Broadcast: In The Pink Of Health

The financial year 2005-06 saw a significant transition in broadcast
business, though the major gainers in the supply chain were the last mile
operators (LMOs). As the number of channel offerings by the service providers
swelled, the revenue model of the cable TV business blurred due to the fact that
this industry has failed to keep track of its legitimate subscribers. With the
conditional access system already in doldrums,
broadcast services in India are seeking different routes to reach the
masses. Among the other options that could bring broadcast services to the
commonplace, DTH leads the race as some big players with definite service plans
have already jumped into the arena. The potential of this market brought in
hitherto unknown names such as BPCL, into the field of broadcast service.

Indian Landscape

The picture in India is no different. Reports suggest that India would be
the biggest market in South Asia by 2010 if it comes to providing alternative
broadcast services. People have started showing interest in switching over to
DTH. With freedom of choice and pay-per-view facility in mind, the current
subscriber base of DTH has gone up to 2.5 mn within a period of three years.
With noise  regarding implementation
of CAS subsiding to some extent, other feasible challenges to CAS such as IPTV,
triple play, and DTH are now slowly becoming visible.

The DTH Connection

DTH is the buzzword now for TV viewers in the metros as it offers immense
opportunities to both broadcasters and viewers. In general, the DTH service is
the one in which a large number of channels are digitally compressed, encrypted,
and beamed from very high power satellites. And it is no more an inaccessible
option for the viewers.

The Players

Out of the current 2.5 mn DTH subscribers in India, DishTV has more than 1.2
mn subscribers with new subscribers being added everyday. The Zee group's DTH
service offers access to several pay channels, but still faces problems relating
to content, as several popular channels such as Star and Sony group products are
not available with this platform. Also, popular ones such as Discovery, AXN, and
MTV are missing. As of now, subscribers are not very enthusiastic about the
price plan or content. But there is no dearth of business plans for Zee
Telefilms (ZTL). Wire and Wireless India (WWIL), the cable outfit of ZTL, is
planning to invest Rs 500 crore to layout a digital platform, gear up for triple
play, and expand value-added services. The net expense incurred by DishTV for
DTH operations so far is Rs 380 crore. It expects gross revenue of Rs 320 crore
in FY 2006-07 riding on a subscriber base of 2.4 mn and an ARPU of Rs 250,
thanks to the launch of various value-added services. And in FY 2007-08, it
hopes to reach a revenue mark of Rs 800 crore with a subscriber count of 3.15 mn
and ARPU of Rs 310.

Public broadcaster, Doordarshan seems to be a better choice for TV viewers,
as it provides service free of cost. With a subscriber base of more than 1 mn,
Doordarshan's DTH offers 33 free-to-air channels including 14 private
channels, and 12 radio channels. It is expected to add 15 more private channels
to its kitty as Prasar Bharti is conducting a co-branded joint marketing with
the help of IGO TV of Onida group.

To give stiff competition to the two old players (DishTV and Doordarshan),
Tata Sky, a 80:20 joint venture between the Tatas and Rupert Murdoch-owned Star,
is tightening its belt and gearing up to unleash its DTH service in the second
half of 2006. Tata Sky plans to offer some new tastes to viewers and would focus
on niche content, quality of service, and aggressive marketing.

Anil Dhirubhai Ambani Enterprise (ADAE) would be the next to launch its DTH
venture, Bluemagic. It plans to launch its DTH service by the end of this year
and it hopes to be allotted six transponders on INSAT 4B, which is yet to be
launched.

State-owned Bharat Petroleum  (BPCL) is also all set to venture into a completely different
domain, which is DTH TV, where it will soon be jostling for space with the likes
of Zee, Tata-Star, and Reliance Bluemagic. Plans have been finalized for foray
into DTH broadcasting services through a 100% subsidiary with an initial paid-up
capital of Rs 95 crore. After a survey by KPMG, BPCL now wants to float a
completely separate company, as its Articles of Association does not allow it to
venture into the entertainment business. A financial feasibility study predicts
the payback period as 8.5 years, and an 11.6% return after 10.5 years, which
could go up to 23.5% in 14.5 years. The firm is willing to invest Rs 990 crore
over the next five years.

BPCL has already commissioned a Ku band transponder-based VSAT hub.
Facilities on the existing radio frequency system of the VSAT hub can be used
effectively, while operating DTH platform. BPCL wants to take advantage of its
extensive network and is confident that its huge customer base would bring in
users.

Kalanithi Maran's Sun Direct of Sun TV fame is also planning to push itself
into the DTH market, though plans are yet to be finalized.

The Market

A report from Hong Kong-based media research firm, Media Partners Asia (MPA)
says that India would emerge as Asia's leading revenue generating pay-TV
market. With multi-channel video industry (cable, DTH, and IPTV), India's
turnover would grow to $7.2 bn by 2010 from $3.6 bn in 2005, and to $10.5 bn by
2015, it predicts. But a lot depends on whether it can clear up the regulatory
hurdles. For example, MPA feels the Indian DTH market could grow to Rs 45 bn ($1
bn) by 2015 if the subscriber base reaches 11 mn users.

On the MSO front, the broadcast industry did not witness any buyouts in 2005
except Siticable's acquisition of a leading multi-system operator (MSO) in
Kolkata, Indian Cable Net. This was a strategic deal to block out entry of
Kalanithi Maran's Sun Group, which was planning to launch a Bengali channel,
Surjo, into a cable business in the state. After acquiring Indian Cable Net,
Siticable now, became the leading MSO in the city with a 70% share in the
market.

The Space War

As Tata Sky and Sun Direct are preparing to launch their respective DTH
services, the war is on to hire transponders on Insat 4 series satellites. Tata
Sky has hired 11 Ku band transponders on Insat 4A. A back up transponder space
has also been booked on Insat 4C. Sun Direct, meanwhile, has booked about six
transponders in the initial phase on 4B or 4C. According to a
source in ISRO Insat 4B is likely to launch in the second or third
quarter of 2006. DTH providers can supply around 12 channels per transponder,
depending on their compression technology. The availability of transponder space
is the deciding factor for the DTH service providers in providing channel
broadcasting. Insat 4A and Insat 4B have a capacity of 12 Ku band and 12 C-band
transponders each. Insat 4C, on the other hand, has just 12 Ku band
transponders. Dish TV and Doordarshan's DD Direct use the NSS 6 satellite for
their DTH services.

Ku band is so far the most appropriate and widely used mode for transmission.
As all encoded transmission signals are digital, it facilitates in providing
higher resolution picture quality and better audio than traditional analog
signals.

Future Perfect

At present, cable networks have a big presence in the Indian market with
around 80 mn C&S homes. So it is clearly evident that in its first few years
of operations, DTH services will be focused on a new market. This would
primarily constitute the rich segment from urban and semi-urban areas, but rural
areas would not be far away as DTH would give them a chance to get their desired
services independent of any network. Technologically the fastest moving country,
India would eye for Live TV, Mobile TV, and IPTV for sure. Though these
technologies are still evolving and face several issues such as an appropriate
business model, availability of spectrum, and infrastructure; we are not very
far from enjoying these services, if India is able to keep up the momentum it
has gained.

By our Reporter

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