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Time to increase cable ARPU in Patna
PATNA: The challenge in Patna will be to raise the average revenue per user (ARPU) which has remained historically low due to competition among the multi-system operators (MSOs), industry experts opined.
Talking at TelevisionPost.com’s fourth on-ground digital initiative GroundPost in Patna, Siti Cable Kolkata director Suresh Sethiya said that in the last 10–12 years, consumer rates have not increased. “More or less, the cable market has remained unchanged and so has the rate of consumer ARPU. In Bihar, ARPU has always been low. But in case it doesn’t increase now, the market will run into a difficult terrain,” he said.
Sethiya is aware that the ARPU won’t go up overnight, but hopes that the market will shape up in four to five months. “About 22 per cent subscribers opt for pack Rs 200+ taxes, 23 per cent for Rs 230+ pack, while the rest go for Rs 180+. Less than 1 per cent opts for Rs 100. We will work together to increase the ARPU,” he said.
According to GTPL’s Amitabh Singh Rana, the problem is that the local cable operators (LCOs) are somewhat apprehensive about increasing the ARPU. Should they increase and two customers decide to leave, it would be a big loss.
“But everyone has to understand that things won’t change until the customer rate changes,” Rana said, adding that there is a simple way of increasing ARPU which is by packaging. “Now that packaging is done, it will take three to five months for the actual realisation,” he said.
He added that GTPL’s owners are predominantly cable operators and they look at the market from the same perspective.
Emphasising the need for service improvement, Rana said, “Every market is challenging and understanding the difference is important. The MSOs should now try to improve the service or else direct-to-home (DTH) will take over the market and cable will not be able to survive in such pockets.”
Darsh Digital Network director Sushil Kumar said that his company is getting good support from all the LCOs and there is harmony among other MSOs.
“For the last 20 years, operators have not been able to increase the effective rate from the ground. We will have to go to the ground and work together. Customers also understand that rates should increase, but we will need to work together to achieve it,” Kumar said.
Incidentally, as cable ARPU is very low in Patna, DTH has not been able to penetrate the market as it is costlier.
Sethiya, who is also a cable operator, said that local operators are lucky, but people think that they are not educated or aware and don’t have support of either consumers or the government and make a lot of money.
“They [LCOs] are highly educated in their field. Only a technical person can pull a wire and convert a signal into video. Is it a miracle? No. Only a cable operator has entry inside the bedroom of a house. Which other consumer service guy has that? The players are not just lucky. They are well informed. And today, once again there is a big opportunity. They have to grab this,” he said.
“Digitisation is a big opportunity. People are not aware and are a bit scared that their business is going out of their hands. That’s not the case. You are making an investment for the future. If you would have thought 20 years back—before putting a Rs 1,000 wire in a home, from where you now collect Rs 300 in installation—that it is a loss-making proposition, there wouldn’t have been any cable operator sitting here,” he said.
According to Sethiya, the reason behind MSOs buying digital set-top boxes (STBs) for Rs 1,800 and giving it to LCOs for Rs 900–1200 is that they are investing for future. “The business in digital is different from the analogue times, but this change is what will bring the growth. It is good for all of us. First, you have to invest before you reap.”
On a positive note, Sethiya said that people in the cable industry are very adaptable and issues like ARPU will be fixed soon.
On the extension of deadline of Phases III and IV of DAS, Sethiya said that the bad thing is that the MSOs who have already invested in boxes will suffer losses and there is no way of recovery. But the good thing is that as Phases I and II have not been completed, the MSOs have some time to prepare.
“The LCOs and MSOs together will have to work out a model and start on their own. Otherwise, DTH or other technologies will eat into our market share,” he cautioned.
So will MSOs give the STBs to LCOs at a subsidised rate in the next two phases of digitisation?
Rana said that a clear understanding of who is funding the boxes is required now. No MSO can think of not recovering the cost for two years.
Now that the dates have been extended, will an independent MSO like Darsh seed STBs on a voluntary basis?
Kumar said that the company is in talks with all its LCOs and if they are willing to pay for the boxes, they will look at voluntary digitisation.