TELECOM SECTOR

• INDUSTRY OVERVIEW
• BACKGROUND
• GROWTH
• POLICY AND INITIATIVES
• REGULATORY FRAMEWORK
• FOREIGN DIRECT INVESTESTERS
• COMPETITION OVERVIEW
• MAJOR PLAYERS
• CHALLENGES AND OPPORTUNITIES

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INDUSTRY OVERVIEW
• BACKGROUND

The telegraph act of 1885 governed the telecommunications sector. Under this act, the
government was in-charge of policymaking and provision of services . Major changes in
telecommunications in India began in the 1980s. Under the Seventh Plan (1985-90), 3.6
percent of total outlay was set aside for communications and since 1991, more than 5.5
percent is spent on it (Figure 1). The initial phase of telecom reforms began in 1984 with
the creation of Center for Department of Telematics (C-DOT) for developing indigenous
technologies and private manufacturing of customer premise equipment. Soon after, the
Mahanagar Telephone Nigam Limited (MTNL) and Videsh Sanchar Nigam Limited
(VSNL) were set up in 1986. The Telecom Commission was established in 1989.

When telecom reforms were initiated in 1994, there were three incumbents in the fixed
service sector, namely DoT (Department of Telecom), MTNL and VSNL. Of these, DoT
operated in all parts of the country except Delhi and Mumbai. MTNL operated in Delhi
and Mumbai and VSNL provided international telephony.

Telecommunications play an important role in the world economy and the worldwide
telecommunication industry's revenue was estimated to be $3.85 trillion in 2008. The
service revenue of the global telecommunications industry was estimated to be $1.7
trillion in 2008, and is expected to touch $2.7 trillion by 2013.

The Indian telecom services can be divided predominantly into basic, mobile and Internet
services. It also comprises smaller segments, such as radio paging services, Very Small
Aperture Terminals (VSATs), Public Mobile Radio Trunked Services (PMRTS) and
Global Mobile Personal Communications by Satellite (GMPCS).

The growth witnessed in the mobile services and Internet services segments was higher
as compared to other services, such as basic services and radio paging services.

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 • GROWTH

A large population, low telephony penetration levels, and a rise in consumer spending
power has helped make India the fastest-growing telecom market in the world. The
market's first operator was the state-owned Bharat Sanchar Nigam Limited (BSNL),
created by corporatization of the Indian Telecommunication Service, a government unit
formerly responsible for provision of telephony services.

Subsequently, after the telecommunication policies were revised to allow private

operators, companies such as Bharti Airtel, Reliance Communications, Tata Indicom,
Idea Cellular, Aircel and Loop Mobile have entered the market (Bharti Airtel currently
being the largest telecom company in India). In the fiscal year 2008-09, rural India
outpaced urban India in mobile growth rate.

The total number of telephones in the country stands at 846.32 million, while the overall
tele-density has increased to 70.89% as of Mar 31st, 2011. Mobile telephony experiences
growths at rates such as 20.21 million subscribers a month, which were added in March
2011.

• TOWERS

It is engaged in manufacturing an extensive range of Telecommunication Towers with the

help of our technical proficiency and rich industry experience. These towers are
flawlessly designed to promptly spread the communication and transmit the cell
broadcast message. Manufactured as per set industrial benchmarks, these are available in
a number of designs of 3-legged and 4-legged towers. Further, we design and install these
towers as per the height and other specifications provided by our clients.

Power Sub-Station Structure

1. RTT Angular Telecom Tower
2. RTT Tubular Delta Tower
3. GBT Angular Telecom Tower

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 4. GBT Tubular Telecom Tower
5. Trolley For Automobile Sector
6. Tower Accessories
7. Galvanized Steel Structures
8. Guyed Masts
Power plants and systems will represent an increasing proportion of the total functional
common core component sector revenue in the US (including wire and cable,
construction, and integrated electronic enclosure packaging) through 2006. Power plants
and systems revenue may only represent a small portion of the overall functional
common core components industry revenues-5.4 percent of the industry's $25.3 billion
total revenue in 2001-but, due to its strong growth rate, it will account for a larger
percentage (6.5 percent) of the $33.4 billion overall functional common core components
industry by 2006.

POLICY AND INITIATIVES

• REGULATORY FRAMEWORK

After 1995 the government setup TRAI (Telecom Regulatory Authority of India) which
reduced the interference of government in deciding tariffs and policy making. The DOT
opposed this. The political power changed in 1999 and the new government under the
leadership of Atal Bihari Vajpayee was more pro- reforms and introduced better
liberalized policies. They split DOT in two- one policy maker and the other service
provider (DTS) which was later renamed as BSNL. The proposal of raising the stake of
foreign investors from 49% to 74% was rejected by the opposite political party and leftist
thinkers. Domestic business group wanted the government to privatize VSNL. Finally in
April 2002, the government decided to cut its stake of 53% to 26% in VSNL and to throw
it open for sale to private enterprises TATA finally took 24% stake in VSNL.

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This was a gateway to many foreign investors to get entry into the Indian Telecom
market. After March 2000, the government became more liberal in making policies and
issuing licenses to private operator.
The government further licenses fees for cellular service provides and increased the
allowable stake to 74% for foreign companies. Because of all these factors, the services
fees finally reduced and the call cost were cut greatly enabling every common middle
class family in India to afford a cell phone. Nearly 32million handsets were sold in India.
The data reveals the real potential for growth of the Indian mobile market.

• FOREIGN DIRECT INVESTMENT POLICY

India has opened its telecom sector to foreign investors up to 100 percent holding in
manufacturing of telecom equipment, internet services, and infrastructure providers (e-
mail and voice mail), 74 percent in radio-paging services, internet (international
gateways) and 49 percent in national long distance, basic telephone, cellular mobile, and
other value added services (FICCI, 2003). Since 1991, foreign direct investment (FDI) in
the telecom sector is second only to power and oil - 858 FDI proposals were received
during 1991-2002 totaling Rs. 56,279 crores (Figure 4) (DoT Annual Report, 2002).
Foreign investors have been active participants in telecom reforms even though there was
some frustration due to initial dithering by the government. Until now, most of the FDI
has come in the cellular mobile sector partly due to the fact that there have been more
cellular mobile operators than fixed service operators. For instance, during the period
1991-2001, about 44 percent of the FDI was in cellular mobile and about 8 percent in
basic service segment. This total FDI includes the categories of manufacturing and
consultancy and holding companies

FDI in Telecom sector has increased in recent years with value of 81.62 billion with share
of 10% in total inflow during January 2000 to June 2005. This is mainly in telecom
services and not in telecom manufacturing sector. Therefore, it is essential to enhance the

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prospect for inflow of increased funds. The NTP 1999 sought to promote exports of
telecom equipments and services. But till date export of telecom equipment remains
minimal. Most of the state-of-the-art telecom equipments including mobile phones are
imported from abroad. There is thus immense potential for indigenous manufacturing in
India. Certain measures like financial packages, formation of a telecom export promotion
council, creation of integrated facilities for telecom equipment through SEZ and
encouraging overseas vendors to set up facilities in India, are required for making India a
hub for telecom equipment manufacturing and attract FDI. The telecom sector has shown
robust growth during the past few years. It has also undergone a substantial change in
terms of mobile versus fixed phones and public versus private participation. The
following table and discussions from the report of the working report on the telecom
sector for the 11th plan (2007-2012) will show the growth of telecom sector since 2003

COMPETITITION OVERVIEW

• MAJOR PLAYERS

There are three types of players in telecom services:

State owned companies (BSNL and MTNL)
Private Indian owned companies ( Reliance Infocomm, Tata Teleservices)
Foreign invested companies (Hutchison- Essar, Bharti Tele- Venture, Escotel, Idea
Cellular, BPL Mobile, Spice Communications)

Various other services emerged by leveraging the telecom services industry

Radio Paging
GMPCS
Very Small Aperture Terminals (VSAT)
Public Mobile Radio Trunked Services.

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Large number of additions in telecom subscribers +Low teledensity (depicting large
untapped potential) = Telecom Advantage

P erc entage

7% 10% TTS L
8%
HUTCH
16%
B S NL
RE LIA NCE
21% B HA RTI
18% IDE A
20% O THE RS

CHALLENGES AND OPPORTUNITIES

Among the areas of interest in these services are mobile broadband, mobile commerce,
value added services and GPS services. Non-voice mobile commerce, value added
services and GPS services. Non-voice services presently contribute between 20-25 per
cent of telecom providers’ revenues. Menon said that the new business strategy has to
move from just communication-led to include business domains. ``The areas of
opportunities for telecom players are Wimax, mobile as a distribution channel, capturing
greater share of consumer wallet, and device linked opportunities.’’

Conclusion

Telecommunications is one of the fastest-growing areas of technology

in the world. Because of its rapid growth, businesses and individuals
can access information at electronic speed from almost anywhere in

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the world. By including telecommunications in their operations,
businesses can provide better services and products to their
customers. For individuals, telecommunications provides access to
worldwide information and services.

BIBLOGRAPLY

http://www.indiamart.com/jitendrafabri-galva/towers.html#rtt-angular-telecom-tower
http://www.indianmba.com/Faculty_Column/FC701/fc701.html
http://en.wikipedia.org/wiki/Telecommunication#Telephone
http://asiancorrespondent.com/489/13-telecom-tower-companies-in-india/
http://www.indiabroadband.net/india-broadband-telecom-news/11682-india-register-500-
growth-broadband-services-within-5-years.html

MEANING OF BROADBAND

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Broadband in telecommunications refers to a signaling method that includes or handles a
relatively wide range (or band) of frequencies, which may be divided into channels or
frequency bins

Broadband in analog video distribution is traditionally used to refer to systems such as

cable television, where the individual channels are modulated on carriers at fixed
frequencies. In this context, baseband is the term's antonym, referring to a single channel
of analog video, typically in composite form with separate baseband audio. The act of
demodulating converts broadband video to baseband video.

However, broadband video in the context of streaming Internet video has come to mean
video files that have bitrates high enough to require broadband Internet access in order to
view them.

TECHNOLOGY OPTIONS FOR BROADBAND SERVICES

The Broadband Policy Framework visualises creation of infrastructure through various

access technologies which can contribute to growth and can mutually coexist. Spread of
infrastructure is a must for healthy competition and therefore it would be the endeavour
of the Government that the telecommunication infrastructure growth in the country is not
compromised in any manner.

Various access technologies, inter-alia, are:

(a) Optical Fibre Technologies

(b) Digital Subscriber Lines (DSL) on copper loop
(c) Cable TV Network
(d) Satellite Media
(e) Terrestrial Wireless
(f) Future Technologies

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Growth in broadband

India is estimated to move from its current position at number 18 in the world for
broadband market and jump to attain the number 6 rank. This will be achieved at a mind-
boggling growth rate of 489%. This is the highest growth rate expected from any market
and is almost the double from the second highest growth market i.e. Vietnam (276%).

World Broadband Q3 508M, Growth Flat

Q3 broadband net adds were 14.3M to 508M according to the ever-invaluable Point-
Topic. That's about 30% of the homes in the world. Developed countries at typically at
Fiona Vanier of Point-Topic notes "Net additions have remained relatively steady after
their peak at almost 20 million in Q1 2009." (14M +- 1M).
50% (7M) of the new subscribers are in China and South Asia, with both China Telecom
and China Unicom over 2M adds for the quarter. South Asia is the big orange blob
dominating the chart at the left. China's lead over the U.S. expanded by 4M to about 40M

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homes, as many as the total in France + Britain. DSL (the big blue area at right)
dominates cable by more than 3:1, with small cable shares almost everywhere except the
U.S. and Canada.

The growth stories outside of China are Brazil and Russia, about 20% per year. The next
chart is the breakdown of the Top 10 broadband countries with three years of data. Here's
the press release from Point-Topic and the Broadband Forum, which includes IPTV data.
France, followed by rapidly growing China, are the TV leaders.

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BROADBAND SUBSCRIPTION REACHED 509 MILLION LINES
WORLDWIDE AS IPTV PASSES 40 MILLION SUBSCRIBER MILESTONE
China and India report second best quarters ever and developing broadband markets
show over 20% growth 3Q2010
– Year on year growth rates of 6.7% have taken broadband subscription to 508,761,837
in the third quarter of 2010, according to figures prepared by Point Topic
(http://www.point-topic.com) and announced today by the Broadband Forum in its
Global Broadband and IPTV Industry Update. Over 14.3 million lines were added in the
third quarter alone, representing 2.88% growth over the previous quarter.

Whilst the first three quarters of 2010 have generally been characterized by uneven
growth patterns, some countries stand out with exceptional growth – with China and
India both reporting their second best ever quarters in Q3. Vigorous growth was generally
concentrated in developing broadband markets, with India, Russia, Vietnam, Ukraine and
the Philippines all growing by more than 20% in the last 12 months.

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Robin Mersh, Chief Executive Officer of the Broadband Forum, said, "The patterns of
growth are shifting as some markets reach saturation and emerging markets show
remarkable growth rates over this year. In more and more countries we are seeing more
than 80% availability and huge take up of broadband. The Broadband Forum celebrates
this major achievement and continues to work towards empowering new applications and
developing enhanced deployment and management solutions to support the broadband
and IPTV industries.”

The new figures show that China and the US continue to add more lines than any other
single market. Russia and Brazil, however, are the most rapidly growing in percentage
terms with 22% and 14% respectively. Asia continues to increase its share of the total
broadband lines in the world, adding more than double the number of broadband lines per
quarter than any other region.

Regional Growth
In Asia, more and more of the developing markets are starting to report significant
growth in broadband, with China, India, the Philippines, Vietnam and even continued
growth in South Korea all pointing to increased dominance in the global market.

In Europe the biggest gains are in Eastern Europe, although the region as a whole has
performed better in 2010 than in 2009 on a quarter by quarter basis with most of the big
markets showing improvement. With these strong numbers coming from Eastern Europe,
there is optimism that 2011 will continue a strong growth trend for the region as a whole.

In the Americas, we see renewed pickup, although it’s too early to say if this is the start
of a full blown recovery. In Canada especially there is little head room for further growth
as household penetration nears 90%. In South America, Brazil and Mexico continuing to
offer robust numbers while growth is slow in some of their South and Central American
neighbors.

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The Middle East and Africa region also shows steady growth rather than spectacular
numbers. While growth is strong in Egypt, Turkey and South Africa, there are still
impediments to adoption (mostly availability and cost) in much of Africa. Once these are
overcome we should see mass adoption become a reality.

Technology Overview
Source: Data provided by Point Topic (www.point-topic.com)
DSL remains the dominant broadband technology worldwide. DSL is growing most
rapidly in Asia, driven by the relatively low up front costs and availability over other
technologies. Fiber continues to grow its strong market share and for the first time we are
seeing notable growth in fixed wireless technologies.
“As demand for broadband increases worldwide there is now a significant amount of
‘infill’ taking place. Many areas don’t have access to the infrastructure required for fixed
line broadband provision. There has been an increase in access via technologies that don’t
require wire of some description all the way to the consumer,” says Oliver Johnson, CEO
of Point Topic.

IPTV Growth
The total number of IPTV subscribers worldwide now stands at 41.9 million
(41,892,171), representing a growth of 7.3% (2.846 million net adds in the quarter) in the
three months to end September and 36.7% growth in the last 12 months (11.256 million
net adds).

“IPTV has grown solidly in the last 12 months. Perhaps more importantly the number of
markets and operators offering IPTV is increasing as high speed broadband spreads
around the world,” says John Bosnell, Senior Analyst at Point Topic. “With TV being
increasingly routed over IP networks, the broadband connection is becoming an
increasingly significant channel for video delivery. As a tool for customer retention, as a
prime mechanism for increasing ARPU, and as a means of providing a distinctive

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offering to the competition, the bundling of IPTV with a broadband subscription and
voice is very attractive to ISPs.”

With 46% market share, Europe continues as the leading IPTV region. But China is fast
catching up to France, the current world leader in terms of IPTV subscribers, and at
current growth rates China will overtake France sometime during 2011. With this growth,
Asia is rapidly closing the gap.

Indus Towers a joint venture of Vodafone, Bharti Airtel and IDEA is formed.

Indus Towers = Ortus Infratel Holding (Vodafone – 42%) + Bhart Airtel (42%) +
IDEA (16%)

American Tower Corp has acquired Xcel Telecom towers for 700 crores.

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Quippo Telecom has acquired Spice Telecom’s tower business and Tata
Teleservices WITIL is merged into it.

BSNL has planned to lease its towers for better revenues. Because of the intense
competition each tower needs more than 2 tenants to stay profitable. The current
rates are a bit low and hence the sharing and consolidation.

Here is the list of 13 telecom tower companies India based on the number of
towers :

Company Approximate
number of towers
Indus 80000
Reliance Infratel 31000
Bharti Infratel 20000
Quippo Telecom 23000
Infrastructure (QTIL)
GTL 9000
Essar Telecom 6000
American Tower Corp 4000
Tower Vision 3000
Aster Infrastructure 1000
India Telecom Infra 1000
Limited
KEC International 400
Independent Mobile 400
Infrastructure

As new players come along, the tower business will be intense as it would be
difficult for a new player to build its own infrastructure. The independent mobile
tower companies will gain a lot. If the established player too share their towers
then the new telecom players can roll out their networks quickly and the tower
companies can increase their revenues. (source for the table above)

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GSM(Global System for Mobile ) & CDMA (Code division multiple
access)

GSM means all sim support this mobile & CDMA means only particular
singal company sim supported

Note: In CDMA technology SIM is often called as RUIM (Removable User Idendity
Module. CDMA uses Different Frequencies than GSM. CDMA also does not require a
SIM card. )

In short, a GSM Phone uses a SIM card or else when you turn it on it will say "please
insert SIM", while a CDMA has no sim card.

DTH: BEAMING FUTURE ON ZOOMING

ECONOMY

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 http://www.rediff.com/money/2004/mar/23spec.htm

http://www.indiandth.com/2011/01/consolidation-and-greater-foreign-interest-forecast-
for-indian-dth-sector.html

http://sivasundaram.com/wp-content/uploads/2007/08/dth-industry-in-india.pdf

http://www.financialexpress.com/news/i&b-min-wants-zero-import-duty-for-dth-
sector/746270/0

http://www.dishtv.in/library/images/mgmt-discussion-analysis10.pdf

http://www.euromonitor.com/india/country-factfile

DTH SECTOR

• INTRODUCTION
• HISTORY OF INDIAN BROADCASTING
• CURRENT PLAYERS
• ENVIRONMENT ANALYSIS- PORTER’S MODEL

• THREAT OF SUBSTITUTE
• BARGAINING POWER OF SUPPLIERS
• BARGAINING POWER OF BUYERS
• INTER FIRM RIVALRY
• THREAT OF NEW ENTRANTS

• CHALLENGES FACED BY THE INDUSTRY

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• POLICY AND REGULATION
• NON- AVAILABILITY OF TRANSPONDERS
• WEAK FINANCIALS
• QUALITY OF SERVICE ISSUES
• RECOMMENDATIONS

• FRIENDLIER POLICY
• ACCELERATED SUBSCRIBER AND REVENUE GROWTH
• BETTER QUALITY OF SERVICE
• CONCLUSION

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 • INTRODUCTION

DTH stands for Direct-To-Home television. DTH is defined as the reception of satellite
programmes with a personal dish in an individual home.

DTH does not compete with CAS. Cable TV and DTH are two methods of delivery of
television content. CAS is integral to both the systems in delivering pay channels.

Cable TV is through cable networks and DTH is wireless, reaching direct to the
consumer through a small dish and a set-top box. Although the government has ensured
that free-to-air channels on cable are delivered to the consumer without a set-top box,
DTH signals cannot be received without the set-top box.

DTH does away with the need for the local cable operator and puts the broadcaster
directly in touch with the consumer. Only cable operators can receive satellite
programmes and they then distribute them to individual homes.

The rapid growth of DTH in India has propelled an exodus from cabled homes, the need
to measure viewership in this space is more than ever; aMap, the overnight ratings
agency, has mounted a peoplemeter panel to measure viewership and interactive
engagement in DTH homes in India.

18 March 2011 saw India's first self produced dolby 5.1 surround telecast on Star Plus on
a show titled 'Maayke Ki Bandhan - Dor' mixed by Nitin Kumar Gupta.

DTH is discussed now as Doordarshan has launched its DTH telecast from April 1. The
government has said it will provide 10,000 dishes free across eight states for increased
community viewing of the DTH service. The government is estimated to be investing
over Rs 300 crore (Rs 3 billion) in this DTH venture.

One of the first DTH service providers, Tata Sky has been known for its DTH service for
a few years now. Presently, the company broadcasts only two infotainment channels and

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one pay-perview channel in HD, but promises many more in the near future. The set-top
box is compact and looks elegant compared to its bulky, non-HD sibling. Its little IR
remote control is highly responsive, rugged and ergonomically designed with a very firm
grip. It features average-sized buttons and a good layout, which makes all the functions
very easy to locate and access without too much trouble. The HD STB performs at par
with others in terms of video quality.

--With the Indian economy booming at a GDP growth rate of 8.2%, there is a sense of
growth prevailing everywhere. The average Indian’s disposable income and purchasing
power has risen to never before levels. The Indian entertainment and media industry is
also not far behind. Terms which were alien to Indians like DTH, Digital Cable, IPTV are
suddenly finding presence in country’s journals.

A report predicts that India would overtake Japan as Asia’s largest DTH by next year and
be the Asia’s leading cable market in the coming years and the most profitable pay- TV
market by 2015. This growth presents a lot of interesting scenarios. In this paper, we shell
analyze the challenges and opportunities present for the DTH industry within the Indian
context. We would look at the history of Indian broadcasting followed by looking at the
current DTH market. An environment analysis would be done using the porter’s five
forces model and the various challenges faced by the industry would be identified.
Finally we would look at the possible suggestions taking a long term view.

HISTORY OF INDIAN BROADCASTING:

The history of Indian television dates back to launch of Doordarshan, the country’s
national television network in 1959. Television was then seen as a luxury item that could
be afforded only by a chosen few. The transmission was in Black & white. The 9th Asian
games which were held in 1982in the country’s capital New Delhi heralded the mark of
color television broadcast in India.

In 1991, Indian economy was liberalized from the License Raj and major initiatives like
inviting foreign direct investment, deregulation of domestic business emerged. This lead

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to the influx of foreign channels like Star TV and creation of domestic satellite channels
like Sun TV and Zee TV. This virtually destroyed the monopoly held by Doordarshan.

In 1992, the Cable TV industry started. If one could list down the revolutions that
happened in Indian Entertainment industry, Cable TV would top the list. It has literally
changed the way the average Indian watches the television. The number of channels
increased suddenly from 2 and the real entertainment started. Every city in India had a
complex web of co-axial cable running through the streets with a new breed of
entrepreneurs called as cablewallahs or Local Cable Operator (LCO) taking in charge of
distribution. The film industry was shocked by this sudden growth and there were ever
organized protests for calling off the Cable TV industry. The industry survived but the
sudden onset of growth made it as a disorganized sector. There were simply too many
cable operators in the country. Carrying new channels on the existing infrastructure
required new investments which the operators were reluctant to make. Also the channels
had a difficult time in getting its returns as the existing system was a non- addressable
and the operators could simply give a reduced number of subscribers to amass profit.

This lead to the emergence of a new breed of firm called as Multi System Operators
(MSO) who has heavy financial muscles to make capital investment. They liaised
between the cable operator and the Channels. MSOs provide the feed to the local operator
for a fee. Soon the industry consolidated with each city having one or two MSOs
operating. Most of the channels are carried by all the MSOs but sometimes certain
channels are shown only on a specific MSO network. The MSO industry has become
highly monopolistic which warrants government participation to ensure competition.
Current estimates show that there are 6000 MSOs operating in the country feeding 60000
LCOs.

In 1995 government felt the need of regulation in Cable TV and passed the Cable TV
networks (Regulation) Act. This was also the time when the state owned Doordarshan
and All India Radio came under a new holding called Prasar Bharati to give them enough
autonomy.

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Even with the basic regulation in place, there were lots of distribution issues with Cable
TV. The LCOs reported a lower number of connections where as the broadcasters
demanded a higher rate. MSOs were finding it difficult to operate under these conditions.
This lead to an amendment of the Cable TV networks (Regulation) Act in 2002 to
provide Conditional Access System (CAS). With CAS, the last mile distribution could be
addressable with accuracy and digitalization of broadcast was also possible. CAS was
rolled out in 2003 starting from Chennai and later to parts of Delhi, Mumbai and Kolkata.

On the DTH front, the United Front government had issued a ban on use of Ku band
transmission. After a change of government, the ban got lifted finally in 2001 and TRAI
issued the guidelines for operating DTH. Country’s first private DTH license was
awarded to Dish TV in 2003 which started operations in 2004. Prasar Bharati also started
its product DD-Direct+.

In 2007, TRAI pro

Broadband subscription is 8.75 million

Product Lines And Consumer Behavior

PRODUCT LINES AND CONSUMER BEHAVIOUR

Range of products
• Set-Top-Box.
• Head-Antenna.
• Cable
• DVD
• Remote
• LCD TV/PLASMA TV/CATHODE RAY TV/LED TV

Product description

SET-TOP-BOX:
The set top box comprises of the MPEG-2 OR MPEG-4 with DVB2 technology.

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Head-antenna:
Antenna which receives signals directly from satellites,

Cable:
Cable connects antenna to the set up box

DVD:
One of the recent entrants into DTH industry is vediocon. This came with set top box
with DVD

ACCESS CARD:
The access card is another important thing in the set top box setup
Where the access card will receive the signals directly from satellite trough head top
antenna

LCD TV:
Some companies are offering the whole set of LCD TV with DTH connection
Ant in the case of cathode ray tubes and in case of PLASMA

Remote:
A compactable remote for both SET UP BOX and TV is used in operating both TV and
Set top box.

Complimentary Goods
LCD TV, DVD, CT TV, Cables, plus box, Ups, Home theaters, sound box, plastic and
paper which are used for recharge cards.

Substitutes
Local Cable Operators, Inter-Net which is bringing many facilities like live TV channels,
along with the net browsing, Theaters, radio stations, I pods.

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 Growth Of The Industry
GROWTH OF THE INDUSTRY
Rate of Growth
The DTH service market in India has emerged as one of the most lucrative markets which
have successfully resisted the impacts of the current economic slowdown. The slowdown
has certainly proved a boon for the Indian DTH industry as people have now started to
cut on their entertainment expenditure and instead of viewing movies at theatres, they are
preferring to stay at home with their television sets.

With the Indian economy growing at a GDP growth rate of 8.2% there is a sense of
growth prevailing every where. The average Indian’s disposable income and purchasing
has risen to never before levels. The industry is anticipated to add nearly 7 lakh
subscribers every month compared to 2.5-3 lakh subscribers in early 2008.

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Current scenario

Media industry in India is among the fastest growing industries of the present Indian
economy. The media industry has benefited a lot from the Indian current economic
growth coupled by the rising earnings levels in India. The media industry is presently in a
critical stage of revolution. It has witnessed the DTH revolution in the recent past. A
rapid adoption of satellite based television services via DTH and digital cable augurs well
for the television industry. DTH industry is currently adding nearly 1 million subscribers
per month. The DTH subscriber base grew to 23.77 million viewers by the end of June
quarter 2010 from 21.3 million users in the previous quarter.

There is an immense opportunity for DTH in the Indian market. As DTH players multiply
and DTH gets a wider acceptance from customers, increasingly, patrons are realizing the
benefits of digitalization. Consequently, cable operators providing analogue cable

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services are under immense pressure and are not able to hike their subscription fees
substantially and, in most cases, are keeping it flat. The opportunity in India is almost 10
times that in developed countries like the US and Europe. For every channel there is a
scope for broadcasting it in at least ten different languages. So every channel multiplied
by ten, there is vast scope for DTH in the country. What is fortuitous for DTH operators
is the fact that the government is pushing for the Conditional Access System (CAS),
which will make cable television more expensive, narrowing the tariff gap between the
two.

The idea of CAS was mooted in 2001, due to a furor over charge hikes by channels and
subsequently by cable operators. Poor reception of certain channels; arbitrary pricing and
increase in prices; bundling of channels; poor service delivery by Cable Television
Operators (CTOs); monopolies in each area; lack of regulatory framework and redress
avenues were some of the issues that were to be addressed by implementation of CAS. It
was decided by the government that CAS would be first introduced in the four metros. It
has been in place in Chennai since September 2003, where until very recently it had
managed to attract very few subscribers. It has been rolled out recently in the other three
metros of Delhi, Mumbai and Kolkata.

Budget expectations

27
Stop levying of VAT and service tax simultaneously on copyright - The Budget, 2010,
introduced the levy of service tax on Copyright Services with effect from July 1, 2010.
Separately, the Government of various states have classified copyright as goods and
made the transfer / licensing of copyright liable to VAT. The industry wants that VAT &
service tax should not be levied simultaneously on copyright because it leads to multiple
taxation.

Scrap customs duty on set-top boxes and other equipment - The industry has
demanded that customs duty on set-top boxes and other equipment be totally abolished.
Currently, the import duty structure for a Set Top Box is as high as a basic import duty of
5% + SAD of 4% + CVD of 8%. Moreover, the excise duty on a Set Top Box is at
10.3%. As DTH and cable operators are suffering losses due to a high customer
acquisition cost. Any reduction would reduce the costs and improve the profitability of
the operators.

Allow higher FDI - Since, the DTH and cable industries are capital intensive and
increased foreign direct investment (FDI) would reduce the funding burden of the sector.
The industry is hopeful of a growth boost by way of an increase in this limit. The industry
wants that FDI norms should be liberalized at least for some of the segments like radio
(20%), DTH (49%) and cable (49%). It has urged the government to increase FDI limit
on DTH and cable to 74% and that on FM radio to 49%.

Include entertainment tax in GST - The inclusion of entertainment tax by states in the
GST is something the entertainment industry would be happy with because some state
levy a fixed amount per subscriber, while in others it is anywhere between 40-50%.
Inclusion of the entertainment taxes into the GST regime will help in creating a common
tax rate in all states and also reduce the tax burden, on account of the input tax credit to
be available in GST system.

DTH operators seek cut in license fees - Direct-to-home operators, who are saddled
with losses as they ramp up subscribers, are hoping see a cut in license fees from the

28
current 10% to 6%. The cut will lead to expenditure per customer going down by around
20% in subscriptions.

Reduction/Removal in 90 days criteria under rule 9A and 9B - In the cases of a film

producer and a film distributor both the expenditure and the receipts in respect of a
particular feature film can be spared over a period of years. Rules 9A and 9B have
therefore been introduced so as to provide for the manner in which the expenditure must
be amortised in order to determine the quantum of income that is assessable to tax. While
rule 9A deals with film producers, rule 9B deals with film distributors. Rule 9A, 9B
specifies that in case if films are released within 90 days of the end of the year then,
production cost will not be allowed in full but allowed only to the extent of revenue
generated from exhibition of the film during the concerned financial year. However, in
the current scenario, most of the films do not have a shelf life of more than 2- 3 weeks.
Accordingly, the industry wants that the criteria of 90 days should either be reduced or
removed

http://www.thehindubusinessline.com/todays-paper/tp-marketing/article1037686.ece

The first mover and the country's largest DTH player with over nine-million subscribers
onboard, Dish TV, claims to have acquired a little over a million subscribers in the last
three-and-a-half months. “Now, as an industry, we collectively enrol over a million
subscribers a month with ease,” said a senior executive of Dish TV. In 2005, when Dish
TV launched the country's first DTH service, not many people knew about the
technology and its advantages. Making cable-dark areas as its prime target, the company
managed to rope in just a little over half-a-million subscribers in the first year of
operation.

With the entry of other players such as Tata Sky, Sun Direct and Big TV, AirTel and
Videocon in the following years, the market gained good momentum and started

29
expanding faster with every passing day, thanks to their aggressive high-decibel
marketing and low entry fee for subscribers.

Industry observers say, it is likely to improve further and grow even faster in the months
to come. In India, there are over 140 million TV homes, and of this, about 100-110
million homes come under the cable and satellite (C&S) market. With around 32 million
subscribers, the DTH industry commands 32 per cent share of this market.

Largest DTH market

According to a study by Media Partners Asia, India will become the largest DTH market
in the world in terms of subscribers by 2012 surpassing the US. However, Mr Salil
Kapoor, Chief Operating Officer of Dish TV, is of the opinion that the Indian DTH
industry with at least 33 million subscribers by the end of the current financial year
would comfortably become the largest market in the world.

This can also be attributed to the fact that there are still large patches of cable-starved
areas in the country, where people watch only terrestrial channels (which are
Doordarshan channels), and also cable networks are not yet digitised in the country.

According to industry sources, ARPU currently hovers around Rs 125-150 a month, of

which around 30 per cent goes to the Government as licence fee and taxes (entertainment
tax and service tax), and 50 per cent to content providers (broadcasters as charges). Only
the remaining 20 per cent is the net revenue for the service provider. For example, if a
subscriber pays Rs 150, nearly Rs 45 goes to the Government, Rs 75 to the broadcasters
and the DTH service provider gets only the remaining Rs 30.

30
“Provided the operator achieves a critical mass of subscriber base, it will be very difficult
to be cost-effective and turn cash-positive,” says Mr Sugato Banerji, Chief Marketing
Officer (DTH Services), Bharti Airtel.

Big investment

Though the subscriber acquisition costs are said to have come down, companies still
spend at least Rs 4,500-5,000. According to industry sources, on an average, an MPEG 2
set-top box with antenna and other equipment costs $37-38, while the MPEG-4 costs
$12-15 more. This is despite the fact that bulk orders for these equipment fetch a
“substantial discount” for the service providers.

“It's still a big investment and will make the gestation period even longer considering the
current ARPU,” said a senior executive of another service provider.

However, according to some analysts, thanks to the increasing number of two-TV homes
in urban and even tier-II markets, delay in digitisation of cable networks and growing
sales of high-definition TVs, the subscriber base will certainly expand.

Besides, with rising ARPU and falling subscriber acquisition cost, majority of players
will report at least break-even in the next couple of years.

(This article was published in the Business Line print edition dated January 4, 2011)

• ENVIRONMENT ANALYSIS- PORTER’S MODEL

• THREAT OF SUBSTITUTE

31
According to the ‘TAM Annual Universe Update –2010’ study, out of the estimated
135 million total number of TV households in India, 80% of the them are subscribed to
cable and satellite connection. From this cable subscriber base, only one in every five
households avails of digital connection.

Further, a report by Media Partners Asia says for the next four years cable is
expected to dominate Indian TV households with a 70% share

Continuous rise in competition with intense competition to acquire customers by

reducing entry prices thereby contracting ARPU is matter of concern for the industry.
Moreover, the recent rise of digital cable operators in some parts of the country and the
cost of servicing on continuous basis is another threat area. Churn management is another
key important metric for better productivity of the market input by the organization.

• BARGAINING POWER OF SUPPLIERS

32
In fact, DTH players target 33% of cable market in the next couple of years. It certainly
seems that after mobile revolution, it could well be turn of the DTH market to explode
into a mass product.

• BARGAINING POWER OF BUYERS

• INTER FIRM RIVALRY

• THREAT OF NEW ENTRANTS

India currently has 6 major DTH service providers and a total of over 20 million
subscriber households in 2010. Dish TV(a ZEE TV subsidiary), Tata Sky, Tata Sky +,
Sun Network owned 'Sundirect DTH',Reliance owned BIG TV,Bharti Airtel's DTH
Service 'Airtel Digital TV' and the public sector DD Direct Plus.As of 2010, India has the
most competitive Direct-broadcast satellite market with 7 operators vying for more than
110 million TV homes. India is set to overtake the USA as the world's largest Direct-
broadcast satellite market by 2012.

33
 • CHALLENGES FACED BY THE INDUSTRY
• POLICY AND REGULATION

“The operators who commence the digitalization of their service by 31.03.2011 be given
100% rebate in income tax on the profits and gains accrued from the service for a period
of 5 years and thereafter 30% rebate for further 5 years in a block of 15 years,”

• ACCELERATED SUBSCRIBER AND REVENUE GROWTH

If the finance minister Pranab Mukherjee yields to the demand for an across-the-board
removal of customs and excise duty on imported equipment, set-top-boxes and hardware,
the government will generate revenues of over Rs 7,000 crore annually in three years.
The revenue increase is due to addition of 15-18 million digital subscribers every year as
a result of the proposed concessions which will take the overall digital subscriber base to
over 75 million by 2015.

34
Experts said the addition of 2 million digital subscribers translates into revenues of
around Rs 200 crore mainly led by entertainment and service taxes. “Addition of every
15-18 million digital subscribers annually from 2011-12 will lead of the generation of
over Rs 2,300 crore of additional revenue every year, including entertainment tax, licence
fees, and service tax. By 2015 the government is looking at an annual revenue of over Rs
7,000 crore from this sector,” a top executive of a leading media firm said.
As a result, the ministry of information and broadcasting (I&B) has come out in support
of the cable industry over digitalisation. I&B ministry has batted for an across-the-board
reduction in duties levied on the sector to zero for next three years, at least. According to
I&B minister Ambika Soni, the move would pave way for the digitalisation of the cable
sector at a faster pace.
“With the proposed duty cuts, the digitisation process will acquire critical mass resulting
in the sale of more boxes which will result in increased collections by the exchequer,” the
head of a leading media company said.
If endorsed by the finance ministry, the move will also help the DTH industry save over
Rs 500 crore annually. Even the six-player private DTH industry has urged the finance
minister to make all duties levied on imported hardware for DTH to be brought down to
zero.
Soni also urged the finance minister to categorise the broadcasting, cable and DTH
sectors as infrastructure industry. Also, all broadcasting services should be covered under
the definition of Industrial undertaking as defined by the Income Tax Act. These
measures would enable the broadcasting and cable sector get access to finance at
concessional rates.

35
What is DTH?

Working of DTH:

A DTH network consists of a broadcasting centre, satellites, encoders, multiplexers,

modulators and DTH receivers.

A DTH service provider has to lease Ku-band transponders from the satellite. The
encoder converts the audio, video and data signals into the digital format and the

36
multiplexer mixes these signals. At the user end, there will be a small dish antenna and
set-top boxes to decode and view numerous channels. On the user's end, receiving dishes
can be as small as 45 cm in diametre.

DTH is an encrypted transmission that travels to the consumer directly through a satellite.
DTH transmission is received directly by the consumer at his end through the small dish
antenna. A set-top box, unlike the regular cable connection, decodes the encrypted
transmission.

So why are broadcasters pushing for DTH?

In DTH, the payments will be made directly by the subscriber to the satellite company
offering the service.

A big problem that broadcasters face in India is the issue of under-reporting of

subscribers by cable operators.

Consider the cable operators pyramid. Right at the top is the broadcaster. Next comes the
Multi Service Cable Operator (MSOs) like Siticable, InCable, etc. Below them are the
Access Cable Operators (ACOs) or your local cable guy who actually lays the wires to
your house.

The local cable operators or the ACOs then allegedly under-report the number of
subscribers they have bagged because they have to pay the MSOs something like Rs 30-
45 per household. Showing a lesser number of households benefits ACOs.

With no way to actually cross check, the MSOs and the broadcasters lose a lot.
Broadcasters do not earn much in subscription fees and are mostly dependent on
advertisement revenue to cover their costs, which is not sustainable and does not offer
high growth in revenues for broadcasters.

The way out of this is to use a set-top box so that it will be clear how many households
are actually using cable or going for DTH where broadcasters directly connect to
consumers and can actually grow revenues with a growth in the subscriber base.

37
DTH differ from cable TV

The way DTH reaches a consumer's home is different from the way cable TV does. In
DTH, TV channels would be transmitted from the satellite to a small dish antenna
mounted on the window or rooftop of the subscriber's home. So the broadcaster directly
connects to the user. The middlemen like local cable operators are not there in the
picture.

DTH can also reach the remotest of areas since it does away with the intermediate step of
a cable operator and the wires (cables) that come from the cable operator to your house.
As we explained above, in DTH signals directly come from the satellite to your DTH
dish.

Also, with DTH, a user can scan nearly 700 channels!

DTH Superior to CABLE

DTH offers better quality picture than cable TV. This is because cable TV in India is
analog. Despite digital transmission and reception, the cable transmission is still analog.
DTH offers stereophonic sound effects. It can also reach remote areas where terrestrial
transmission and cable TV have failed to penetrate. Apart from enhanced picture quality,
DTH has also allows for interactive TV services such as movie-on-demand, Internet
access, video conferencing and e-mail. But the thing that DTH has going for it is that the
powerful broadcasting companies like Star, Zee, etc are pushing for it.

COMPITITORS

38
HISTORY OF DTH IN INDIA

DTH services were first proposed in India in 1996. But they did not pass approval
because there were concerns over national security and a cultural invasion. In 1997, the
government even imposed a ban when the Rupert Murdoch-owned Indian Sky
Broadcasting (ISkyB) was about to launch its DTH services in India.

Finally in 2000, DTH was allowed. The new policy requires all operators to set up earth
stations in India within 12 months of getting a license. DTH licenses in India will cost
$2.14 million and will be valid for 10 years. The companies offering DTH service will
have to have an Indian chief and foreign equity has been capped at 49 per cent. There is
no limit on the number of companies that can apply for the DTH license.

So, what's the buzz? Will DTH finally be the one that rules?

The cable system is well entrenched in India and is showing quite rapid growth. If DTH
had come to India in 1996-97 (like Star had originally attempted), then it could have
made a significant breakthrough.

39
Europe is an example of this. DTH developed there before cable and now controls nearly
80 per cent of the total satellite television subscriber base. But in US, cable rules because
it came before DTH.

DTH will definitely cut into the existing cable user base. It will make the local cable
operator less important and take business away from him. It will give consumers greater
choice.

But it is likely to be an up market premium product and most middle class households
will stick to cable.

CONSOLIDATION AND GREATER FOREIGN INTEREST FORECAST FOR

INDIAN DTH SECTOR

Increased foreign participation is inevitable and consolidation in India’s direct-to-home

(DTH) satellite TV market is likely in the next two to five years, according to new
research from Screen Digest.

The proposed easing of foreign involvement limits in Indian broadcasting ventures from
49% to 74% will, according to the report, see more international players enter India’s
DTH market – following what has been a successful ‘litmus test’ by way of News
Corporation’s stake in the Tata Sky platform.

DTH in India has experienced a 108% compound growth rate since its 2005 launch with
Dish TV and its initial subscriber base of 750,000. As of the end of 2010, India’s six
DTH operators – Dish TV, Sun Direct, Tata Sky, Reliance Big TV, Airtel Digital and
Videocon d2H – now host about 30 million subscribers between them.

40
“At the end of 2010, India’s DTH base accounted for 21% of the world’s pay satellite
subscriber base,” says Aravind Venugopal, analyst – television, Screen Digest. “By 2014
it will cross the 50 million mark; bigger than both North America and Western Europe.”

Despite this, India’s DTH subscriber revenues accounted for just 1% of global pay-TV
subscriptions revenue in 2010 – though Screen Digest suggests India’s share will increase
to 2.7% by 2014.

Ultimately, says Mr Venugopal, “high DTH content and hardware subsidies and low
ARPUs lead to excessive losses, and so consolidation is inevitable in the long run.”
While he says it is impossible to predict which of the DTH operators would either fold or
merge, Screen Digest certainly “expects some movement in this direction in the next two
to five years.”

Cable TV remains the dominant pay-TV distribution platform in India, with a 75%
market share compared to satellite’s 25%. However, the average revenue per satellite
subscriber is set to overtake cable ARPUs in India and, says Screen Digest, will grow in
tandem with the economy – at a compound annual growth rate of 8% between 2010 and
2014.

The analysts are careful to point out this forecast could, however, deviate should
analogue switch off happen within this five year time frame. The Telecommunications
Regulatory Authority of India (TRAI) has proposed that all 83 million analogue cable
homes transition to digital by 2013, way before the official date for terrestrial analogue
switch off, which Screen Digest believes, has now been put back to 2017.

Source: Rapidtvnews.com

41
http://www.acesphere.com/ir/Budget/NewsPopup.aspx?
newsid=126148&FromDate=2011.02.02&ToDate=2012.2.8

---------------Media Industry: Hike FDI ceiling, lower taxes for greater pene...

The Indian entertainment and media (E&M) industry has out-performed the Indian
economy and is one of the fastest growing sectors in India. The E&M industry generally
tends to grow faster when the economy is expanding. The Indian economy has been
growing at a fast clip over the last few years, and the income levels too have been
experiencing a high growth rate. Above that, consumer spending is also on the rise, due
to a sustained increase in disposable incomes. All these factors have given an impetus to
the E&M industry and are likely to contribute to the growth of this industry in the future
as well.

Advancements in technology are further helping the industry in all the spheres. The
industry is increasingly getting more corporatized. More theatres across the country are
getting upgraded to multiplexes and initiatives to set up more digital cinema halls in the
country are already underway. The media has over the years undergone a series of
changes. From just informing and spreading awareness, the media has adopted various
tools and techniques that have contributed towards bringing a positive change in society.
From sting operations to phone tapping, investigative journalism is perhaps the first step
taken by the media in the direction of breaking free from old and traditional journalistic
values.

Current scenario

Media industry in India is among the fastest growing industries of the present Indian
economy. The media industry has benefited a lot from the Indian current economic
growth coupled by the rising earnings levels in India. The media industry is presently in a
critical stage of revolution. It has witnessed the DTH revolution in the recent past. A
rapid adoption of satellite based television services via DTH and digital cable augurs well
for the television industry. DTH industry is currently adding nearly 1 million subscribers
per month. The DTH subscriber base grew to 23.77 million viewers by the end of June
quarter 2010 from 21.3 million users in the previous quarter.

42
There is an immense opportunity for DTH in the Indian market. As DTH players multiply
and DTH gets a wider acceptance from customers, increasingly, patrons are realizing the
benefits of digitalization. Consequently, cable operators providing analogue cable
services are under immense pressure and are not able to hike their subscription fees
substantially and, in most cases, are keeping it flat. The opportunity in India is almost 10
times that in developed countries like the US and Europe. For every channel there is a
scope for broadcasting it in at least ten different languages. So every channel multiplied
by ten, there is vast scope for DTH in the country. What is fortuitous for DTH operators
is the fact that the government is pushing for the Conditional Access System (CAS),
which will make cable television more expensive, narrowing the tariff gap between the
two.

The idea of CAS was mooted in 2001, due to a furor over charge hikes by channels and
subsequently by cable operators. Poor reception of certain channels; arbitrary pricing and
increase in prices; bundling of channels; poor service delivery by Cable Television
Operators (CTOs); monopolies in each area; lack of regulatory framework and redress
avenues were some of the issues that were to be addressed by implementation of CAS. It
was decided by the government that CAS would be first introduced in the four metros. It
has been in place in Chennai since September 2003, where until very recently it had
managed to attract very few subscribers. It has been rolled out recently in the other three
metros of Delhi, Mumbai and Kolkata.

43
Budget expectations

Stop levying of VAT and service tax simultaneously on copyright - The Budget 2010,
introduced the levy of service tax on Copyright Services with effect from July 1, 2010.
Separately, the Government of various states have classified copyright as goods and
made the transfer / licensing of copyright liable to VAT. The industry wants that VAT &
service tax should not be levied simultaneously on copyright because it leads to multiple
taxation.

Scrap customs duty on set-top boxes and other equipment - The industry has
demanded that customs duty on set-top boxes and other equipment be totally abolished.
Currently, the import duty structure for a Set Top Box is as high as a basic import duty of
5% + SAD of 4% + CVD of 8%. Moreover, the excise duty on a Set Top Box is at
10.3%. As DTH and cable operators are suffering losses due to a high customer
acquisition cost. Any reduction would reduce the costs and improve the profitability of
the operators.

Allow higher FDI - Since, the DTH and cable industries are capital intensive and
increased foreign direct investment (FDI) would reduce the funding burden of the sector.
The industry is hopeful of a growth boost by way of an increase in this limit. The industry
wants that FDI norms should be liberalized at least for some of the segments like radio
(20%), DTH (49%) and cable (49%). It has urged the government to increase FDI limit
on DTH and cable to 74% and that on FM radio to 49%.

Include entertainment tax in GST - The inclusion of entertainment tax by states in the
GST is something the entertainment industry would be happy with because some state
levy a fixed amount per subscriber, while in others it is anywhere between 40-50%.
Inclusion of the entertainment taxes into the GST regime will help in creating a common

44
tax rate in all states and also reduce the tax burden, on account of the input tax credit to
be available in GST system.

DTH operators seek cut in license fees - Direct-to-home operators, who are saddled
with losses as they ramp up subscribers, are hoping see a cut in license fees from the
current 10% to 6%. The cut will lead to expenditure per customer going down by around
20% in subscriptions.

Reduction/Removal in 90 days criteria under rule 9A and 9B - In the cases of a film

producer and a film distributor both the expenditure and the receipts in respect of a
particular feature film can be spared over a period of years. Rules 9A and 9B have
therefore been introduced so as to provide for the manner in which the expenditure must
be amortised in order to determine the quantum of income that is assessable to tax. While
rule 9A deals with film producers, rule 9B deals with film distributors. Rule 9A, 9B
specifies that in case if films are released within 90 days of the end of the year then,
production cost will not be allowed in full but allowed only to the extent of revenue
generated from exhibition of the film during the concerned financial year. However, in
the current scenario, most of the films do not have a shelf life of more than 2- 3 weeks.
Accordingly, the industry wants that the criteria of 90 days should either be reduced or
removed

Outlook

The Indian Media & Entertainment industry offers attractive growth potential as
compared to both developed and other emerging markets. The entertainment sector is
expected to grow at 10.7% in 2009-13. Further, rapid urbanization and an increase in
disposable income have accelerated the addition of new viewers driving the viewership
number. The industry is witnessing continues increase in media spends by various
industries. A rapid adoption of satellite based television services via DTH and digital
cable augurs well for the television industry.

Since, Telecom Regulatory Authority of India (TRAI), which also regulates broadcasters,
has recommended higher FDI in the broadcasting sector, particularly in direct-to-home
(DTH) and cable network operators and FM radio, this expectation of the industry is
likely to be fulfilled in the upcoming budget and higher FDI will lead to easing the
burden off the media company’s shoulders and improve their profitability.

Further, lack of empowered officers for enforcement of anti-piracy laws is the key issue
that is encouraging the menace of piracy. Hence, some steps on part of the government in
this regard should help the industry in recovering losses due to piracy.

45
HTTP://WWW.PLUGGD.IN/DTH-INDUSTRY-IN-INDIA-ANALYSIS-297/

DTH INDUSTRY IN INDIA : PAST, PRESENT AND FUTURE

By Guest Author on 26, May, 2010 9 | Topic: Indian Telecom Industry

India has a total television population of close to 135 million, out of which 80%
have access to cable and satellite (i.e. 108 million). The total DTH subscribers are close
to 22 million. Thus the DTH has a market share of approximately 20%. The subscriber
base for DTH in 2006 was meager 1 million. Now for an industry which is just 5 years
old, it is a great achievement.

Let’s have a look at how the DTH industry has grown in these 5 years. In 2005 Dish TV
was the only player in the DTH industry and was registering subscriber growth mainly in
the areas where cable TV was not available. The subscribers were not ready for the cost
of set top box. In 2007 CAS mandate was introduced in selected metro cities, where users
had to invest in a set top box.

Though the initiative was not very successful, it gave a wider acceptance to the DTH and
consumer became ready to pay for the set top box. Spotting the opportunity Sun Direct
launched its services in 2007 with a drastically low one time cost involved for DTH
subscriber. Followed by this Reliance, Big TV and Air-Tel and Videocon launched their
services. The market became competitive. Every player came with innovative offerings,
Dish TV offered Movie on Demand free worth the cost of set top box, Air-Tel and Big
TV offered free subscription for first few months etc. All these things were coupled with
aggressive marketing campaigns. Tata Sky gained the maximum subscribers during this
period.

Today the market shares of various players are as follows

• DishTV : 30%
• Sun Direct: 25%
• Tata Sky: 22%
• BIG TV : 13%
• Airtel : 8%
• D2H : 2%

So where is the real growth happening for the DTH industry. Is it the urban areas or
rural? Though DTH is comparatively expensive than cable service, the growth is coming
from the rural area. If we see statistics the growth for the digital segment in rural areas
were 34%, 49% and 64% in the past three years.(source:- TAM Annual Universe Update
–2010). The growth in the rural segment can be attributed to frequent power cuts in the
rural areas. DTH platform gives the rural consumer access to their favorite programs,
with the help of generator/ invertors, which is not possible with the cable service in most
of the areas.

46
Though DTH has certain advantages such as better picture/ sound quality, better
customer service. It also has a disadvantage of price. The DTH player have to pay various
taxes such as Adjusted gross receipts @ 10%, service tax @ 12.36%,VAT @
12.5%,CST@3%,corporate tax, Excise duty@ 16%, Customs duty, CVD ,customs duty
etc. Whereas the local cable operators easily get away with government taxes by
underreporting the subscriber base. Thus gaining a clear cost advantage. The regulator
should take a note for the same and provide regulations for the same.

At the same time in Indian market “One size fits all” strategy doesn’t work for long. So,
the DTH players have to design packages suitable for rural consumer enable them to
enjoy the digital content (For eg. Levi’s jeans had enabled consumers to buy their jeans
with an EMI scheme).

The DTH industry is expected to grow at a CAGR of close to 24% .The future of DTH
industry will largely depend on innovative marketing tactics adopted by the DTH players.
The stage is all set for DTH industry. Let the real game begin.

[Guest article by Mahesh Bendre.]

http://www.rncos.com/Report/IM198.htm

The direct-to-home (DTH) TV industry has been witnessing tremendous growth

since the past few years. This growth has been supported by huge investments
by the existing as well as new players. The DTH market acquired around 30
Million subscribers by the end of 2010, an increase of approximately 50% over
2009. The entry of new players in the Indian DTH industry is intensifying
competition. Due to this intensified competition, installation prices are declining
and subscribers now have a wide range of options.

The reason for this high growth in DTH subscriber base can be attributed to the
fact that quality of service delivered by DTH is superior compared to cable or any
other medium. As DTH TV industry is currently in the phase of growth, it is
expected to attract a large number of subscribers in near future. As per our new
research report “Indian DTH Market Forecast to 2012” the number of DTH
subscribers is projected to grow at a CAGR of around 23% during 2011-2014,
reaching 69 Million.

For the purpose of research, we have not included Doordarshan, which is a free
DTH service provider. The report contains comprehensive information about DTH
service providers in India, with a focus on in-depth analysis of their strengths and
weaknesses. It also explains the reason due to which, all the incumbent players
have been investing huge amounts in the promotion and marketing of DTH
services in the country.

47
“Indian DTH Market Forecast to 2012” The report highlights certain key
marketing strategies along with the current industry trends. These marketing
strategies could serve as a benchmark for the anticipated future growth of the
Indian DTH market. Apart from this, the report will also help clients to
recognize/identify the factors that will drive the country’s DTH market in the
coming years. The report also studies the Indian consumer behavior and
elaborates various factors that will enable people to switch into DTH in the near
future.

INDIAN DTH INDUSTRY SHOWING INCREDIBLE

GROWTH
May 04, 2011
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Despite the fact that, Indian DTH Industry faces several issues, such as low ARPU
(average revenue per user), high cost of acquisition of content and subscribers, and
various taxes, such as entertainment and service tax, the industry currently has about 30
Million subscribers and is poised to grow to 69 Million subscribers by 2014 end, says our
new research report “Indian DTH Market Forecast to 2012”.

The ongoing research analysis found that, the Indian DTH industry is dynamic with new
technologies emerging and new business opportunities waiting to be explored. To stay
ahead of the competition, players need to offer the latest bouquet of services and provide
the flexibility and content that consumers want.

However, presently, the Indian DTH industry is being driven by some of the major
players, such as Dish TV, Tata Sky, Sun Direct etc. With the entry of new players, like
Videocon D2h in the industry, competition has become even intense. Due to this
intensifying competition, installation prices are declining and subscribers have a wide
range of options to make choices.

Besides, we have done thorough research and prudent analysis of some critical factors
acting as a catalyst for the industry’s current and future growth outlook. Additionally, the
report provides intensive detail analysis of various segments under the DTH market. The
report also includes comprehensive information about all the DTH service providers in
India, with focus on in-depth analysis of their strengths and weaknesses. It also explains
the reason, why all the incumbent players have been investing huge amounts in the
promotion and marketing of DTH services in the country.

“Indian DTH Market Forecast to 2012” highlights certain key marketing strategies

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along with the current industry trends. These marketing strategies could serve as a
benchmark for the anticipated future growth in the Indian DTH market. Besides, the
report will help clients in recognizing/identifying the factors that will drive the country’s
DTH market in coming years. The report also studies Indian consumers’ behavior and
elaborates various factors, which will enable people to switch to DTH in near future.

For more information visit: http://www.rncos.com/Report/IM198.htm

1. Analyst View

2. India: Direct-to-Home (DTH) Market Overview

3. Emerging Market Trends

3.1 High Subscriber Acquisition Costs - A Challenge for Industry
3.2 Profitability Slowly Turning towards Positive Numbers
3.3 HD Content Broadcast on DTH Set-Top Box Remains Niche Concept

4. Key Market Driver

4.1. More Customer Choice
4.2 Conditional Access Systems
4.3 Innovative Services

5. Industry Outlook to 2014

5.1 Subscribers
5.2 Operators
5.3 ARPUs
5.4 Set-top Box

6. Recommendations for Future Growth

7. Consumer Price Sensitivity Analysis

8. Regulation Issues
8.1 QOS
8.2 Tariffs
8.3 Technical Standards and Other Obligations
8.4 Prospects for Foreign Investors

9. Other Technology Options

10. Key Players Analysis

10.1 Dish TV
10.2 Tata Sky
10.3 Big TV
10.4 Sun Direct
10.5 Airtel Digital TV
10.6 Videocon D2H

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