22 Oct 2017
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An aggressive band of LCOs in Indore

MUMBAI: It is early evening in Indore. Twenty local cable operators (LCOs) have gathered near the Bada Ganpati temple to discuss the implications of digitisation and the future of the cable TV business that they have built over two decades of hard work and turmoil.

Seated in their midst is Anil Pariyani, a middle-aged man who barely laughs or speaks. Looking at the Ganesh idol, which towers over 25 feet from crown to foot, he wonders at the temple built in 1875 by Shri Dadhich.

History stares back at Pariyani. The architectural grandeur of the buildings dates back to the Holkar, Mughal and British era. He is particularly attached to the Lal Bagh Palace that represents the majestic rule of the Holkars. The atmosphere is quaint all around, made somewhat mysterious by a weird-looking, snake-toting old man on a bicycle.

A few streets away is the MTH Compound, the lifeline of the cable TV equipment business. Pariyani and his friends often gather here to interact with other LCOs, sipping tea, talking about court cases and pondering over the change taking place all around them.

11

Then comes the rain, without warning, from nowhere. Pariyani reflects on the day, the month and the year. His brother had ventured into the rain to repair a cable line overlaying a building. He never returned, electrocuted to death as he was, leaving the destiny of his small cable TV business in his brother’s hands.

That was 11 February, 2002. Pariyani now lives in a different era when a consumer has to view television through a digital set-top box (STB). The number of pay TV channels has expanded, direct-to-home (DTH) has come as a competitor, television news has become a powerful force, and multi-system operators (MSOs) have grown in influence in the value chain.

Uncertainty rules Pariyani’s life. He services 160 families and has so far deployed 350 STBs. But Digicable, his MSO, is in a financial stress and certain broadcasters have disconnected their signals due to non-payment of dues.

“I was forced into the business after I lost my brother in 2002. I need more channels to compete with others and retain my subscribers,” he laments.

After the digital addressable system (DAS) drive kicked off in Indore, Pariyani started paying Digicable a monthly fee of Rs 50 (inclusive of taxes) per subscriber. On average he collects Rs 150 a subscriber per month, leaving him an income to take care of his family after deducting the expenses of maintaining the cable network.

He worries that as the other MSOs are asking for Rs 100 (inclusive of taxes) per subscriber, Digicable too will follow suit in no time. Meetings such as this with fellow LCOs help him to gain confidence that all is not lost yet.

16

Setting the tone for the LCOs in Madhya Pradesh is Iqbal Khan, a 63-year-old firebrand leader who opposes every move of the MSOs such as their demand for more subscription revenues. He speaks with venom and irrationality but has unquestionable support of those who have crowded a small shop to seek temporary shelter from the rain.

“The MSOs are asking us to increase the payout. In no way will we pay more to the MSOs. We own the customers and want to take home at least Rs 100 per subscriber at the net level,” thunders the sexagenarian.

Now deeply rooted in the cable TV ecosystem, Iqbal would have had a career completely different from it. As a child, he grew up under the shadow of his uncle who worked in the Indian Navy. When his uncle died fighting in a war, he made up his mind to join the Navy. He was in Mumbai at that time and was a sea diver for Dolphin Offshore Enterprises. But he was denied a job and left for Indore a couple of years later, after trying his luck at truck transport business in Mumbai.

“There was corruption in the system, which I couldn’t tolerate. I had grown up in Mumbai as my father was in the Air Force and posted there. When he passed away, all of us decided to return to Indore,” he said.

02Iqbal’s next stint was also in a different area. He went to the Gulf and worked as a transport supervisor, saving all that he could. Trouble started with his health and he had to undergo a bypass surgery in 1999 at the age of 48. He stuck for four more years in the Gulf, all the time hoping that his three graduate sons would find a job in India. Nothing of that sort happened and when he came back in 2003, he decided to invest all his savings in the cable TV business.

“I had three unemployed grown-up sons. So I thought they would find occupation in the cable business. I invested all that I had in the cable business,” he recalls.

In 2003, the time was ripe for cable TV explosion in Indore. The number of TV households was on the rise, and due to competition, the MSOs were pampering the LCOs. Getting accidentally into the cable TV business, Iqbal expanded from Indore to other neighbouring rural areas of the city. Now he has shut them all and has operations only in Indore city.

Iqbal is no small cable operator. He has 5,000 active subscribers and is among one of the top 10 LCOs in the city. There are 452 registered LCOs in Indore and 10 of them have over 5,000 connections. These 10 LCOs make up 20 per cent of the cable TV market in Indore. Consolidation among the LCOs, thus, could be a possibility in future. Though holdings would vary, the average size of the rest of the LCOs works out to 457 STBs.

The LCO Equation

  • Number of registered LCOs is 452.
  • 10 LCOs have 5,000 and above points.
  • These 10 LCOs make up 20% of the market.
  • Indore has a high degree of income disparity. This hits LCOs in going for a uniform cable bill rate.

Otherwise settled, Iqbal cannot accept the MSOs’ demand for Rs 100 (inclusive of taxes) per subscriber. Having his cable connections in the slum areas, he gets a monthly average of Rs 150 per subscriber. He has little ability to increase this.

“How can I pay the MSOs more? My subscribers are gardeners, construction workers and other low wage-earners. When DAS was implemented, my customers did not take any STB for three months. They will not pay more for their monthly cable bills. Besides, my staff and maintenance cost per connection amounts to about Rs 40–45,” he says.

Given the unbridled income disparity, LCOs will find it difficult to go for a uniform cable bill rate in the city. “The MSOs should consider these peculiarities of the Indore market,” avers Iqbal.

As night descends, Iqbal drives me to his three-storeyed house. Seated in the sofa of his living room, he orders for mangoes. “Have the skin peeled,” he shouts, directing the voice to his daughter-in-law in the kitchen.

Then he begins with his pet topic, the tirade against the MSOs. He talks about the formation of Malwa Digital Network and their ambition to turn into an MSO.

“We are looking at somebody who can invest or give us feed of all the channels. In case the partner invests in STBs, we will pay the feed-provider Rs 30 [plus tax] per box. If we invest in STBs, we will pay Rs 30 [inclusive of taxes] per box. We are assuring the strategic partner [MSO or headend-in-the-sky service provider] of at least one lakh cable connections. And we will give an increase of about 5 per cent every year,” he says.

Iqbal’s grandchildren enter the room, flocking him. One granddaughter sits on his shoulder and starts pulling his hair. The softer side of Iqbal comes out. “Every day, I spend at least an hour in the night with my grandchildren. I have taken up the issue of the cable operators because I believe in the cause. This gives my life a purpose,” he says while affectionately patting his grand-daughter.

Considering the investments the MSOs have made, they look at Iqbal’s revenue-share demand as irrational. How the battle lines turn or a middle ground evolves is anybody’s guess in this city of aggressive LCOs.