The second wave: Direct-to-home

In the pre-liberalisation days, TV-owning households had nothing but the channels of Doordarshan to entertain themselves. Cable and satellite transmission was almost unheard of, and a whole host of channels available at the click of a remote seemed too good to be true, at least for average middle-class families. Then came the great C&S wave in the early 1990s, and life was never the same again. Viewer habits changed overnight and so did the dynamics of the television business.

Cut to the present and the television industry seems to be at the crossroads again. Conditional access, which was set to revolutionise TV-viewing habits and bring to the fore the all-important issue of addressability, failed to take-off. In the aftermath, DTH or direct-to-home services seems to have emerged as the hot topic of discussion. The reason is not difficult to gauge. Broadcasters, especially, mainline ones such as ZEE and STAR as well as pubcaster Doordarshan, are set to take a big-time plunge into DTH distribution services, implying, that the chain of intermediaries beginning with the multi-system operator (MSO), followed by the local cable operator (LCO) and the last mile operator (LMO), who actually brings home the satellite signal, will be eliminated.

The Subhash Chandra-promoted Essel Group, which has ZEE Telefilms among other companies under its banner, took the first tentative steps in this direction, when it soft-launched Dish TV, its direct-to-home service, via ASC Enterprises, in October last year.

Beginning with 2,000-odd subscribers, Dish TV, according to Ashish Kaul, vice-president, corporate brand development, Essel Group, has around 60,000 subscribers today, with the service adding close to 800 to 900 consumers on a daily basis. The number of channels distributed by the platform is 50 with a target of 100 channels set for April this year and 200 channels to be distributed by early next year.

STAR, on the other hand, has joined hands with the Tata Group in an 80:20 joint venture to launch its DTH service by the second-half of this year, while Doordarshan is looking to launch its Ku-band transmission service (Ku-band is considered to be the strongest frequency of transmission for commercial purposes; used by DTH operators across the world) by the middle of this year. The project outlay for a DTH service provider, according to industry estimates, is around Rs 300-400 crore, and ZEE, according to Kaul, has set aside an investment of Rs 500 crore for the venture.

The question is, why are broadcasters making a beeline for DTH considering that it is a capital-intensive business? The answer is simple. Cable operators underdeclare their subscriber base, which means broadcasters get lower annual payouts towards distribution. According to industry estimates, the size of the cable business - based on the annual consumer spend towards subscription - is Rs 8,500 crore, of which a sizeable portion is unaccounted for owing to rampant underdeclaration. What is left is shared between members of the cable industry, that is, the MSO, LSO and LMO, leaving about Rs 1,000 crore for the broadcasters, say analysts.

If DTH comes into the picture, intermediaries are automatically eliminated and underdeclaration is curtailed, not to mention that the service tends to be mobile, implying, that a dish antenna, connected to a set-top box and TV can be put up anywhere to facilitate transmission. Again, the viewer gets a range of options in terms of channels to choose from, some of which are exclusive to DTH.

But if the service has its pros, there are cons as well. From the point of view of the service provider, if the number of channels as well as the type of channels is decisive in wooing subscribers, for the consumer, the issue of affordability takes precedence over everything else. Putting the basic infrastructure, that is, the dish antenna, which has a clear line of sight with the sky, connected to a set-top box and TV, costs about Rs 4,500, which is over and above the monthly subscription amount paid to the service provider.

Though observers maintain that service providers will attempt to keep the monthly subscription amount in a competitive bracket, the point is will consumers agree to make that one-time down payment towards infrastructure? Once in place, will the operator provide after-sales service, which is crucial to DTH? Rohinton Maloo, managing director, Cutting Edge Media, believes that these are important factors for the success of DTH in the country. "It is not only a question of putting up the infrastructure, but also of after-sales service," says Maloo.

Typically, he says, DTH is not meant to facilitate or abet cable wars but to cover large landmasses, where it is impossible to provide cable transmission. "The other reason for which DTH was conceived was to provide premium content," he says. Hence, identifying the right target audience, which, at the same time, have the disposable income to support DTH, is imperative, he points out.

The urban landscape dotted by high-rises is a hindrance to the smooth rollout of DTH, say analysts. Kaul of the Essel Group, however, maintains that the network's target group is the rural community and not residents of urban India. "There are affluent households in the countryside," he says. "We are looking at those areas where there is no connectivity and those areas where there is poor connectivity," he says.

Again, interoperability, that is, the ability to switch between platforms, is another issue dogging the industry. The SIM card, located in the set-top box, is the driver of the service and is exclusive to the operator. Pushing multi-bay machines, which permit SIM cards of different operators in a single box is an expensive proposition, which makes the service prohibitive, state analysts.

Frequent breaks in the supply of electricity in rural areas coupled with rampant piracy of signals, non-compatibility of television sets to DTH (since a sizeable portion of TV-owning households use black and white TV sets or old colour television models, which carry the prime band consisting of 11 frequencies only), and above all, the social concern of displacing cable operators from their only means of livelihood, are some of the other issues that need to be addressed.

However, observers believe that cable transmission and DTH can co-exist in the country, and the service will comprise a small percentage of the distribution business, at least to begin with. "It is another mode or medium of delivery and will take its time to evolve," adds a senior media observer based in Mumbai. © 2004 agencyfaqs!