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A peep into Hindujas’ Headend-in-the-Sky project

MUMBAI: Hinduja Group, which has interests in cable TV distribution business through IndusInd Media and Communications Ltd (IMCL), is quietly working on a Headend-in-the-Sky (HITS) project.

A large part of the business model is still under wraps as Grant Investrade, an investment arm of the Hindujas, is awaiting government clearance for operating HITS. But bits and pieces of the model is coming out in the open.

The basic sales pitch is that last mile operators (LMOs) can own their network, launch multiple services and scale up their monetisation opportunities while the HITS company will provide technological support. For the LMOs who are uncertain of their status under the umbrella of the multi-system operators (MSOs), this can be a good enough bait.

Tony D'Silva“The business model of JAINHITS, the only existing HITS operator in the country, is like an MSO. Under our system, cable TV operators will own the set-top boxes (STBs) and stitch their content deals with broadcasters. We will operator as a ‘white label’ neutral platform that can help in resolving many issues that are faced by the LMOs,” Tony D’Silva, who is heading the HITS project for the Hindujas, told TelevisionPost.com.

The Hinduja company will provide MPEG-4 high-definition (HD) boxes at the price of standard definition (SD). Unlike the plain vanilla STBs currently provided by the MSOs, the HD boxes will enable cable TV operators to monetise from multiple value-added services. “We will arrange for the cable operators to buy boxes as per their choice and demand,” said D’Silva.

Cable TV operators will, however, have to pay for the STBs. In case of MSOs, operators get STBs at a subsidised price. “We will be able to get better rates from the STB vendors due to economies of scale. So cable TV operators will stand to gain in purchasing STBs which they will own,” said D’Silva.

The cable TV operators will have the freedom to do content deals with broadcasters. “In case they need our help, we will facilitate such deals,” he said.

The packaging and bundling of channels will be done as per the request of the cable operators. The HITS project will also have a robust subscriber management system (SMS), averred D’Silva.

Cable operators can do prepaid billing in order to monetise packaging and impulsive buying. “We will have terminal at every operator point so that you track the progress of the customers and transfer money to your account immediately,” D’Silva stated.

The HITS operator will also generate subscriber reports for all operations on a monthly basis. D’ Silva assured that the HITS platform has no intention to own subscribers as they are the sole propriety of the LMOs.

Incidentally, Grant Investrade has applied to the Information and Broadcasting ministry for a licence to operate HITS. “We expect to get the government approvals soon,” D’Silva told TelevisionPost.com. He, however, declined to give further details.

Meanwhile, speaking at a summit organised by the Maharashtra Cable Operators Foundation (MCOF), D’Silva said the television distribution industry in India is at a tipping point with the arrival of digital addressable system (DAS). He called on the LMOs to take full advantage of DAS by looking at it from a long term perspective and not get disheartened by short term losses.

LMOs must look beyond the basic cable subscription model to one where they can provide multiple value-added services like Video-on-Demand (VoD), broadband, and multiscreen services like TV Everywhere. This, he said, is critical to lift ARPUs (average revenue per user).

The biggest challenge in digital addressable system (DAS) before cable TV operators is to monetise the last mile customer. D’Silva said that STBs, collecting customer application form (CAF), setting up SMS and call center is a basic form of digitisation.

According to D’Silva, digitalisation in true sense is providing proper channel packages, bundling services like cable and broadband, prepaid payment model, VoD, games, connecting cable to multiple devices, and ‘over the top’ (OTT) service.

“Most subscribers don’t watch more than 15-20 channels, so providing relevant packages and bundling services will help cable operators add more revenue. The key in DAS is to monetise. Unless we monetise properly, we wouldn’t have taken full advantage of DAS,” he said.

D’Silva urged the LMOs to open their minds to new technologies. He asserted that the LMOs can earn more revenue in HITS model as compared to the traditional MSO-driven cable TV model.

D’Silva said that HITS has a competitive advantage over direct-to-home (DTH) operators as it has no capacity constraint, there is return path, and cable operators can insert local channels.