Digitization: Who wins, who loses
Telecom Regulator has made digitization mandatory for four metros- Chennai, Delhi, Kolkata and Mumbai from July 1, 2012 onwards. The transition from analog television to digitization will require viewers to get digital set-top boxes (STB) while operators will have to distribute channels in digital format.
April 30, 2012 / 21:31 IST
Moneycontrol Bureau
Telecom Regulatory Authority of India (TRAI) has made digitization mandatory for four metros- Chennai, Delhi, Kolkata and Mumbai, effective July 1, 2012 onwards. The transition from analog television to digitization will require viewers to get digital set-top boxes (STB) while operators will have to distribute channels in a digital format. (A set-top box is a digital receiver that connects to a television. It receives signals from a mini dish and turns the signals into content on your screen.)This process is expected to be completed in four phases. The first phase will cover the four metros, Mumbai, Delhi, Kolkata and Chennai.Phase 1 has around 10 million TV homes in the four metros. The success of implementation in Phase 1 will ensure a smooth implementation plan for rest of the country in phases, says a KPMG report that quotes Subhashish Mazumdar, senior VP (marketing and customer relations) at IndusInd Media & Communications Ltd. "Phase 1 will be seen as a proof of concept of addressable digitization and complete analog sunset. MSOs are focusing their energies on getting Phase 1 right,” the report said.In the second phase it would be implemented in all cities having population of over 10 lakh. The third phase will cover all urban areas having municipal corporations. By 2014, entire country is expected to be digitized.However, Ronnie Screwvala, managing director, The Walt Disney Company India expects delays in digitization due to practical difficulties like “communication to the consumer”. He says a 6-12 month delay can be considered ‘on-time’, particularly when the country has waited for over 10 years for digitization. He calls digitization of cable, and broadband as the two big themes for 2012 and 2013.Digitization is expected to be a game changer for the Indian television industry, which has a pay TV penetration of 80% and is expected to bring a sea change for broadcasters, cable operators and the viewers. Interestingly, India’s TV distribution market is the third largest in the world with 146 million households.Gainers & LosersDish TV is a leading player in the DTH segment with 32% market share. Its current average revenue per user (ARPU) is Rs 142 and with additions of HD channels, further improvement in the company's ARPU is expected. The broadcasting industry is expected to witness strong growth in both advertising and subscription revenues post digitization, the KPMG report said.
Carrying all private TV channels will become obligatory and carriage fees (fee charged by cable operators to broadcaster) will be abolished, this will help revive sick TV broadcast industry.Among those who are planning to cash in on the opportunity is the leading south-based player Sun Group, which is eyeing the the untapped Chennai market. In an interview to CNBC-TV18, SL Narayanan, group chief financial officer said Chennai offers a fairly significant upside because it is currently a free-to-air market. “It is reasonable to predict at least a million households might move over to the digitally addressable systems, which will be a fairly good upside for not just Sun TV but for almost all broadcasters,” he added. Sun Group channels hold a fairly dominant share of viewership across three languages- Tamil, Telugu and Kannada.Another company waiting to exploit the digitization wave is Videocon. According to Rohit Jain, Deputy CEO Videocon D2H, digitization is a once in a lifetime 100 million plus subscriber addition opportunity over the next 4-5 years. Similarly, Sameer Ganapathy, senior vice president-distribution, UTV Global Broadcasting expects digitization to result in a significant rise in the subscription revenues of broadcasters as addressability and transparency increase.Broadcasters will also get revenues directly from subscribers and their reliance on television rating points (TRPs) and advertisers for revenues will reduce.On the other hand, cable operators who are currently earning significant revenues from carriage fees might witness significant downtick in carriage fees. But, Vikas Mantri of I-Sec feels that digitization is an incrementally positive move for cable companies as well. To reap benefits of digitization, there can be significant time lag between investments and actual returns, he explains.Meanwhile, television cable service provider, Hathway Cable has already achieved digitalization of two million homes on a voluntary basis and expects it to start monetising once digitalization happens.Speaking to CNBC-TV18, K Jayaraman, chief executive officer, Hathway Cable had said: "For the nine month period, our incremental deployment for setup box has been almost for 450,000. Our broadband cable business has also been showing substantial growth. We are well prepared for first two phases of digitalization.” Hathway will be investing around Rs 150-175 crore in digitization. It will not only supply set-top boxes, but also increase the number of channel availability to 400.Renowned players are offering packages in HD as well non-HD formats.Below is an indicative price at which set top boxes can be taken:Tata Sky HD Rs 2,840
Tata Sky Rs 1,640Videocon HD Rs 2,890
Videocon Rs 1,590Dish TV HD Rs 2,690
Dish TV Rs 1,990Bharti Airtel HD Rs 2,890
Bharti Airtel Rs 1,590RCOM HD Rs 2,890
RCOM Rs 1,590Harsha Jethmalani
harsha.jethmalani@network18online.comRiken Mehta
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