Cable’s last mile is running out: Why operators must adapt to the CTV future

The cable operator once owned the final stretch into the Indian living room. That monopoly is now being dismantled one connected screen at a time. As broadcasters partner with DTH operators, MSOs and broadband companies to deliver linear television over internet-enabled platforms, cable operators face a choice they can no longer postpone: evolve from being signal distributors into digital entertainment platforms, or risk becoming irrelevant to the connected household.  

For more than three decades, the Indian cable operator has been the last mile of television. He laid the wire, collected the monthly fee and controlled the relationship with the household. That position is now being challenged not just by streaming, but by a connected television ecosystem in which the same linear channels can reach the television set through broadband, applications and internet-enabled platforms.

Read more: Cable operators on the back foot

The industry's response has increasingly moved into regulatory consultations, tribunal proceedings and demands for a level playing field. Those concerns are not without merit. 

But there is a larger question the industry needs to confront: can cable operators continue to protect a business model built around distributing television signals, when broadcasters, DTH operators, MSOs and broadband companies are themselves adapting to distribute those same channels through connected devices?

The smarter response may not be to fight the technology, but to become part of it.

The grievance is real. But it has limits

The Telecom Regulatory Authority of India (TRAI) has been examining the framework for Application-based Linear Television Distribution (ALTD), including FAST services. Traditional distributors operate within a defined regulatory framework, while internet-based services can potentially deliver similar linear television content without carrying identical obligations.

Read more: DTH players enter CTV

For a licensed distributor that has invested in networks and compliance, the asymmetry is understandably a concern.

The All India Digital Cable Federation (AIDCF) has taken that argument to the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), challenging Prasar Bharati's move to onboard linear satellite television channels on its WAVES OTT platform.

AIDCF has argued that the existing uplinking and downlinking framework permits broadcasters to provide channel reception decoders to recognised distribution platform operators, including MSOs, DTH, HITS and IPTV operators, but does not expressly include OTT platforms.

TRAI’s role when TV shifts online. Read on

The dispute could establish an important regulatory precedent on whether linear television can be distributed through an OTT environment outside the traditional distribution architecture.

But even a favourable ruling would only address the regulatory question. It would not reverse the consumer shift towards connected screens, nor would it eliminate the growing number of alternative routes available to broadcasters.

The distribution gateway is already changing

Broadcasters are no longer necessarily dependent on one distribution gateway to reach television households. They are increasingly exploring partnerships with DTH operators, MSOs and broadband companies to take linear channels to connected-TV environments.

That creates a structural challenge for traditional distributors because CTV can replicate one of the core propositions of cable: a bundle of linear channels available on the television screen.

Read more on entry of Nelen in CTV space

The difference is the pipe. A senior broadcaster said the distribution platform operator is "no longer necessarily the only gateway to the television household", a development that could have "enormous implications for the industry's economics".

Broadcasters, the executive said, may increasingly be able to acquire and engage consumers directly, potentially controlling their own applications, user interfaces, advertising environments, authentication, data relationships and consumer propositions.

For distributors, that is potentially a much bigger threat than the loss of a television subscription.

The traditional distributor's advantage was never only the cable running into the home. It was the relationship that came with it: billing, customer service, installation, local presence and, increasingly, knowledge of what households consumed.

If that relationship migrates to a broadcaster-owned application or another internet platform, distributors risk losing the leverage that came with being the gateway.

NELEN shows what adaptation can look like

The transition, however, does not have to mean the disappearance of traditional distributors. NELEN's evolution offers one example.

The company's origins go back to 1991, when M.R. Gopala Raju established The Bhimavaram Community Network as a proprietorship to provide cable signals to operators in Bhimavaram, Andhra Pradesh.

The business subsequently expanded its cable television operations before moving into digital distribution and entering the MSO segment under the BCN Digital brand in 2014.

Its entry into connected TV is therefore another stage in a distribution business that has already evolved from cable operations to a broader television distribution model.

"The industry is evolving with consumer behaviour. There are still sections of the industry that want to remain traditional cable operators and do not want to evolve. But the market is changing and we need to accommodate the changing tastes of consumers," said V V S Narayana Nunna, CEO, NELEN.

The change is particularly visible among younger consumers.

"Today, younger consumers prefer shorter videos and shorter clips, particularly on mobile devices. They may not necessarily sit in front of a television and watch an entire two-hour movie in one sitting. They may watch 30 minutes at one point and continue at another time," Nunna said.

That behaviour makes the connected television environment increasingly relevant because the consumer does not necessarily have to choose between television and mobile.

"Connected TV provides that flexibility. Consumers can move between devices, from TV to mobile and mobile to TV. That multi-device environment is one of the key advantages of the technology," he added.

The DPO of tomorrow will look very different

A senior executive at a leading DTH operator believes the emergence of CTV does not spell the end of DTH operators, MSOs or local cable operators.

"The DPO may not disappear. But its role will change. This does not necessarily mean the end of MSOs, LCOs or DTH operators. Far from it. Their role could evolve," the executive said.

The DPO of tomorrow, the executive said, could become a broadband provider, aggregator, platform, customer-service provider and digital entertainment gateway rather than simply a distributor of television signals.

That distinction could determine which distributors survive the transition.

A local cable operator already has an asset that many technology companies do not: a relationship with the household. The challenge is to build new services around that relationship.

Broadband, connected-TV devices, content aggregation, billing, customer support and local service can all form part of a new distribution proposition.

The opportunity, therefore, is not necessarily to defend the old pipe. It is to own the gateway in a different form.

Litigation cannot become the strategy

None of this makes the industry's regulatory concerns irrelevant.

AIDCF and other industry bodies may have a legitimate case for seeking clarity on whether internet-based platforms distributing linear channels should operate under obligations comparable to traditional distribution platforms.

TRAI's ALTD consultation and the WAVES case before TDSAT are therefore important. But the industry needs to pursue two tracks simultaneously: regulatory parity on one side and business transformation on the other.

The mistake would be to assume that winning the regulatory battle will restore the old distribution model.

Broadcasters are already building relationships across multiple distribution routes. DTH companies are moving towards connected television. Broadband providers are becoming entertainment platforms. Traditional distributors themselves are experimenting with CTV.

The market is not waiting for the regulatory framework to settle before changing.

The consumer will deliver the final verdict

The most important vote will not come from TRAI or TDSAT. It will come from the living room.

A consumer who moves from a mobile screen to a television does not care whether the content travelled through a cable network, DTH platform, broadband connection or OTT application. The consumer cares about convenience, content, price and the ability to watch what they want, where they want.

That is the competitive reality facing traditional distributors.

Cable operators do not necessarily have to disappear. But the cable operator as merely a provider of television signals is becoming harder to defend.

The distributors that survive will be those that use their existing relationships, networks and local presence to build the next-generation television business.

The wire built the cable industry. It cannot, by itself, sustain it.

The next battle is not over who controls the cable. It is over who controls the connected household.