; customers today do not shy away from forking out extra money to get best in class services. All these factors put together have provided an impetus to cable digi za on in the country. The Indian government has been pre y aggressive about cable digi za on in the

country; the parliament recently cleared the bill to amend the Cable Television Networks (Regula on) Act for ushering digi za on. As per the act, cable digi zaon will be implemented in 4 phases across the country and would be completed by December 2014. In view of the development, the I&B ministry has decided to modify the June 30th, 2012 deadline for a complete switchover, in the main metros to October 31st, 2012. The new deadline would be monitored more vigorously and reiterates the governments commitment to digi za on in the country.

Impact on Various Stakeholders

The ever-increasing demand from consumers, combined with massive increase

in number of TV channels has posed an insurmountable challenge for analog cable TV. The advent of cable digi za on in the country is a much required change not only for consumers but also for the rest of the stakeholders. The consumers will have access to 500 plus TV channels, a be er viewing experience, new and be er services such as HD, broadband, and video on-demand. TV viewing will become more interac ve, personal as well as social. Cable digi za on will also streamline the underrepor ng of subscrip on revenue by LCOs, as a result MSOs would gain an estimated 6-fold increase in subscrip on revenue. Digi za on will further help cable service providers to tap addi onal business opportuni es in the form of value-added and interac ve

44 | VOICE&DATA | AUGUST 2012 | voicendata.com | A CyberMedia Publication

CABLE TV DIGITIZATION

services. It will enable broadcasters, satellite operators, and cable operators to provide more interac ve services to the customers and enable operators to grow their ARPUs. Bundled broadband will boost revenues, prots, and serve as compe ve differentiation to DTH, which in turn will help LCOs increase scalability to cross-sell other services and gradually help in the consolida on of LCOs. This will in turn help to curtail the service tax leakage and provide an impetus to the economy.

Highlights
The cable industry in India has grown to an estimated 94 mn in 2011 from a trifling 0.4 mn in 1992 The Indian government has been much aggressive about cable digitization in the country Digitization of around 100 mn homes will require a capital investment of about $10 bn to have the requisite infrastructure in place

within the given meframe, even ensuring a 60% digi za on, will help India in taking a giant leap and be at par with the developed economies.

The Future
Digi za on will result in radical change in consumers expecta ons and the industry will witness many mergers and consolidaons, because LCOs will e-up with triple play service providers or MSOs to upgrade their infrastructure. However a rise in the number of pay channels is expected, although there will be substantial improviza on in the content. This will also put pressure on free-to-air channels to maintain viewership. Digi za on will lead to more 3D content crea on for urban consumer and more regional content for the rural consumers. It will also spur the demand for 3D and HD TV sets. A consulta on paper released by Trai indicates that Trai has revamped the en re regulatory structure of the broadcas ng, cable TV, and DTH industry, pertaining to carriage fee, channel prices, and channel availability, etc. Once digi zed, all channels (pay and free-to-air) have to be oered on a-l-carte or individual basis to subscribers, according to the Trai. Some of the concerns pertaining to digitization as expressed by the cable industry include revenue sharing and the availability of set-top boxes. The larger issue of the role of broadcas ng con nues to remain unaddressed. However once cable operators are able to overpower the challenge of video being fragmented across dierent content sources, devices, and technologies by combining TV and web applica ons, consumers will benet from being able to watch videos and interact with friends on any screen. Next-genera on architecture solu ons will enable local content mone za on and ecient management and publishing of content across mul ple screensTV, PC, mobile, and tablets. That will ensure content following the consumer rather than the other way around.
Sanjay Rohatgi The author is senior vice president, service provider, Cisco India & Saarc vadmail@cybermedia.co.in

Collaboration Among Stakeholders

The scale of the cable digi za on ini a ve needs large scale planning and co-ordinaon among all stakeholders involved. Going by the numbers, digi za on of around 100 mn homes will require a capital investment of about $10 bn to have the requisite infrastructure in place. Therefore, the government as well as private players must provide cable operators with exible and aordable payment policies, yet uncompromised quality set-top boxes. The increase in FDI across pla orms from 49% to 74% is a welcome move from the government, incen ves such as oering customer concessions and income tax holidays are expected in the future. Private players on their part need to come out with exible and new business models without incurring huge costs. It is equally important to provide customized and locally designed set-top boxes at an a rac ve price point. In fact, there are set-top boxes available in the market having varying price points that cater to the disparate purchasing powers and choice of consumers. In a nutshell, the government along with other ecosystem players has to create a model that is win-win situa on for all the stakeholders involved. The MSO digital penetra on today stands at 5 mn. In order to meet the deadline of 2014, cable service providers will have to sell about 90 mn set-top boxes to their consumers. While complete digi za on may or may not happen

Complete Switchover
To ensure that cable digi za on is completed as per the set meline, the en re ecosystem needs to focus on a few crucial factors such as awareness, collabora on between ecosystem players. The government on its part has to usher in encouraging policies as well. Consumers on their part need to know what cable digi za on would bring to them to help them make an informed decision about the need to switch. Communica ng and informing consumers about what going digital means in terms of choice, access, and quality is crucial here. The Indian Broadcas ng Federa on (IBF) and News Broadcasters Associa on (NBA) have, in fact, begun awareness programs and already have ckers running on almost all TV channels to inform end consumers about the benets of digi za on. Training and orientation for more than 200,000 cable operators in the country is another cri cal step, since many of the LCOs have misplaced anxiety about cable digi za on. In reality, cable digi za on will help LCOs to thrive and by co-operating with MSOs they can transform into channel partners for ISPs and service providers because of their last mile access. Keeping pace with changing mes, the Informa on & Broadcas ng Ministry has begun to use media to create awareness about their plans to digi ze the cable sector in the country. Players such as Cisco for example organized a cable summit in the country to create awareness.

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46 | VOICE&DATA | AUGUST 2012 | voicendata.com | A CyberMedia Publication