Business is Billing!



Till a few months ago, many Indian cellular service providers treated their
billing system as nothing more than a tool to get relevant information from CDRs
and calculate the cost for invoicing.

It is not that the decision-makers at Indian service providers do not know
what billing systems can do. It is not that they are isolated from the trends
that are seen in the rest of the world. But when it comes to actual
implementation, not much progress has been made.

Why?

Depending upon what side of the debate you are, you can give various answers.
But it all boils down to just one thing: billing systems were not really a
top-of-mind thing for many service providers.

Apart from the usual “excuses” like “regulatory
problems”, “not sure about the direction that things are going to
take”, “the slowness in the vendor meeting the requirement”, and
“the billing system and practice is fairly okay”, that one hears, what
really made the companies defer their decisions regarding taking a radical
relook at the billing system is a combination of four reasons.

One of them is the rise of prepaid. Not only was it easier for the service
providers to convince cost-conscious Indian consumers to keep a tab on his
mobile expenses, many took it as a no-loophole, readymade substitute for a
costlier and more complex fraud management systems. As prepaid got all the
attention, the regular post-paid systems escaped the attention. It is a
different matter though that prepaid customers are still treated as the way they
have been traditionally treated, despite a strong rationale to change the
approach.

Second, fraud management and revenue assurance got priority in comparison to
major changes in billing systems. So, there was a lot of focus on the practice
and implementation of fraud management systems that ran around the core billing
system that was there.

Third, real competition was not there with just two operators around. And
whatever competition one saw was in pricing.

And finally, there was the hype of 3G/UMTS that refuses to go even now. What
to bill for is a fundamental question that was raised the world over, and
Indians responded by doing what they are best at–deferring their investment
decisions till a time when a precise answer to that could be given. It is only
now that they are, like their counterparts elsewhere, realizing that there is no
such simple formula. So the problems accumulated till a time that the operators
were forced to change the way they bill.

In many cases, they have started with throwing out their billing systems and
bringing in new systems. In the span of a few months, Reliance changed the
billing system that it got through Siemens Nixdorf, to replace it with homegrown
GABS by SISL. Lucent, with its Kenan product, and a more proactive software
products team, managed to convince Bharti that all their problems would be taken
care of by its product. And so Bharti is changing its billing systems in all
five circles to Lucent. And Aircell Digilink, sources say, is seriously looking
for a replacement of its present billing system–ISIS. This follows the changes
that operators like Fascel, Usha Martin, Spice Cell (Calcutta) and Skycell
implemented some time back. Yes, an external development that could affect the
way that systems are replaced is the SEMA-LHS merger. LHS has regularly been
releasing newer versions of its product BSCS, while SEMA has been comparatively
slower. Many expect that all CABS 2000 customers of SEMA will be moved to BSCS.

Going Digital is the Key

The number of television channels has increased to about sixty something. A
large number of FM radio stations are going to start services soon. Most of the
channels have started realizing the importance of going digital. Digital Video
Broadcasting (DVB) and Digital Audio Broadcasting (DAB) are going to chart the
future of Indian broadcasting in the years to come. The benefits of going
digital are many. It means a lower transponder rental for the broadcasters, with
high quality picture and sound. The spectrum is utilized efficiently, besides
giving low transmission cost per program. More channels can be delivered using
the same infrastructure. More value-added services can be delivered, besides
more programming choices on a digital network. With the standardization of
MPEG-2 for compressed video/audio and European DVB, the stage is set for this
transition.

Opportunity for Equipment Manufacturers

The market is huge–given the massive investment plans of all major
broadcasters, including DD and AIR, to expand their network by going digital and
starting various value-added services. DD and AIR, in order to compete with the
new channels, have been forced to upgrade and modernize their equipment, thus
opening up new opportunities for suppliers. The budget is definitely a
constraint when it comes to public broadcasters. It will be the studio,
production and post-production equipment demand from private television
companies and studios that will help fuel growth. The need for more programs,
due to a 24-hour broadcast by most of the private operators, will be the main
driver for the explosive growth in demand. There has been a tremendous growth in
the number of production companies and studios, especially in Delhi and Mumbai,
which are about three hundred. Significantly, most of these companies are
installing state-of-the-art equipment. Due to proliferation of news channels,
the demand for newsroom automation equipment has also grown sharply. According
to an estimate, the total market demand for television/radio studio, production
and post-production equipment is currently estimated at around $300 million.
According to Ranjit Nigam, national sales manager, Barconet, “As most of
the channels are going digital, the demand for equipment will be huge.” Sue
Gilks, business partner and development manager with Tandberg Television, says
“Over the last three to four years we have seen the market grow rapidly in
India, mainly because of some of the government policies.” European,
Japanese and US companies, for e.g. Barconet, Sony, JVC, Panasonic, Tandberg,
Tektronix, Scientific Atlanta and others, are the major suppliers of broadcast
equipment in India. Most of these companies have their presence in India through
some business partners or distributors. Some of them, though, operate through
their full-fledged offices. The introduction of DTH services will also
automatically result in a market for Ku-bandwidth dish antennae and integrated
receive decoders.

Broadcast Statistics

  • 69 million TVs 
  • 200 million households
  • Cable TV: 30 million (Grew from 21 million in 1998 to 25 million in 1999)
  • Total Indian market for CATV equipment is expected to be nearly USD 215 million, (Approximately USD 60 million being imported from the U.S.) 
  • Average Expected Growth Rate: An average of fifteen percent each year for the next few years
  • Imports: Expected to grow at twenty five percent, as CATV operators upgrade to higher quality, imported CATV equipment.
  • Sixty four satellites skirt over Asia and more than 120 channels are beaming down programs.
  • 60 of the 120 channels can be viewed in India
  • DD reaches out to 88 percent of the population
  • This is likely to increase with the introduction of DTH
  • Indian television channels employ 250,000 people. Another 50,000 additional jobs could be created in the next 3-5 years 
  • TVs share of adspend is about Rs 2,000 crore
    Source: DD, Broadcast Engineering Society and American Embassy

Manufacturing of high-end broadcast equipment in India is negligible. There
are few companies who are manufacturing themselves or through joint ventures by
some foreign companies. Bharat Electronics Limited is a major player in the
radio/TV transmission equipment market in India, followed by C-DAC and Gujrat
Communication and Electronics Limited. The ministry of information technology
has clubbed broadcast equipment under communication and broadcast. Within the
broadcasting sector it broadly includes digital broadcasting of audio &
video, broadband access, digital compression, digital storage and retrieval,
hard disc-based and optical technologies. The production of communication and
broadcasting equipment during 1999-2000 was estimated to be of the order of Rs
4,800 crores, as compared to production of Rs 4,400 crores in 1998-99.

Manufacturing in the CATV equipment segment is mostly dominated by indigenous
manufacturers, which is a highly disorganized segment. Equipment mainly includes
headends, amplifiers, splitters, etc. The gray market also caters substantially
to the CATV equipment. This segment is very cost sensitive and the CATV
operators are not ready to shell out more for better quality equipment from
reputed manufactures. Nigam of Barconet feels, “Most of the cable operators
are highly cost conscious and their level of understanding about the benefits of
new technology is very low, which make them buy inferior products. There is a
need to educate them on the quality front.” He adds, “Most companies
are still doing hand soldering. Testing facilities are not up to the mark and,
above all, the procurement of components is a major problem.” Incidentally,
Barconet is scouting for a strategic partner to manufacture in India. Scientific
Atlanta, Barconet and Motorola GI are major suppliers of CATV equipment. The
cable industry faces an imminent threat from the launch of DTH services, though
the operator’s association denies any immediate impact on their business. With
the broadband network coming up with the creation of bandwidth capacity, there
is also talk of television channels being streamed on the Internet. This is an
opportunity, which will of course take a lot of time before it becomes a
reality. Already, streaming portals like Numtv.com and Sharkstream.com are in
place. Transponder space is also an area where satellite companies have an
opportunity in the light of increasing number of channels. The government has
allotted frequency to twenty five top bidders for FM stations. Zee and Bennett
Coleman & Company bagged the maximum number of licenses for a premium price.
This is a good opportunity for digital audio equipment manufacturers.

Regulation on the Right Track?

Major
Private Satellite TV Broadcasters/MSOs

  • Asianet Satellite System
  • AXN Action Channel
  • CNBC
  • CVO
  • Discovery Channel
  • Eenadu Televisionl 
  • etc
  • Hathaway
  • In2Cable
  • Jaya TV
  • Lashkara Channel
  • Maharishi Channel
  • Modi Entertainment Network
  • Ortel Communications
  • Punjabi World
  • Raj TV
  • RPG Netcom
  • Sahara TV
  • SitiCable
  • Sony Entertainment TV
  • Star
  • Sun TV
  • TVi
  • Udaya TV
  • Vatsa
  • Vijay TV
  • Zee Network

Most of the equipment manufactures are more than satisfied with the fast pace
of reforms on the broadcast front and are hopeful of the upcoming Communication
Convergence Bill in the parliament. The permission to allow uplinking from India
and the decision to permit DTH services in Ku-Band has sent the right signals to
the industry. Despite this, very few channels like Sun and Eenadu have actually
set up an earth station to uplink their channels. Restriction on foreign company’s
equity participation is an important reason for this. These broadcasters are
currently uplinking three to four channels, which is cost-prohibitive. In
Singapore, one uplinking center is capable of playing 16-16 channels. However,
Mahesh Prasad, president of Sahara TV, says, "The policy is tilted against
domestic broadcasters and there should be a level playing field." Kiran
Karnik, CEO of Discovery, sees no reason why the government is not allowing
private players in the terrestrial transmission space. Ranjit Nigam says,
"The biggest change has been in terms of customs duty which has come down
from 350 percent in 1984 to 67 percent now. RBI clearance has also become
easier. There are not too many items on the special import group. Policy on the
whole is a liberalized one".

Value-Added Services

With the creation of substantial optic fiber backbone, especially in the
metros, opportunity exists for the cable operators to utilize this to offer
value-added services like Internet on TV, to customers. Already, companies like
Spectranet and Mantra in Delhi, and In2Cable and Hathaway in Mumbai, have
started offering these services. But surprisingly, despite all the benefits, the
response has been very poor and the number of subscribers is very low. This can
be attributed to the clear-cut failure of marketing strategies adopted by these
companies. They have not been able to make subscribers aware of the advantages
that these services offer them. At this pace, the concept of interactive
television is going to take a lot of time. Reluctance on the part of
cost-sensitive subscribers to pay more for quality services has only compounded
the problem. Added to this is the high cost of access products like set-top
boxes. According to Ashish Jain, business development manager, MCBS, a leading
Indian broadcast equipment manufacturer, "There is a big market for
Internet over Cable in India, it is only that operators have not been able to
device a proper revenue model and do the marketing accordingly." It will be
a lot of time before interactive television becomes a reality in India. The
chances of MSOs becoming local exchange carriers for basic operators is also an
area which holds lot of promise, if regulatory hurdles are cleared. Once
interactivity becomes a reality, operators will be in a position to provide
several other services like pay-per-view, home shopping, multiple viewing
angles, near video on demand and games. This will lead to the next stage where
video on demand, home banking, teleworking and even telephony and video
conferencing could be provided.

Future Perfect

Intensifying of competition on the broadcasting front has resulted in new,
emerging opportunities for everybody–the broadcaster, equipment manufacturers,
production houses and above all, the subscriber. This has also resulted in bad
blood between broadcasters and cable operators, which is an ominous sign. The
battle is on for the ground. The ongoing tussle between Star and SitiCable is an
expression of that. Siti is said to be blocking Star’s channels on their
network. The ultimate sufferers are the subscribers, who are deprived of their
favorite programs because of limited options. Hathway, in which Star has a
stake, does not want to air TV Today’s Aaj Tak channel as Star News competes
with it. Cable operators are also peeved at arbitrary pay channel costs. It is
these irritants which need to be overcome. One only hopes that the independent
regulator, which the new Communication Convergence Bill envisages, will take
care of this issue.

Sudesh Prasad

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