There has to be concerted efforts on part of the government, the regulator, MSOs, cable operators and broadcasters to quickly map out which of the 38 cities are doable and which are not doable, as it is better to postpone the date in those cities that are not doable instead of doing half-baked digitisation. My personal expectation is that of the 38 cities, digitisation will happen in about 25 cities.
Ashok Mansukhani is the Whole Time Director of Hinduja Ventures and President of MSO Alliance. He is a Director of IMCL since 1999. He is also Group Advisor Taxation for the Hinduja Group. The MSO Alliance represents all leading MSOs in the country. Mansukhani’s current focus is to help create a congenial regulatory business environment, which would allow cable companies to grow and meet the challenges of new emerging technologies such as DTH and IPTV in a digitised world.
In conversation with exchange4media’s Abid Hasan, Mansukhani talks about Phase II of digitisation, the expectations and roadblocks. He also shares his views on regulation of cable operators and the emerging technologies.
Q. How is the digitisation process panning out in India?
I think it has had a great start. There have been some initial hiccups, mostly with due to the fact that consumers needed to know what packages they could have, how to adopt a la carte, and they needed to be told exactly how much they are paying for what they are seeing. But think these are startup problems and you have to keep in mind that two of the four metro cities are fully digitised, while more than half of Kolkata is digitised, though Chennai is lagging behind. Now, the multi system operators (MSOs) have to seed another 38 cities by March 31. I think all the initial hiccups will settle down in the next couple of weeks.
Q. What are your expectations from Phase II of digitisation? Do you see any roadblocks?
I think some of the cities don’t have digital headends. There has to be concerted efforts on part of the government, the regulator, MSOs, cable operators and broadcasters to quickly map out which of the 38 cities are doable and which are not doable, as it is better to postpone the date in those cities that are not doable instead of doing half-baked digitisation. My personal expectation is that of the 38 cities, digitisation will happen in about 25 cities.
Q. The I&B Ministry has sought the recommendations of the Telecom Regulatory Authority of India (TRAI) on issues relating to transmission of local channels or ground based channels operated at the level of cable TV operators/ MSOs. What’s your take on this?
I think it’s a very negative move; it will break away from the free spirit of the cable industry and is totally against the Indian Constitution. However, obviously there must be some reason behind this move. If the only purpose of the government is to bring local channels under overall regulatory control, then it’s acceptable. If large broadcasters that are reaching out to millions of viewers can have self-regulation, then there is no reason for TRAI to interfere. I am pretty sure that TRAI will take a more liberal view.
Q. Scarcity of set top boxes (STBs) has been a major issue in digitisation. What steps you are taking to handle this?
As far as set top boxes are concerned, we have done demand-supply reviews and have submitted them to the government in October, November and December. Every week the government doing a city by city review of progress in Phase II. In a recent statement, the I&B Secretary said that more than 30 per cent digitisation has been done in these cities; I have also heard from TAM Media that cities in Punjab are fully digital cities, while Gujarat too is largely digital. There could definitely be problems in 12-13 cities which don’t have headends. But remember that just because the government has announced a deadline date it doesn’t mean that the seeding stops, it can continue thereafter as well. Although customers take some time to adopt the system, ultimately they are happy with digitisation.
Q. How much you are spending in the second phase and the subsequent phases of digitisation?
As far spending is concerned, most of the expenditure will be on set top boxes. Indusind media is trying to reach 4-5 million homes; the cost of each STB is in the region of around Rs 1,200-Rs 1,500. These boxes will be available to customers for around Rs 700-Rs 1,000. There are two forms of cost – one is the cost of importing the boxes, including duties, and secondly, it is the installation cost. We recover the cost over a period of time through higher ARPUs. The customer is willing to pay once he knows what he is watching.
Q. What is the latest update in Phase II of digitisation?
We have identified 25 cities initially. The remaining 13 cities are rolling targets; as there are no national MSOs in these cities, some of them might join us. If the national MSOs are present, the pace of digitisation will be faster. The second phase has just started, hence it is early to comment on whether the deadline will be met. A more accurate answer can be forthcoming only by end of February.
Q. What is the unique selling proposition of MSOs versus DTH players?
First USP is that every MSO has got around 500-1,000 cable operators under it and every cable operator has got a staff of 10-20. So you have a huge fleet on the street that knows the customers, the areas and localities. One doesn’t have to call up a call centre, but can directly get in touch with the cable operator. Secondly, a cable operator provides a two-way probability of a broadband, provide pay-per-view and video-on-demand. In the long run, you get 365 days error free service and with high definition adopted by the industry, you will have better quality boxes in time to come. The USP is to provide a valuable set of services at a value cost to the customer.
Q. How does cable digitisation improve competence of DTH, cable and TV channels?
It has improved competition because contrary to what DTH players thought, cable was actually able to cover 70 per cent of the households. Therefore, cable has become inherently competitive, and keeping in mind that within the cable space too there is tough competition, it will lead to a growing and better market and reduction of monopoly.
Q. What will be your key focus areas for 2013?
Key focus areas include making a stable base of five million customers and provide broadband to all the five million customers; to be able to supply pay-per-view and video-on-demand services; and to be able to supply higher quality digital product in the form of high definition.