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MSO-LCO power equation at an inflection point

MUMBAI: The MSO-LCO power equation is at an inflection point. That seems to be truer now than a few months earlier, after Hathway Cable & Datacom switched off a whopping 200,000 set-top boxes (STBs) in Bengaluru to make local cable operators (LCOs) comply with the full submission of customer application forms (CAFs).

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LCOs protest against Hathway in Bengaluru

The unity of the multi-system operators (MSOs) came into play in Bengaluru as top executives met on Tuesday to neutralise the impact of the protests launched by the LCOs in mass numbers. The common agreement among 12 national and independent MSOs was to push for subscriber billing by April.

Jagdish Kumar“This is a watershed moment for all for us. We can implement the Bengaluru model in other parts of the country. In Delhi and Mumbai also, we are moving forward. MSOs need to go hand in hand and take along the LCOs to implement billing,” said Hathway Cable & Datacom MD and CEO Jagdish Kumar.

MSOs are realising that they need to act tough with the LCOs, if persuasion fails.  Faced with unyielding LCOs, that is the only way they can push their agenda of raising consumer bills. They also realise that they need to come out with a more acceptable revenue share model, like in Mumbai.

In Bengaluru, the MSOs in general and Hathway Cable & Datacom in particular took a tough stance to switch off the STBs where they had failed to get the CAFs from the LCOs, despite knowing that there would be a severe backlash.

As part of the immediate settlement, Kumar said that the 200,000 STBs that had been deactivated by Hathway in Bengaluru would be partially switched on till Sunday. “We will switch on the STBs but they will be downgraded to base pack. We have given the LCOs time till Sunday for submission of CAFs,” says Kumar.

SN SharmaThe MSO Alliance coordination committee meeting held in Bengaluru discussed the way forward on billing. “Everybody has confirmed that the billing has to start from March and in case that doesn’t happen, we must be able to start it by April,” said DEN Networks CEO and MSO Alliance secretary SN Sharma.

Sharma also said that the MSOs would issue joint advertisements in a few days to raise awareness among consumers about billing. “We will issue advertisements to inform consumers about billing,” informed Sharma.

On the issue of deactivation of STBs, Sharma said that the MSOs were of the opinion that the STBs must not be deactivated completely. “It was felt that instead of completely switching off the STB, we must at least allow free-to-air (FTA) channels to run. We are in the process of starting the FTA channels for some time,” added Sharma.

Karnataka Cable Operators Association (KCOA) president Patrick Raju said that Hathway had wrongly deactivated even those STBs for which CAFs had been submitted.

“Hathway had switched off almost 200,000 STBs claiming that CAFs have not been received. But the reality is that they have switched off STBs of even those customers who have given their CAFs,” Raju stated.

He also revealed that the MSO had held a meeting with KCOA following protest by LCOs. “In the meeting, Hathway officials agreed that there was an oversight on their side due to which the STBs of customers who had submitted CAFs got switched off,” Raju claimed.

The KCOA president also asserted that the MSO has decided to switch on STBs for which CAFs have already been received. “They were not able to switch on STBs as there was some problem in their system,” he informed.

Asked whether Bengaluru is prepared for billing, Raju said it looked difficult as things stand today. “It looks difficult as none of the MSOs are prepared. If an MSO like Hathway has not been able to collect CAFs, do you think other MSOs can start billing?” he said.

Even as the ground situation continues to be volatile, the MSOs are pushing LCOs to increase monthly payouts. Hathway has already asked its LCOs to pay Rs 90 from January.

Raju feels there has to be some uniformity in rates; otherwise, it will be difficult for LCOs to increase monthly bills. “Some MSOs are asking for Rs 50, some are asking for Rs 80, while some like Hathway are asking for Rs 90. It’s a bad situation; there is no clarity whatsoever. The MSOs need to have uniformity in rates. Otherwise, LCOs will not be able to up the rates,” he averred.

MSOs are trying to put up a united front so that CAFs and billing issues get sorted out. In Delhi, the MSOs have appointed McKinsey to help them to put in place a robust billing process.

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Mass STB switch-offs in Bengaluru as CAF collection in 31 cities comes to a close