NEW DELHI: Stiff challenge from digital cable operators has forced India's biggest direct to home (DTH) television company, Dish TV, to tie up with neighbourhood cable operators, opening up a new front in the war between the DTH and cable industries.
India's top four metros-Delhi, Mumbai, Chennai and Kolkata-will replace all analog television networks with digital transmission from July 1, 2012. This has led to a scramble between multi system operators (companies which create and distribute a bouquet of channels through cable networks) and DTH operators who transmit their own bouquet of channels via satellites.
Their fight could end up giving a fresh lease of life to the local cable operators who were until now providing the last mile connectivity for the MSOs, but were faced with the threat of extinction with the launch of digital set top boxes.
Dish TV chief executive RC Venkateish said the company has launched a pilot project in Delhi and he expects to grab 1-1.5 million subscribers across cities in the short term through tie-ups with the cable operators.
These operators have been given the option to take up distribution and installation of Dish TV connections to customers and push Dish TV set-top boxes in cable households with the first phase of cable digitalisation.
Currently, the company has agreements with about thirty cable operators, but expects to roll out this scheme in the country and rope in about 3,000 local cable operators in the next two months.
"This scheme helps us open a new distribution channel and establish a personal contact with our customers. Our last-mile operators will install these boxes, service the connections as well as collect bills," Venkateish said.
These last mile operators will be paid commissions on the installation of set top boxes as well as a 15-20% commission every time the customer serviced by them recharges his subscription.
North-Delhi based cable operator Rajan Sidana, who owns Chaitanya Cable Network, said that aligning with large DTH players like Dish TV would be a profitable deal for last-mile operators. "As it is, we are facing competition from DTH service providers and losing consumers to them. This is a way to retain our customer base and be able to offer them DTH as well as high-definition set-top-boxes on a commission basis," he said. He services about 700-800 households and can offer feeds of several MSOs to consumers.
Other DTH companies may also join the fray soon. A senior executive from another DTH company who did not wish to be named, said that this is innovative way to grab more subscribers but warned that this could be an expensive way of grabbing consumers at a time when the DTH industry is making losses.
Vikram Mehra chief marketing officer Tata Sky said, "We have beefed up our service and installation teams and our customer care centres that will help us acquire new subscribers."
Cable companies still dominate in the big metros and roping in the last-mile cable operators will help them increase their subscriber base in the metros. Currently several local cable operators have access to television feed from several multi system operators besides being an exclusive last-mile operator for at least one MSO.
Another South Delhi cable operator RS Bedi, who owns Skywaves, said, "This is an opportunity for existing cable operators who are being squeezed by MSOs to open up an alternative revenue stream. It will also help Dish TV reduce its downtime to cater to consumer's service requests."
He added that the margins being offered by Dish TV is attractive and the cable operator will not have to bother about laying cables and will not have to set control rooms. "This will help us grab new consumers as digitalisation kicks in," said Venkateish. Dish TV currently has 12.5 million gross subscribers and 9.5 million net subscribers in the country as of December 31, 2011.
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