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HomeArticlesNew MediaMove Beyond Cable TV in 2015
Wednesday, 04 March 2015 11:55

Move Beyond Cable TV in 2015

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2014 was the year when “Digital” finally got its moment centre-stage. The government made several announcements committing to convert the country into a “Swach-Digital Bharat.” This is a turning point and I can’t wait to see how the momentum picks up in 2015. Being an observer on the sidelines, here are some thoughts and suggestions to the cable industry and policy makers on a few things that could expedite our Digital journey. 

Digital: Looking beyond Video- Invest in Broadband

What the cable TV industry in India faces today is reminiscent of the trends faced in the last two decades by the telecom sector. When free IP based voice services were launched in the world, there was a paradigm shift in the way the telecom companies started to diversify their services. Revenue from voice started to gradually reduce, and telecom companies have had to push data services harder, essentially becoming the pipe to carry voice and text related services from third party vendors. In India, non-voice revenue for mobile operators comprises about 20% today, but this will likely increase to at least 40% by end of 2016. 

Cut to the cable TV industry. For the last two decades, video primarily has been the mode of business (and also the bone of contention) for the industry. However video has become a commodity. Uncontrolled and unpaid access to large libraries of content are abound in alternative media platforms such as the Internet. Quality is no longer a differentiator, as advanced compression technologies and growing broadband speeds assist consumers to watch video in reasonable quality. 

The ARPUs from video services today range from $2-$3 for cable MSOs in India. In order to move this upwards, cable MSOs have to provide a wider range of services, especially cable broadband. With broadband, cable TV operators can provide the underlying platform and pipe to carry a number of applications including live and on-demand video, voice and Internet, but also expand their services to the small and medium enterprise sector. 

In consultation paper in September on ‘Delivering Broadband Quickly’, the Telecom Regulatory Authority of India (TRAI) advocates leveraging cable networks in the country to ramp up the penetration of high speed broadband in the country. Ironically only “0.7 million or 1.16% of the total 60.87 million broadband connections” are reportedly supported by cable modem.  

The infrastructure upgrades required to push broadband services are significant, where the CAPEX costs per subscriber range from Rs. 7,000 to Rs. 12,000 and estimates of conversion does not make it attractive for MSOs to push this ahead. 

This is where the views of the industry become myopic. Broadband, today the fifth essential item in the country, after ‘roti, kapada, makaan’ and electricity is not limited to cable subscriber homes, but also other verticals, providing a room to experiment with different business models. 

The industry needs a push from government incentives to ramp up their broadband infrastructure and provide the much-needed momentum to our “swachh-digital bharat” transformation.

Synergies with IT & Telco Operators to Expand Portfolio

The cable TV industry, where a large number of players are burdened by significant CAPEX and OPEX, would greatly benefit moving out of its isolation and considering business partnerships with the IT, and Telecom sectors. Telecom companies in Europe for instance are exploring large scale consolidation by acquisition of small carriers as well as cable operators to aid their geographical network expansion. While India would unlikely move in that direction anytime soon, the cable industry can extend its portfolio into services such as system integration and data centre & cloud services, apart from network related offerings.

For example, a cable headend can become a centralized hub of cloud based applications to run ERP for micro enterprises in a taluk; or they could power e-learning for schools in a block. By tying up with a storage vendor or a system integrator, they could explore providing webcasting.

Caught in the rigmarole of carriage fees conflicts and tax related disputes, the industry largely seems to miss the point that this is after all a services business- providing room for diversification.

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