DTH: The Party Begins

There is a life beyond DD Direct+, Tata Sky and Dish TV. New
players like Bharti, Reliance, Videocon, and Sun TV are chalking out entry
strategies into the DTH space. Although DTH is still at a developing phase, a
lot of players want to tap the segment offering different options for consumers.

New players will have to compete with veterans such as DD
Direct+, Dish TV and Tata Sky, who will not shed the DTH market share to new
players easily. Dish TV has been constantly adding new channels to its bouquet;
last month it added eight new channels to take the count to 171. Its customer
base is also growing at a good pace, presently with 2.3 mn customers. Recently,
it also tied-up with Kingfisher Airlines for in-flight entertainment. Dish TV
plans to offer up to 200 channels by the end of this year, and invest Rs 180
crore in technology upgradation in the next three years. Dish TV is also
confident that by mid 2009 it will be able to breakeven.

Tata Sky is also not to be left behind. In its first year of
operations it has crossed the 1 mn connections mark and expects to cross 8 mn in
the next five years. Tata Sky has expanded its distribution network from 300
towns and 10,000 dealers at the time of launch to 4,500 towns and 30,000 dealers
across the country today.

The DD Direct+ envisages telecast of 30 free-to-air channels
(containing both Doordarshan and private channels) initially and is likely to
include more channels later on.

Not All Smooth Sailing

With four new players eyeing the DTH space, in a market where cable has a
strong hold, the going may not be smooth. As a matter of fact, internationally,
most markets have a single or a maximum of two DTH players.

Bharti Airtel, which is planning to launch its DTH services by
the last quarter of FY 2008, is already geared up to meet the expectations of
the customers. Airtel's strategy for DTH service is to launch it in more than
250 towns of India by the end of 2008. In lieu of this, the company is setting
up state-of-the-art infrastructure near Gurgaon for the purpose of uplinking and
broadcast. This investment will ensure a scaleable and stable solution to the
consumer. Airtel would compete with other players on the basis of differentiated
product offerings, superior customer experience, and distribution reach. In the
initial phase it plans to offer 150 plus channels, in addition to radio and
interactive channels. Airtel's strategy for DTH is to launch it on a pan India
basis and take it to the masses. By the end of 2008, it aims to be present in
more than 250 towns of India.

Reliance Communications' DTH venture 'Blue Magic' is
expected to hit the market by the end of the current year or in early 2008. It
plans to launch its DTH services in a phased manner. In phase one the company
would be offering its services in metros and will keep a track on the market
moves to plan in its second phase. The company would be offering 150+ channels
apart from Big FM 91 radio channel. Its main focus will be on customer
satisfaction, for which the company would be banking on its robust distribution
channel.

Videocon is also making a foray into the DTH market through its
media arm, Bharat Business Channel. It is expected that Videocon would be
launching its services in the first quarter of 2008. Videocon Industries would
be capitalizing on its already existing distribution network in India, which can
be used for sale of DTH hardware. It plans to have more focus on pricing and is
coming up with around 130 plus channels.

Bharti Airtel

Not disclosed

January 2008

250 towns

150+

Reliance Communications

Blue Magic

Early 2008*

Phased manner

120+

Sun TV

Sun Direct

Early 2008*

Not disclosed

120+

Videocon Industries

Not disclosed

Q1 2008*

Not disclosed

130+

Sun TV's Sun Direct is eyeing to capture a majority of
subscribers riding on its brand presence, language-specific bouquets, and
attractive pricing. The company plans to launch its services early next year.

A Reason to Smile

But, there is something that new DTH players can smile about. The successful
launch of INSAT-4CR, which carries twelve high-power Ku-band transponders,
designed to provide DTH television services, video picture transmission (VPT),
and digital satellite news gathering is a boon for them. The lack of enough
transponders for DTH operations was a major headache for existing players as
well as new players to expand and launch their services, respectively. This
launch will accelerate their expansion.

Ku-band transmission will provide coverage in all uncovered
areas including remote, border, tribal, hilly and inaccessible areas in one go
within a short time. With this coverage, the national broadcaster proposes to
meet its obligation of covering the whole nation and its people not only with
national channels, but also make available popular Doordarshan and some other
free-to-air channels on its platform. In order to meet its obligations, it has
also been decided that 10,000 receive systems (Dish and Set Top Box) would be
provided free of cost at public institutions like Anganwadis, Schools, Public
Health Centres, Panchayats, Youth Clubs, Cooperative Societies etc. in the
uncovered areas.

New entrants in the DTH space will also have to keep in mind the
latest TRAI regulation for Direct to Home Broadcasting Services to protect the
interest of DTH subscribers. DTH operators now cannot disable the set-top boxes
of subscribers who want to discontinue the DTH service. This new regulation will
also prohibit changing the scheme that is running at the time, frequently. The
operators will have to continue the scheme for at least a six-month period, and
also inform their customers well before making changes. Another guideline is
that DTH operators have to establish toll free call centers with sufficient
capacity to handle call loads, and solve customer problems within five days of
complaining and all billing complaints within seven days. This regulation will
be known as 'quality of service and redressal of grievances regulation, 2007
and will be implemented from December 1, 2007.

As and when this regulation is implemented, old and new DTH
players will be on their toes as they cannot now force a customer to choose a
package against one's wishes; operators will have to provide packages based on
the customer's demand. TRAI has also made it clear that subscribers are free
to discontinue the service and operators will have to refund money for DTH
equipment charged at the time of installation. Besides this, customers will be
free to move on to rival service providers for better service at lower costs.
Hence, the entire strategy on which new DTH players will be able to hold ground
would depend on pricing and distribution.

On the new players front, only those players who will offer
customer friendly pricing and good quality of service (QoS) will be able to
survive the cut-throat competition in the DTH space. It will be beneficial for
them to absorb the fact that the customer will be king.

Sandeep Budki


sandeepb@cybermedia.co.in