- 12 Jan 2012
- Reaction score
Cable TV Digitization: Missing the Deadline
With uncertainty about the first phase of cable digitization happening within the given timeframe, even ensuring a 60 percent job done will enable India to move forward
A revolution is on the verge of hitting the shores of the cable industry in India. With the president of India has already given a nod to the mandate on completing cable digitization of 4 metros by June 30, 2012, and about 35 cities like Pune, Ahmedabad, and Bengaluru by March 31, 2013, there is no turning back for the stakeholders.
But with the first deadline of digitizing the metros around the corner, the industry is likely to miss the bus of digitization.
According to Trai, cable TV industry in India is estimated to have 94 mn customers in 2011 out of the 147 mn TV households, whereas the total base of DTH subscribers in India grew to 44.4 mn homes in 2011.
Given that the cable MSO digital penetration stands at 5 mn today, to meet the deadline of 2014, cable service providers have to deploy about 90 mn set top boxes (STBs) at their consumer premise. One would have to crystal gaze to say a yes or a no.
Nonetheless, entire exercise will prove to be a win win situation for all including the consumers. While complete digitization may or may not happen within the given time frame, even ensuring a 60% digitization will enable India move a step forward to be at par with the developed economies in the sector. And this in itself would be a good start.
Digitization will revolutionize consumer entertainment and enable subscribers to experience superior HDTV along with other services such as digital video recording (DVR), HD gaming, Video on demand (VoD), and future connected home services and presents benefits for all those involved.
“There is a positive momentum on this front. The digitization bill has strong backing from the government and is well received by the MSOs,” says Sandeep Arora, vice president, service provider, Cisco India & Saarc.
Why Digitize ?
Digitization opens doors to new services and revenue models for the entire Indian market. Digitization will help to legitimize the revenue streams from the people to the operators and content providers.
“The 2014 'Analog Switch Off' deadline for all cable transmission is going to pull a big demand of 100 mn subscribers,” says Vivek Sharma, regional vice president and director of India geographical sales unit, STMicroelectronics.
After initial digitalization through SD cable, this will lead to the deployment of value added services like VoD, additional content, and OTT applications.
The consumer will benefit from a better viewing experience, wider choice of channels (from 70 to 300+ channels) and benefits such as attractive tiering and a la carté option.
Cable service providers and broadcasters would benefit through increase in subscription revenues.
“We are at the cusp of a game changing transition for the cable, DTH, and broadcasting industry, with value added services, increase in bandwidth, and transparency for all parts of the value chain,” insists Sunil Lulla, MD & CEO, Times Television Network.
Local cable operators (LCOs) will be equipped to compete against DTH players. This would help them increase scalability to cross-sell other services.
“Subscribers are now looking for a STB and they may choose to reassess their choice between cable and DTH. We expect DTH to also benefit significantly from this digitization in cable,” explains Shashi Arora, CEO, Digital TV Services.
There is no doubt that DTH or Dish TV has a big platform for big to small channels in terms of regional content. This will boost the broadcasters as well give them maximum visibility and also the DTH players to provide maximum contents.
The MSO will benefit by being able to better count the number of subscribers and accurately declare revenue. Also, the digital world allows the delivery of VAS to increase ARPUs and contribute to more enjoyable subscriber experiences.
The government would benefit via increase in service tax collections. It will be able to recover tax leakage of $1 bn pa and improve tax receipts, re-farm 700 MHz terrestrial TV frequency for mobile services (ease spectrum crunch & potential > $15 bn auction revenue), and enable cable operators to use digital infrastructure to increase broadband penetration.
Hurdles to Cross
Without doubt, the cable digitization market has huge growth potential. As it is said, all good things come with their own set of challenges, cable digitization phenomenon is no different.
The first and foremost hurdle for digitization process is cost and investment. In order to meet the mandate, stakeholders are currently under tight crunch to facilitate the digitization process to reach 94 mn households and complete the process.
The total costs of digitization includes head-end and content costs which the stakeholders are bearing.
“There is huge investment and infrastructure required for digitization which is difficult to estimate, but the whole digitization of cable industry will cost around `20,000-25,000 crore,” explains Salil Kapoor, COO, Dish TV India.
Digitization requires investment in headends (central and regional), and consumer equipment (STB).
We need to understand investment in terms of 3Ps-products, process, and people.
While MSOs will be required to invest in new technology architecture and platforms to re-define consumer experience, they also need to invest in terms of scaling their business architecture. Business architecture will be in terms on new business process to deliver and monetize their services in the market. Apart from that their key assets will lie in people who can seize the day for MSOs.
MSO and LCOs will have to digitize their cable signals and shift from analog within the given time period and lure their consumers with attractive, cheap set top boxes. Looking at the custom duty, taxes, and disappointment from budget, this also remains a huge bottleneck.
Most of the MSOs do not have the financial bandwidth to make this investment. Access to capital and availability of skilled manpower are the biggest challenges for cable service providers.
Similar is the case with DTH operators who are bleeding with huge custom duty and taxation pressure.
“DTH industry is already bleeding with multiple taxations. With the current budget, service tax has also increased ,” informs Salil Kapoor, COO, Dish TV, India.
“A big project will be to educate the public as a whole about the analog shut-off process and their choices will need to be prioritized,” insists Rajiv Kapur, MD, Broadcom India.
The timelines for digitization are aggressive especially for phase I, and the industry must accelerate activities to meet these short deadlines.
For June 30th deadline, 5 mn subscribers need to switch to cable TV set top boxes or DTH in metros.
“As a broadcaster, we actively support the communication prepared by the IBF, to inform viewers to obtain a digital set top box, in the first 4 cities,” informs Lulla.
DTH players and cable operators are trying their best to reach out to the consumers with their set top boxes. Another bottleneck remains of low cost STB in market.
Reaching rural areas of the country and digitizing these areas would further require efforts not only from the DTH and cable operator's side, but also from government's side. Making STBs affordable and reaching every household of India by 2016, will be a dream unless government's initiative in letting out affordable STBs to rural consumers and lowering custom duty on set top boxes for wider penetration is initiated.
“We are meeting the consumer demands and reaching to consumer doorsteps through various parallel channels, eg, current tie-ups with Oxigen, MPOnline, J&K Bank, and others,” explains Salil Kapoor, COO, Dish TV, India.
Vendors are trying their best to beat the heat by offering lucrative prices of STBs to DTH operators and cable operators.
“We are working closely with cable service providers to usher them into digitization,” insists Arora.
However use of new and advanced technologies can reduce the cost of digitization in India and help accelerate this movement at fast pace.
“Technology provides a platform not only to reduce cost but also increase revenue. For example, with the coming of IP technology in video architectures has drastically reduced the cost of delivering content and has enable quality viewing like HD and 3D screen delivery,” explains Arora.
Tech at Help
Next-generation technology brings in more efficiency in the system as well enable new business models, which can be tapped to increase revenues and RoI.
Vendors are incorporating technologies at chipset and network front for seamless migration from analog to digital with advance technologies. These are helping LCOs and MSOs to migrate to Next Generation Networks architecture. Some of the technologies are-integration of components into single chip solutions; lower power solutions to make power supplies cheaper and more reliable; smaller form factors reduce shipping volume and weight and reduce use of PCB, plastic, metal as applicable. Optimized drivers reduce memory to further reduce prices.
Over and above digitization and technologies in digitization will transform cable service providers to evolve as experience providers and offer value added services and thereby increasing their revenues.