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HomeArticlesRoop SharmaA Tough road ahead for Phase III
Tuesday, 07 July 2015 07:48

A Tough road ahead for Phase III

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In the last two task force meetings held on 20th April and 27th May 2015 respectively in the I&B Ministry for implementing Phase-III of DAS stakeholders have been only projecting their problems and did not talk of the progress made. According to our reports, hardly 10% of the 47 million STBs have been seeded in the Phase III. Infact, the report says that one prominent national MSO has not ordered a single STB for Phase III. Less than six months are left to complete Phase-III that covers about 39 million Cable TV households in 630 districts encompassing 7709 urban areas. 

From the experience gained in the earlier two phases, we find that it took more than two years only to seed the set-top-boxes in 28 million households. In certain areas of the DAS cities like Chennai and Hyderabad STB seeding has not even been completed and analog signals are being passed on to the consumers.  Phase-II had ended on 31st March 2013 and we are yet to see even a single consumer getting the itemized billing produced by the SMS and billing system of the MSOs.

Two of the major problems faced by stakeholders and projected during the 7th and 8th task force meeting are given below:-

Interconnect agreement between broadcasters and MSOs

Broadcasters are making it difficult for the new MSO to get their content, making some excuse or the other, just to help their affiliated National MSOs increase their subscriber base. In many cases new MSOs are being compelled to approach TDSAT to get the content which causes further delay and also irreparable damage to the MSOs business, giving undue advantage to its rivals. 

Like in the case of God Father Communications who is competing with the politically supported Fastway  MSO in Amritsar, and is unable to get the content from large broadcasters in spite of a successful audit of his network by the BECIL, on the Directions of TDSAT.  

Reference Interconnect Offer (RIO) Issues 

Although many broadcasters have started putting RIO on their websites, yet they sign deals with new MSO at a much higher rate, violating the TRAI regulations. This puts the new MSO at a disadvantage as he is unable to give a lower price to the consumers than their rival MSOs who enjoy the favours of the broadcasters, getting a much lower rate from the broadcasters. Thus, in the same city and for the same content, consumer gets a higher bill from the small MSO. 

Market outlook, 5 years from now

Notwithstanding the above, Digitisation has entered the market even if its implementation is slower than expected and it is going to stay now. Regulations stuck in the courts are likely to get resolved and progress of digitisation is likely to speed up. However, the market in Phase III and IV will not pickup unless basic problems are not resolved by the people concerned. Since there is no legal framework working at present and no business model has emerged so far, bigger MSOs and Pay Broadcasters supporting them are the only gainers. Most of the industry is incurring losses, projecting false balance sheets. TRAI fixed tariffs are not in place. Since there is no market force working, TRAI must fix retail prices so that consumers do not get cheated and lose faith in the whole system.

 Most of the capex is going for the STBs. Revenue is being generated from other means like installation and activation fee which are not permitted. Actual service is not proving to be profitable. Industry is still working on hopes. MSO wait for funds from abroad but nothing is coming. Even those investors who decided to invest in the beginning of Digitisation have withdrawn from the market.

It is very important for the stakeholders to understand the threats to the business and opportunities available so that a controlled path could be carved.


1.Many MSOs started providing broadband. With government’s increased emphasis on this, it could prove a great growth opportunity for MSOs.

2.New technologies like OTT, VoD, HD, 4K being introduced. The earlier the MSOs adopt them, the faster they meet the competition from the telecom operators.

3.Manufacturing of STBs within the country has started. Videocon, Logic Eastern, Indeon, MyBox etc. are already in the business. Hero Group is next to enter, investing in MyBox. Bharti Airtel is also venturing into it. Many international players like Changhong, Skyworth, Humax, have also joined in. 

4.National Optical Fibre Network (now BharatNet ) is getting a big push as part of Digital India. It will join 2.5 lakh panchayats with high speed broadband in the first phase. MSOs have an opportunity to be its partner for the last mile from Blocks to Panchayats. 


1.Last Mile is still with small operators, they are neglected by the regulations. So whereas MSOs invest on backhaul infrastructure, a weak last mile does not pass on the benefits of digital network to the consumer. LCOs are unable to upgrade due lack of funds, technical knowledge and Insecurity in business. 

2.Most of the regulations and Tariff Orders are in Courts and not being implemented. Activities without a legal framework result in more chaos than order. 

3.Consumers are mostly poor and lower middle class, cannot afford digital services. Thus not enough demand for any value added services. ARPUs remain low. Even DTH has not been able to garner a higher ARPU. In fact, DTH is going back to the disruptive pricing of services like cable operators in pre digital era.

4.Only 35% of TV sets are flat screen, capable of giving benefits of digital networks. Some of the older sets in poor households do not even have AV connection, required for STB.

5.Since real itemised billing and a-la-carte offers have not been implemented, public reaction to digital services is still not clear. Public is being forced with digital service in the analogue way. 

6. Common man’s willingness to adopt the new technology is not known. No TV channel has ever done a programme on digitalisation with consumers in mind. So far, digital cable is only satisfying the needs of the affluent class.

7.Multiple Taxation and many other financial issues are not yet resolved. Before even the benefits of digitisation reach the people, state governments, Central Govt and Pay Broadcasters have devised ways to fleece the consumer to the maximum, as if the digital revolution is only to benefit them. This is curbing the growth of the industry as people are unwilling to pay high costs and taxes and MSOs & LCOs are being squeezed of revenue, leaving very little for the upgrades. 

8.Broadcaster’s perception of underdeclaration by LCOs and expecting high ARPUs from the common man in India has to change. Innovative pricing and new products and services will have to be devised to increase the ARPUs.  

9.Bureaucrats in the Government and the Ministers have no knowledge of the ground realities and get the feedback from corporate before making policies. Hence our policies do not meet public interest. Even if the policy is found wrong, it is not rectified due to arrogance.

Security Issue must be resolved

Out of about 900 MSO applicants, only 170 have the permission. Others are now being given provisional certificates by the MIB but process is slow. Hardly any MSO for Phase III & IV have commenced operation whereas 100 million more STBs have to be seeded in comparison to 30 million in Phase I& II. There are 630 districts only in Phase III, with more than 7000 urban areas and about 40 million connections. 

Large MSOs do not have any existing infrastructure in the areas covered by the next two phases. Consumers are not willing to give higher subscriptions in these areas. We do not have a supporting manufacturing industry in the country and consumer awareness is extremely low. Under such circumstances, it is almost impossible to achieve what the government is targeting.   

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