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GroundPost: Challenges of MP market from cable operators’ perspective

MUMBAI: The growing distrust between multi-system operators (MSOs) and local cable operators (LCOs), lofty entertainment tax and the looming threat of direct-to-home (DTH) operators are some of the issues giving sleepless nights to the cable TV community in Madhya Pradesh.

“The tug of war between MSOs and LCOs, and high entertainment tax are the two big challenges that we are facing today,” said Siti Cable COO Mahipal Singh Rawat during a panel discussion on ‘Challenges of the Madhya Pradesh cable TV market’.

GroundPost-Cable-TV02

(L to R) Umesh Uppal (IndiaCast), BS Tomar (UCN), Himanshu Dhoreliya (TelevisionPost), Sameer Prabhakar (Digicable), Shaji Mathews (GTPL), Mahipal Singh Rawat (Siti Cable) and Shekhar Agrawal (Siti Cable)

According to Mahipal, an even bigger threat that is looming over the cable TV community is that of 4G. “This has the potential to challenge the status quo. As an industry, we must be prepared for this challenge. LCOs must upgrade their network so as to provide new services like broadband and other services to build loyalty among consumers,” he said, while speaking at GroundPost’s digital summit in Indore. Organised by TelevisionPost.com, the event had a gathering of over 300 LCOs.

Thanks to digital cable, the cable TV community has somewhat neutralised the threat of direct-to-home (DTH). “Earlier, we faced huge competition from DTH, but now thanks to digital cable, we have overcome competition from DTH. However, 4G will be a bigger challenge to the cable TV community than DTH,” Mahipal added.

He also said that raising average revenue per user (ARPU) is on the mind of every MSO since they have pumped in capital to seed set-top boxes (STBs). The current ARPU is insufficient for the MSOs, LCOs and broadcasters to build their business models.

Digicable vice-president Sameer Prabhakar said that everything else has remained the same except for the fact that consumers are getting digital signals. “The biggest challenge before the industry is how to upgrade the existing network so as to provide new services like broadband and VAS. We are still doing business in analogue mode,” Prabhakar stated.

He also underlined the fact that growing ARPU was in the best interest of everyone in the value chain. VAS, he said, was a big revenue opportunity for cable operators.

GTPL COO Shaji Mathews assuaged the fears of LCOs by saying that they cannot be driven out of business by MSOs. “DTH operators are teaching MSOs and LCOs how to implement digitisation. The LCOs have built the business right from scratch and it is they who own the last mile.”

Mathews also opined that the LCOs must be allowed to bill the customers with MSOs developing the billing system. “There is no such rule that the MSOs have to bill customers. The LCOs can bill customers, while the MSOs can provide the billing system. The MSOs cannot snatch away the right of the LCOs,” he said.

He also criticised the way in which the Telecom Regulatory Authority of India (TRAI) implemented digitisation. The DAS rules, he said, were in favour of broadcasters since they have a strong lobby. “The pricing regime put in place by the TRAI is utter nonsense. There is a need to revisit the pricing of channels to make them reasonable,” he lamented.

Regional MSO UCN’s Indore head BS Tomar said that seeding of STBs is just the first step in moving towards addressability, and more needs to be done including packaging, billing and broadband.

“The LCO support was critical in seeding STBs. We need their support to start packaging and billing. Only when these issues are resolved, can we move forward to Phases III and IV,” stated Tomar.

Talking about Phases III and IV, Siti Cable’s Singh said that the regulator will force digitisation down the throat of MSOs, as in Phases I and II. While semi-urban towns will be manageable, the rural areas will be out of grasp for most MSOs.

DTH and Headend-in-the-sky (HITS) were good options to digitise the rural hinterland covered under Phase IV, he averred.

Mathews also observed that Phases III and IV are a tough call for MSOs given the way Phases I and II have gone, with billing and packaging yet to take shape. He said that there is a lot of confusion in the market due to digitisation.

He also said that VAS will remain a pipe dream till the basic issues faced by the MSOs and LCOs are resolved. Nevertheless, every MSO worth their salt is looking at VAS as a new revenue stream, one that will reduce their dependence on cable TV subscription revenue.

Also read:

Digitisation: Implementing Phase III more realistic than Phase IV
GroundPost: Cable TV will become a broadband-focused business
GroundPost: Jawahar Goel urges industry to unite on ET, says Chandra to lead a delegation to MP CM