MxMIndia

Tag: TRAI

  • Presenting the second part of our half-yearly reviews where we asked industry captains to tell us how the first six months of 2012 have been

    The Half-Year That Was-II

    By Team MxM

     

    Continuing with the feature we carried on July 2 (Link: http://www.mxmindia.com/2012/07/the-half-year-that-was/), we bring in more views from the industry on the six months gone by. This half-yearly report card is again a mixed bag – while some have had an excellent run, others had few hitches on the way. Here’s bringing views from some leading players of the industry.

     

    Broadcasting:

    Rohit Gupta

    Rohit Gupta, President, Sony Entertainment Television

    So far, it’s been an excellent year for Sony network. And I’m sure it’s been same for the industry, at large. The industry is still growing and there have been no cuts in spends. People are still putting their money in the medium. I’m sure there is no gloom surrounding this industry. Even the 2008 slowdown didn’t affect us. So, there is nothing to worry about too.

     

     

    Sunil Lulla

    Sunil Lulla, MD and CEO, Times Television Network

    I would say, it has been testing six months for the broadcast industry. The biggest set-back has been the extension of the digitization implementation. The IBF ran a very good campaign for it but since MSOs couldn’t fulfill the requirements, unfortunately it has to be postponed. My advice to the ministry now would be to take strict actions and make sure the new deadline is met. It is important for the industry since it will shape the industry and help us understand it better too.

     

    By and large, important events in the broadcast industry like IPL, Indian Idol did well and a new show like Satyamev Jayate was launched. However, there is still a gap between how a show performs and what the viewers really want. Hence, I think TAM needs to be more clear and needs to increase its sample size too.

     

    But what really shocked the industry was the new adult timings and ‘A’ restrictions on television. What happened with Dirty Picture’s telecast was regrettable. Nevertheless, after the self regulation imposed by various channels – news and GECs – the quality of content has improved.

     

    As from the business point of view, from January till April, it was good; but May onwards the marketers have had a watchful attitude. It might not impact the industry at large, but a certain sections might get affected. Also, given the current economic climate, one will have to keep a very watchful eye for the near future.

     

    Prasana Krishnan

    Prasana Krishnan, COO, Neo Sports Broadcasting Pvt. Ltd

    The last six months have been eventful for the broadcast industry. First it was the whole discussion regarding digitization – from notifications to it finally getting delayed. Hopefully, the new deadline will be met as it is positive for the broadcast industry. Also, the new advertising guidelines set by TRAI will make sure that the market doesn’t get diluted.  Such moves will only benefit the industry and help it grow.

     

    However, there has been a slowdown in ad sales and revenue generation. Everyone knows what happened during an event like IPL. It is a slow phase right now, but the costs of purchasing rights are still high. So, it won’t be wrong to say that testing times are ahead.

     

    K Sriram

    K Sriram, GM, Vijay TV

    The last 6 months in the Tamil GEC space has seen a dramatic change in programming. KBC travelled into Tamil Nadu and with actor Suriya donning the role of anchor. The barrier between the big screen and television was truly breached for the first time. KBC Tamil ensured that prime time television in TN was redefined, as it not only cut across audiences, but also surged ahead of the power cuts and the IPL fever and eroded into SUN TV’s prime time shares. Vijay TV saw a growth of 41 per cent in the year in a market which was otherwise declining. Content came to the fore.

     

    Tamil television also saw the movie acquisition game being taken to another level with Nanban, the hit Tamil adaptation of 3 idiots, being screened within 100 Days on Vijay TV. Another path breaker given that A+ titles before were insulated for a year. Loud and clear in the Tamil GE space – the game just got bigger and in the last 6 months there was only one player playing the game. Competition is sure playing catch up.

     

    Marketers:

    Harkirat Singh

    Harkirat Singh, MD, Woodland

    The overall market in the branded retail segment has been seeing growth. The biggest change that one sees in this segment is that now the growth comes from smaller towns. In the earlier phase, the growth came from metros; and if one ventured into smaller towns in branded retail say a decade back, most likely, things would not fall in place. Now the risk factor in venturing into the smaller towns is much less and there are many players in branded retail who are turning towards these cities knowing that growth opportunity lies there.

     

    For Woodland, last six months have seen steady growth and we intend to open 60 stores this year, though the rider is to expand but be selective. The market, I would say, has been slow. But that is the trend I would say during a particular time of the year where each year business is slow and picks up only later. As for retail, I think the market is vibrant and the sector has been seeing activity and is slated to see increased activity with FDI in retail being relaxed.

     

    Vikas Jain

    Vikas Jain, Executive Director and Co-Founder, Micromax

    For the mobile phone industry there has been no concern about consumption, as the demand for new sets continues to be on rise. The change being that now the customers are well-educated on the mobile sets they want to buy and with change in technology there have been change in the preference on the type of mobile sets. The key, therefore, is to recognize and anticipate the product in demand and meet the needs of consumers. The players need to create a roadmap of the products to be launched rather than get carried away by technological changes. Keep an eye on the changing trends and tweak the launches accordingly.

     

    On the flip side, the devaluation of rupee has put pressure on the margins and Micromax being a player that vouches for being cost effective will not yield to increasing prices of the phone sets. As for following any trend on cost cutting on the marketing and communications front, we have not done any. We continue to be associated with Bollywood and Cricket and would associate if any good opportunity came to us.

     

    Media Agencies:

     

    PM Balakrishna

    PM Balakrishna, COO – Allied Media

    I think the months of April-May were on par but June was not so great. The feeling is that of a slowdown for sure. But an advertising perspective there is cause for worry. It’s a reflection of the economy not looking good in the past few months with petrol prices seeing a hike, inflation seeing a rise and other such factors. These factors play a part in the way media spends pan out.

     

    Where television is concerned there were some properties that did well like the Euro Cup recently and also the IPL before that, but then there are signs of slowdown with advertisers not being too keen to be associated with properties and also with the rates coming down. With Print, which sees ads from sectors like Real Estate and so on, there was a sudden upsurge that was seen in June with most property dealers advertising a lot in dailies and magazines. But that may be a sheer sign of desperation because transactions are not really happening or consumers are not really picking up stocks. There has not been a surge from other sectors as well and they are treading cautiously. So if one were to do a quarter to quarter analysis, one would see that there has been a decline in April-June this year compared to the same quarter last year.

     

    As for the revival, what I have observed recently is that clients have been drawing up plans which they might want to unveil soon, probably around the festival season. But I think overall, the growth will meander along in the next quarter also. Probably the last four months of this year may turn out to be good but whether it is enough to offset the slow-burn over the first six months – I am not too sure.

     

    Anamika Mehta

    Anamika Mehta, COO – Lodestar Universal

    Although we are six months into the year, I do not think the industry will record the original projections that were forecasted. We are just into the first quarter and therefore we cannot conclude much but overall some categories are seeing a slowdown. Sectors like real estate and finance have seen a slowdown in the spends but FMCG companies are yet to go slow. They are playing a cautious game though.

     

    Also, much of the growth is also the result of the current economic conditions which do not look good at the moment. But it will not be all gloom and doom as is being witnessed in Europe but it will also not be a great story as was being propounded forIndia. Also, one cannot predict the exact figure beyond a point but the approach is going to be that of caution.

     

    Sundeep Nagpal

    Sundeep Nagpal, MD, Stratagem Media

    I would say the media industry in India is already feeling the effects of the economic gloom that has been in the works for some time now. From what I have been given to understand the first quarter of this fiscal has been reasonably difficult. In fact nothing can be said about the trend that will emerge in the next six months as there is some amount of scepticism in the industry. Unfortunately, in our industry fluctuations are happening faster than what we have witnessed before – whether up or down. It takes a lot of deeper understanding and attention to details if one has to figure out what the current media scenario correlates to. Frankly, even I do not have an answer to that. It’s very easy to say that it is dependent on the overall global or Indian outlook but that is too macro a view to attribute to. If I was a media planner, I would be looking at ways to look out for the early signals and accordingly find out the relevant methods to adopt. Overall, the industry may just about see a decline in its growth numbers for 2012 than what was originally anticipated.

     

    Advertising:

     

    Arvind Sharma

    Arvind Sharma, Chairman, Indian Subcontinent, Leo Burnett

    As the GDP numbers have been showing a slowdown, one can see that it is getting reflected in the advertising spends too. While at peak the advertising industry was showing a growth of 25 per cent, it would be somewhere around 7 per cent in the first half of 2012. At individual agency level, while we have seen a growth on 40 per cent in 2010 and 25 per cent in 2011, in the first half of 2012 we would see a growth of around 15 per cent. But I think at an individual agency level we still can manage fairly good growth as India has close to Rs35,000 crore advertising expenditure hence the need of the hour is to get aggressive and lay claim to the bigger pie from that budget. This will happen from organic growth from current clients to acquiring new businesses. This growth will also come from making our offering robust.

     

    If one were to look at growth, then in our case, I would say that we have seen growth from our existing clients but growth from new clients or from new major initiatives have been significantly less. However, I would say that the mood currently is to be cautious.

     

    PR:

     

    NS Rajan

    NS Rajan, Managing Director, Ketchum Sampark

    While we have grown by about 20 per cent in the first half, we are witnessing headwinds gathering across various sectors which can in turn affect growth in these segments and consequently the PR business in the second half.

     

    Also margins could be under pressure in the coming months as the increased cost of servicing may not be compensated by incremental revenues unless the economic environment changes significantly which can lift up sentiment.

     

    [To be Concluded]

     

  • Presenting the first of our half-yearly reviews where we asked industry captains to tell us how the first six months of 2012 have been

    The Half-Year That Was

     

    By A Correspondent

     

    It’s July 2 today, and the first six months of the year have passed. While the slowdown has impacted spends in a major way, most of the 182 days from Jan to June have been eventful. On the positive side: new television channels, new agencies – media and creative, consolidation, people and account movements, government issues, digitization, awards… the list could go on. And on the negative: a channel being shut, pink slips, pay cuts, appraisals deferred, digitization delayed… the list could go on here too.

     

    We have already embarked on the second half of the year, but as we do that, here’s a quick look at how industry captains review the half-year. We present you the half-yearly review in two parts… the first today and the second mid-week… on Wednesday.

     

    As you would gather, there is much gloom in the industry, though no despair. Not yet.

     

    ADSPENDS:

     

    Nagesh Alai, President, Advertising Agencies Association of India (AAAI) & Executive Director, India Operations, Draftfcb Ulka Group

    Nagesh Alai

    If I were to summarize the indications of the economy, then one has seen softness beginning last November and December leading to a situation of downturn. The macro-economic indications like rupee falling, impact in production and fall in demands have also reflected in the consumer behaviour in a negative way. The last quarter of 2011-12 (Jan-March) has seen a fall in GDP to 5.3 per cent. All this have impacted the manufactures as well as service providers, with the mood being that of postponing a decision. While some would have thought that the situation would not impact FMCG, but that one has seen a resistance from that sector too.

     

    So in terms of advertising, the impact being in terms of ad outlays and remuneration; while the latter has been up for constant negotiation and any further would only impact the quality of service being provided, it’s the latter that is being hit now. I think this year one would see a growth of maximum 10-12 per cent as compared to 14-15 per cent in the past. While print and TV still comprise 80 per cent of the spends, but advertisers are looking at newer mediums, where the spends is not high and get better mileage for monies being spent.

     

    I personally believe that even if government were to take corrective measures, one will only begin to see the recovery by mid-2013. The mood can be aptly summarized as being that of cautious approach.

     

    PRINT:

     

    Narendra Kumar Alambara, COO, Thanthi Group

    Narendra Kumar Alambara

    In terms of the regional publications, I would say that the past six months have been good and bad. If one looks at readership and circulation, the regional dailies have seen an increase vis-à-vis the English language publications. However, there is a need to be bold and unconventional when it comes to regional publications, both by those selling this space and advertisers themselves. In today’s time when every paisa has to be accounted for in terms of returns, I think regional publications would have been an excellent answer to have targeted reach because of the value they provides for the money and reach.

     

    However, we have failed to do that. Today when most media houses are not restricted to being uni-dimensional and have different platforms for advertisers be it television, print, digital and even regional newspapers and channels under their umbrella; I think the solution lies in integrating various offerings, including the regional to get a better value and growth.

     

    Krishna Prasad, Editor-Outlook

    It’s difficult to put a number as yet on the kind of growth that has been witnessed, but you will always see print being challenged by television and other mediums. As far as the past six months are concerned, I would say the growth of print has been at par. By this I mean that even though most advertisers have huge monies, they are shying away from advertising with this medium. This is somewhat similar to what was observed during 2008, where companies didn’t have any reason to opt for cost-cutting, but were up for it. Many advertisers are seeing this downturn as a reason to go easy with their spending and not be too extravagant.

     

    Most newspapers today, especially in Delhi like Delhi Times, Hindustan Times and others appear chunky in their appearance, which gives you a sense that all is well but that may not necessarily be the case. Most of them are actually going slow with their spending and are trying to play it safe. I expect things to look better from October onwards – around the festival period. So largely, the growth of media will be dominated by how the economy transforms itself; it’s not operating in a vacuum. That’s the best case scenario.

     

    But the worst case scenario is that it may take a little bit longer for things to get better; perhaps with the elections coming up soon, with the country seeing a new Finance Minister and the markets going topsy-turvy, the print industry may still take some time to stabilise itself.

     

    RADIO:

     

    Prashant Panday

    Prashant Panday, CEO, Radio Mirchi

    The radio industry has been hit just as hard as any other segment. Maybe a little less than print and a little more than TV. The economic slow-down and the policy freeze has made advertisers a little wary. They are not exactly cutting spends, but they are demanding more from broadcasters. A broadcaster can either cut prices or offer more for the same. In some sectors, the advertising cut has been more severe like telecom, real estate and so on. But there are other segments that have done better – like core retail, and even auto.

     

    Given the economic conditions, and the lack of new frequencies, radio has done as well as it possible can.

     

    Rabe T Iyer

    Rabe T Iyer, Business Head, BIG FM

    The last financial year was alright, but the last three months have been pretty flat. The reason for that is because categories like BSFI, Auto and some of the campaigns of the usual summer categories were a bit slow. Nevertheless, we expect the next three to six months to be a good run. This is because people ultimately want to keep their goods moving, and hence the next three to six months are going to be good. The last three months were flat for the industry because the dollar exchange hit the sentiments and some categories which were expected to fire up in the month of May-June have taken some more time, mainly because of the overall economy conditions and the sentiments attached to it, and also because of the fluctuating dollar prices. This has directly impacted the ad spends, not just on radio, but across the portfolio on media brands.

     

    Ashit Kukian

    Ashit Kukian, COO, Radio City

    The last six months has been very good for the radio industry. One of the reasons I would say is because the core advertising categories in radio namely: Telecom, FMCG, and Entertainment channels to name a few, had increased their advertising spends on radio.

     

     

    DIGITAL:

     

    Chhaya Balachandran Aiyer, CEO and MD, BCWebWise

    Chhaya Balachandran Aiyer

    More and more brands are getting ready to seriously look at digital media and those who have been using it already, are increasing their spends. Digital is expected to deliver more cost-effectively. Amazingly, even production charges of films are expected to be cheaper, if they are being produced by digital agencies. It would help if brands which see real value in digital and see it delivering, also realize that results won’t come if they tighten their purse strings so much. Fortunately, there are a few clients who have realized the quality v/s quantity value and are waking up to the real digital age and extending their budgets.

     

     

    Rajiv Hiranandani

    Rajiv Hiranandani, Co-founder and Executive Director, Altruist, Mobile2win

    I think the mobile industry has underperformed in last six months, as per the overall outlook was supposed to be, in terms of number of handsets sold and amount of value-added services (VAS) consumed. Mobile industry has seen its slowest growth, and this has been also because of the negative outlook in the economy. Some of the reasons have been people waiting for better handsets models, the overall mood of economy not being good, and mobile VAS seeing a lot of restrictions in terms of TRAI guidelines.

     

     

    OOH:

     

    Noomi Mehta, Chairman and Managing Director, Selvel One Group

    Noomi Mehta

    The last six months have not been good for the out-of-home (OOH) industry. The month of June, however, has seen a significant improvement, which is perhaps because the IPL campaigns in the months of April and May have fructified. Otherwise, I believe, the industry figures have been down. The markets, by and large, seem to be in a depressed state, along with the economy. Going forward, one of the basic steps needed to improve the industry’s performance is the need for a common currency for measurement. OOH is part and parcel of the country’s economy, and hence it will also be subject to the same pressures as the economy.

     

     

    Image: Rafiq

     

  • Unless Maharashtra, Tamil Nadu and Bengalsee the DAS in their own interest, Mrs Soni and her two key satraps won't make progress beyond impotent bluster, says Rohit Bansal

    The Anchor: Rohit Bansal on 5 must-dos for the sun to rise on Digitization on Nov 1

    By Rohit Bansal

     

    1. Govt and Ambika Soni must stay

    To state the obvious, for The Cable Television Networks (Regulation) Amendment Act, 2011 to kick in the mandatory switchover of the existing analogue cable TV networks to Digital Addressable System (DAS) in the four metros of Delhi, Mumbai, Kolkata and Chennai, the government must survive.

     

    Even if that’s a given, the minister Mrs Ambika Soni mustn’t be allowed to meander into party work. If she does, a new minister will take his or her own to time settle down, and pernicious lobbies for a status quo will have an upper hand.

     

    2. Ambika Soni and her babus get three states into action

    Though Shastri Bhavan bears the mantle of implementing the Act, the ministry of information and broadcasting (MIB) has no boots on the ground. So, unless Maharashtra, Tamil Nadu andBengalsee the DAS in their own interest, Mrs Soni, Uday Varma and Rajeev Takru, her two key satraps, won’t make progress beyond impotent bluster.

     

    3. There’s deeper monitoring and a few scalps on the lamp post

    Albeit coming late, TRAI regulations on Tariff & Interconnection would have had enough time since April 30 to sink in. The Quality of Service Regulations and the Consumer Complaint Redressal Regulations would have existed since May 14, requiring every Broadcaster and MSO to publish its Reference Interconnect Offer within 30 days of issue of the regulation, and the stipulated 30 days for negotiations between Broadcasters and MSOs, and thereafter, the MSOs and LCOs to arrive at agreements for us ordinary Joes would have been exhausted many times over. No one could then cite lack of time for fuzziness over the terms and conditions for installing Set Top Boxes and the prices of channels on an a-la-carte as well as on a bouquet basis. Also, every MSO or its linked Cable Operator would have no excuse for failing to put a Consumer Complaint Redressal System consisting of a complaint centre with toll free consumer care number, web based complaint monitoring system, as well as appoint or designate one or more nodal officers and publish consumer’s charter for DAS.

     

    Thus Verma and Takru have their tasks cut out. Implementation is their dharma, the concerned states their believers.

     

    4. ISRO delivers the promised launch

    For any stick that Takru and Varma may hold, the cable operator is wily enough to dodge them. What she can’t is if Indian Space Research Organisation’s much-delayed GSAT-7 multi-band satellite, carrying payloads in UHF [ultra-high frequency], S-band, C-band and Ku-band, leaves the ground and starts doing some work. It would then be left to Doordarshan’s Tripurari Sharan to show his mettle and put together a free-to-air DTH platform of 200+ channels on GSAT-7. If Sharan can swing that, the cablewalla will embrace DAS with a measure of fear if not conviction.

     

    5. The DTH Gorilla Begins to Maraud

    These folks have sat on their backsides sleeping over the opportunity that “DAS Confusion” presents to them. If only they can get cable operators to become LMOs and leverage some Rs6,000crore residing in their war chests, the pure-play cablewalla will see more in digitization than what the long-arm of the regulation can ever achieve by scaring him.

     

    Rohit Bansal is CEO & Co-Founder, Hammurabi & Solomon Consulting

     

     

  • MxMIndia gets you reactions from industry stakeholders on the government's decision to postpone the digitization deadline for Phase I to October 31, 2012

    Can we achieve the October 31 deadline?

     

    By Shruti Pushkarna

     

    Under mounting pressure from various stakeholders, the government announced an extension of four months for the first phase of digitization of cable television. Digital Addressable System (DAS) will now be effective from November 1 in the four metros, Delhi, Chennai, Kolkata and Mumbai.

     

    A press release issued by the I&B Ministry read: “The Cable Television Networks (Regulation) Amendment Act, 2011 has made it mandatory for switchover of the existing analogue Cable TV networks to Digital Addressable System (DAS) by December 2014, in a phased manner. In respect of four metros of Delhi, Mumbai, Kolkata and Chennai, the digital switchover is mandated to be completed by 30th June 2012.”

     

    But towards the end in the press note, the ministry acknowledged that keeping ground realities in mind, the MIB is compelled to set a new deadline. The statement reads, “…keeping in view public interest and after intensive and extensive consultations, as well as written commitments from all the stakeholders, for fully implementing the regulations of TRAI, the Ministry of Information & Broadcasting has decided to modify the 30th June deadline for a complete switch over to 31st October 2012 for all four Metro Cities i.e Delhi, Mumbai, Chennai and Kolkata. All the TRAI regulations for DAS will come into effect from 1st November, 2012.”

     

    The extension was announced notwithstanding the pending matters before the Delhi and Bombay High Courts and the TDSAT. The Bombay High Court will hear the petition on June 21 and the Delhi High Court will hear the matter on June 25, which is also the date when TDSAT will hear a similar matter filed by LCOs and IndusInd Media & Communications Ltd.

     

    Soon after the announcement of the new sunset date, MxMIndia spoke to various stakeholders to get their reactions on the new timeline and to find out if October 31 is an achievable deadline. While some welcomed the government’s decision for postponement to November 1, others felt that the extension issued by the ministry is not enough for the humongous task at hand.

     

    MSOs welcome the govt’s decision, though some still unsure of achieving the deadline

    Ashok Mansukhani

    Ashok Mansukhani, Director, IndusInd Media & Communications Ltd said: “I think it’s a sensible development and it will help in smooth transition to digitization. The new date is completely achievable, it was fully discussed in the taskforce. I don’t know about Tamil Nadu since the government there is supposed to install the set top boxes but for the other three metros, certainly it will happen. It’s a welcome step and it was fully discussed in the taskforce and it’s a natural result of the taskforce deliberation.”

     

    JS Kohli, CEO, Digicable said: “We are happy with the postponement. Although it’s not a six month extension but yes we can deliver on the new date. We are satisfied with the extension.”

     

    JS Kohli

    Ravi Gupta, Independent MSO, Delhi said: “The new sunset date is good although it is two months less than what we were expecting. They should have given a six months extension, I still don’t think we can achieve the task by November 1. A lot of digital headends are under installation and integration is what takes time. I don’t think anyone from the ministry has done a detailed study of this process. No senior official from the ministry or from the TRAI has visited a digital headend. A minimum of six months extension should have come.”

     

    LCOs happy with the extension but feel four months not enough

    MR Srinivasan, General Secretary, Chennai Metro Cable TV Operators Association said: “It is good in a way because we are not yet ready because in Chennai only 2 lakh boxes are available. But now atleast we have some breathing time. Moreover, the government of Tamil Nadu is planning to start some MSO operation in Chennai, so it’s some relief and we have some time to plan ahead and be ready before the sunset date. Actually we expected an extension upto December but atleast we have got a slight relief, something is better than nothing.”

     

    Sanjay McGee, Local Cable Operator, East Delhi said: “Although it’s a good decision, in the last meeting between LCOs and I&B Ministry, Rajiv Takru agreed that four months extension was not enough. At first the ministry refused any extension, but when we urged on atleast three months extension, Rajiv Takru stated that if there has to be an extension then take atleast six months. But they have taken a middle path and decided on four months. They shouldn’t have announced the extension at this point, they should have waited till June 29. Now the consumer will not take the deadline seriously and the pace will slow down. If we keep working at the same pace as of today, then we might be able to achieve the new deadline.”

     

    Swapan Chowdhury, General Secretary, Cable & Broadband Operators’ Welfare Association, Kolkata said: “I am not satisfied because four months will not cover up the whole situation. Government might have given an extension but they have not considered any facts and figures. I say that because 70 per cent in Kolkata still don’t have set top boxes (STBs), so four months are not enough for deployment of such a huge number of STBs. It will not even happen on November 1. Maybe another 20 or 30 per cent seeding will be done up till the new date but what about the remaining numbers. In the June 8 meeting with the I&B Minister it was categorically mentioned that none of the government appointed nodal officers have checked the actual seeding position or the status of ordered material. Unless and until the government studies the ground situation deeply it will again fall back. The actual facts are different from what’s being presented on paper. They should have given an extension upto atleast Jan 1.”

     

    Broadcasters disappointed with the postponement, suggest on strict penalties for those who don’t adhere to the timelines

    Sunil Lulla

    Sunil Lulla, Managing Director & CEO, Times Television Network said: “It’s a complete disappointment. What is the guarantee that the new date will be held, when there is a date set by law, why should the date be changed? A lot of time, money and effort has gone by broadcasters in promoting and communicating the date and making sure consumers went along. The industry and the consumer suffers because there are some parts of the entire constituent which may not have adhered to these deadlines, may not have implemented the seeding of the boxes. This was announced on the net through a press release, the government hasn’t really notified us. I think it would have made sense for them to invite all stakeholders and agree on a new date if there was to be one and to a process by which these date wont slip.”

     

    Rahul Sood

    Rahul Sood, Head- Network Distribution & Affiliate Sales, NDTV said: “Basically LCOs were pushing for a Jan 1 timeline and broadcasters were saying that if you have to give an extension, it should be only for three months. So I guess they have taken a middle path by extending it upto October 31. The TRAI guidelines which came out on April 30 were such that within six months there has to be implementation of the same. I think that’s the loophole that MSOs and LCOs were quoting and asking for a minimum six months extension. So keeping all that in mind, I think ministry has taken this step. But if as an industry we have this discussion again on October 20, then it’s a real shame. There should be no excuses now, timelines have been extended, now there has to be a joint willingness to from all stakeholders to make sure this happens. While they have issued this date change, I think with that strict penalties and penalization code should be put in place as well for those who don’t adhere to the new timelines.”

     

    An independent commentator says new sunset date ill-conceived

    Dinyar Contractor

    Dinyar Contractor, Editor and Executive Publisher, Satellite and Cable TV Magazine said: “This is not going to work, this date is ill-conceived. There is no way that set top boxes can be procured and deployed in that timeframe even if the order is released today. As I’ve mentioned earlier, delivery time on set top boxes alone is around four months so this extension makes no sense except postponing one more extension. Any date prior to end of December is not realistic and is not going to resolve the problems or the issue, which is obtaining and deploying set top boxes. So I feel that the extension is inappropriate.”

     

  • The I&B ministry has announced the fresh date for digitization in the four metros as November 1

    Digitization in 4 metros put off to November 1

    By A Correspondent

     

    Given the varied and protracted deliberations with stakeholders, the Government of India has announced that the sunset date will be October 31, 2012 for the four metros with a complete switchover from November 1 in Chennai, Kolkata, Mumbai and New Delhi.

     

    Here goes a prepared statement issued:

    The Cable Television Networks (Regulation) Amendment Act, 2011 has made it mandatory for switchover of the existing analogue Cable TV networks to Digital Addressable System (DAS) by December 2014, in a phased manner. In respect of four metros of Delhi, Mumbai, Kolkata and Chennai, the digital switchover is mandated to be completed by 30th June 2012.

     

    The Task Force, comprising of all stakeholders, constituted by the Ministry in April, 2011, has been monitoring the progress made by various stakeholders towards digitisation. The task force has also undertaken field visits and interacted with local stakeholders. Discussions have been regularly held with Broadcasters, Multi System Operators (MSOs), Local Cable Operators (LCOs), while the Ministry of Information & Broadcasting has been in regular contact with the concerned State Governments on this issue.

     

    Regulations on Tariff & Interconnection were issued by TRAI only on 30th April 2012 instead of being issued in January, 2012, as expected.  The Quality of Service Regulations and the Consumer Complaint Redressal Regulations were issued on 14th May, 2012 by TRAI. As per these Regulations, every Broadcaster and MSO was required to publish its Reference Interconnect Offers (RIOs) within 30 days of issue of the Regulation.  Another 30 days are required for negotiations between Broadcasters and MSOs.  Thereafter, the MSOs and LCOs arrive at agreements which enable the consumers to have a clear indication of the terms and conditions for installing Set Top Boxes and the prices of channels on an a-la-carte as well as on a bouquet basis.

     

    The second order of TRAI of 14th May, 2012, has mandated that every MSO or its linked Cable Operator has to put in place a Consumer Complaint Redressal System consisting of a complaint centre with toll free consumer care number, web based complaint monitoring system as well as appoint or designate one or more nodal officers and publish consumer’s charter for DAS.

     

    Both these orders of TRAI have not yet been substantially implemented.  As a result of this, the installation of Set Top Boxes has not picked up necessary pace for the completion of the process of digitalisation by 30th June, 2012.

     

    The assessment of these ground realities, compels the Ministry of Information & Broadcasting to set a new deadline.  It is, however, imperative that the modified target deadline is set with strict benchmarks to ensure that no complacency sets-in in the system and the new target date is achieved collectively by all the stakeholders.

     

    Therefore, keeping in view public interest and after intensive and extensive consultations, as well as written commitments from all the stakeholders, for fully implementing the regulations of TRAI, the Ministry of Information & Broadcasting has decided to modify the 30th June deadline for a complete switch over to 31st October 2012 for all four Metro Cities i.e Delhi, Mumbai, Chennai and Kolkata.

     

    All the TRAI regulations for DAS will come into effect from 01st November, 2012.

     

    The Ministry of Information & Broadcasting will closely monitor the process of digitalisation over the next four months.  The Ministry of Information & Broadcasting will issue warning letters to those going slow on their written commitments.  Needless to add that both, the Ministry of Information & Broadcasting and TRAI, will take action under the provisions of the Cable Act, wherever and whenever necessary.

     

  • TDSAT stays TRAI directives on ad duration, next hearing on July 17

    TDSAT reprieve for broadcasters, stays TRAI’s ad duration rule

    By Shruti Pushkarna

     

    The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has stayed the Telecom Regulatory Authority of India’s (TRAI) notification to limit the duration of ads to 12 minutes per hour. The case will come up for hearing next on July 17.

     

    The TDSAT stay comes is a relief to broadcasters who slammed the TRAI’s move to limit the duration of ads on their networks. Uday Shankar, President of Indian Broadcasting Foundation (IBF) and CEO of Star India has confirmed the development to MxMIndia.

     

    In an earlier statement, Mr Shankar had said, “TRAI has no jurisdiction in the subject. Advertising is governed by the Cable and Satellite Act and the appropriate authority is with the ministry of information and broadcasting. The regulator is overstepping its brief.”

     

    Speaking to MxMIndia after the stay order by TDSAT, Mr Sunil Lulla, Vice-President, IBF and Managing Director & CEO of Times Television Network said, “Since the stay is only for a month, there’s another hearing coming up. It’s not appropriate for us to comment when it’s work in progress. As for our stand on the ad cap issued by TRAI, our stand is well known and it won’t change.” Mr Lulla, who is also on the Board of Directors of the News Broadcasters Association, had criticized the TRAI’s decision on limiting the duration of ads, in the past. He said, “This move is completely ridiculous. Self-regulation is the best regulation.”

     

    Broadcasters believe that low revenues from subscription leave them no option but to rely heavily on revenues from advertising. However, there is a large section of media professionals and consumer organizations which which believes that broadcasters have misused the leeway given to them so far, and the number of ads screened at peak hours mars the viewer experience.

     

  • This week, in Media Matrix, Paritosh Joshi discovers in Singapore what a great cable system like StarHub can bring to the party!

    Paritosh Joshi: Cable on steroids

    By Paritosh Joshi

     

    This week, Media Matrix comes to you live from Singapore (ok, so ignore the hyperbole).

     

    Just last week we were expressing disappointment about the direction in which digitization appears to be headed with cable not being able to hold its own against DTH. This week, we will look at what a topflight cable system can actually bring to the party.

     

    I give you StarHub.

     

    Before someone points out that StarHub is Singapore’s monopoly cable operator and reaches over 99 per cent of all Singapore households, let me say it myself. While this certainly bestows advantages, StarHub also has to contend with a natural cap on the number of households it can service – just over 5 lakh by the way, with nothing left to expand to. For comparison, just the Mumbai (suburban) district has over 17 lakh households, lots of room for a good cable service to deliver compelling services and grow.

     

    Here is what StarHub Interactive’s landing page looks like. Just five icons but with loads of stuff tucked away under each.

     

    As you drill down, all manner of options become available. You can check the winning ticket numbers for various lotteries. You can also buy them. Under Movie Ticketing, you can find out films/screens/showtimes and also buy tickets. Under Finance, you have access to all securities and currencies traded on a range of regional and global bourses. That isn’t all.  You can set up your own portfolio, complete with buy/sell triggers, reminders and even connect to your trading account to execute orders.

     

    It doesn’t take a lot of imagination to conceive of the endless range of possibilities such a service could deliver in India. Remember that vastly more consumers are familiar with the TV ‘UI’ – the good old remote – than with the user interfaces offered by browsers and apps.

     

    Also, each of these services will find participation interest from whole categories of vendors. Financial intermediaries wanting to develop retail interest in a wide range of saving, investment and insurance products will compete to be on the platform. Every personal and domestic service provider will crave for the customer base. Banks will offer payment gateway facilities to encourage use of credit and debit cards in a more secure environment than the open internet. The nascent Indian homeshopping industry would positively lap up the possibility of concluding transactions in real time. Each of these will be an income opportunity for the cable platform operator, providing an additional B2B revenue stream and accelerating amortization of capital investment in high quality digital infrastructure.

     

    But is the cable community listening?

     

    Post Script: Regulatory Overreach

    Those who have been involved with the Television industry long enough might recall Mr. Pradeep Baijal, Chairman- TRAI from 2003 to 2006 commenting to the effect that once the last mile to the consumer’s home became competitive, there would be no case left for tariff regulation and the TRAI would switch to forbearance as it was progressively doing in its primary, telecommunication domain.

     

    What has actually happened is quite the opposite. The Authority has got ever deeper into tariff regulation. Funnily enough, the entire thrust of the regulatory exercise is in the wrong place. We will deal with what is wrong with TRAI’s television tariff regulation strategy in a subsequent piece but does anyone else share this view? Please use that comment box below. I will be waiting to hear from you.

     

    Paritosh Joshi was until recently CEO, Star CJ. He has been a marketer, a mediaperson and been a key officebearer on industry bodies. He can reached via his Twitter handle @paritoshZero.

    Media Matrix appears every Thursday. Due to an oversight, we didn’t carry it yesterday… sorry!-Ed.

     

  • June 30 is the sunset date for digitization in the four metros and there are question marks on the readiness. Dinyar Contractor lists the reasons why he thinks delivering before the deadline for the four metros is such a challenge

    The Anchor: Dinyar Contractor on 10 reasons why the digitization deadline is a mighty challenge

    By Dinyar Contractor

     

    1. At the FICCI- I&B ministry meet that was held a week ago in Mumbai, barely 40 days before the analogue sunset date, the I&B officials said that they had reviewed digitization in Mumbai the previous day so their report was immediate and current and they confirmed that 33 per cent of the homes in Mumbai already have set-top boxes. I would like to turn that around factually and say that 67 per cent of the homes did not have digital boxes even 40 days before the sunset. So it is pretty much an impossible task that 67 per cent will get it within 40 days.

     

    2. Let’s look at Chennai. Arasu Cable has confirmed that they don’t have set-top boxes. In fact, a day after the FICCI meet, Arasu had asked its cable operators to log in to the Arasu site and send in their estimates of how many boxes will be required. Arasu will then put together these estimates and float a tender which means they would then start asking for people to give prices for boxes. So for the boxes coming in is way over the horizon for Chennai.

     

    3. Incidentally, there is a lead time just for a component of a set-top box in the world market today of four months. That means if you order your box today and the manufacturer orders the component, it will be four months before the manufacturer gets the component. What that means is that the box will not be manufactured and it will definitely not reach you before five months. Therefore, if at all there is a postponement, it doesn’t make sense to have any postponement which is earlier than Jan 1, even six months is really cutting it fine.

     

    4. There is a major national level MSO who candidly admitted to me that their HD boxes have landed but they don’t have the funds to clear them. The government had promised 74 per cent FDI as part of the digitization effort but the government has not implemented this and therefore, MSOs have not been able to tap foreign investors. So without enabling funds, the government has put this clause out which does not make any sense.

     

    5. We are talking of a sunset date 30 days from now. So for instance, I as a cable operator go to somebody’s home and I say please take the set-top box. And they say, sure I’ll take it but what is it going to cost me? And I say I don’t know what it is going to cost you because the government hasn’t declared the rate. Now as a customer I would not accept the box.

     

    6. On May 28, the TRAI put up all the analog pay channel tariffs. There is a Supreme Court judgment which says that broadcasters cannot charge more than 42 per cent of the analog pay channel rates for digital. So 42 per cent is the ceiling, however that 42 per cent is completely irrelevant since broadcasters are providing pay channels to DTH platforms at something between 10 to 15 per cent. So from May 28, the ball has started rolling where negotiations have been opened between broadcasters and MSOs to work out some figure for their pay channels that will be somewhere between 10 and 42 per cent. So there is a huge spread in the rates between 10 and 42 per cent, these negotiations are obviously not going to quick and easy. I don’t see these negotiations culminating in three weeks or a month.

     

    7. There was a Parliamentary Committee report which was released and tabled in the Lok Sabha a few days ago where the Committee says that this entire thing should be delayed by at least six months. I see this as the first stone thrown by the government to ripple the waters and start talking of a delay.

     

    8. The TRAI suddenly declared that every digital headend must deliver 500 channels. Incidentally, a major portion of the set-top boxes already deployed are incapable of doing 500 channels. This is again a fact that is not adequately ventilated. They can typically do 350 channels, less than 400 channels. It means that they have to take out may be 2 million of the boxes that have already been seeded and throw them away. Where is the money going to come from? We are not even realistic about what is going on.

     

    9. In Kolkata, don’t forget there is Mamata Banerjee who might rake up the issue against digitization depending on the political capital it might have.

     

    10. Here you have a sunset clause where the government has not enabled anything, they have only been talking of a sunset but they have not done anything to facilitate and to enable the sunset. The delay has nothing to do with the MSOs or the cable industry, it is simply completely chaotic unplanned deputation of the law or total lack of enabling a systematic process in which digitization could have been introduced.

     

    Dinyar Contractor is Editor and Executive Publisher, Satellite and Cable TV Magazine (www.scatmag.com)

     

  • With Airtel’s entry, mobile advertising will get the much-needed fillip and advertisers a better medium for targeted selling

    Dial ‘M’ for Mobile & Money!

     

    By Tuhina Anand

     

    Bharti Airtel’s foray into mobile advertising or m-advertising opens up immense possibility in this space for a country likeIndiawhere mobile penetration is much higher than internet. Also the hand held device is something personal which many have the habit of checking frequently, hence the assurance that if a message is sent, the chances of it getting noticed is much higher.

     

    There are players who have been trying to explore this territory for a while but the limitation has been that they are all third party players and would need support of a telco. With Airtel’s entry, this space will get the much needed fillip and advertisers a better medium of targeted advertising.

     

    Airtel, being a leading telecom player, has the advantage of huge database and they can facilitate a targeted and customized communication for potential consumers. Mohit Beotra, Head, Emerging Business, Bharti Airtel Ltd, said: “Our perspective on mobile advertising is straight forward. We can help in targeting the right kind of customers based on the analytics. We have access to data that can help in increasing the effectiveness of a campaign. There is an opportunity for the marketers and our customers and we can help in facilitating that dialogue to reach to the right kind of people.”

     

    He added: “While we would like to open eyes to the kind of opportunity that m-advertising has for the marketers, we would also like to help them in constructing effective campaigns for them on this platform.”

     

    Airtel has a three-year deal with Mogae Digital, a company owned co-owned by Sandeep and Tanya Goyal, to be its sole and exclusive monetization partner. They will sell advertising solutions on behalf of Airtel and also drive marketing reach for the telecom giant. While it is estimated that mobile advertising will grow by more than 40 per cent in the next few years inIndia, Mr Beotra stated that these are merely figures floating around and one can’t surely put a number to it. However, he is sure that Airtel’s revenue from this venture would be significant in the coming years.

     

    A recent example of m-advertising is the launch of Life OK channel by Star which allowed the channel to target the viewers just hours before the launch as the message flashed on their screens when one finished their call thus helping in targeting the right consumers in the right place.

     

    Giving his take on Airtel’s move, V Balasubramanium, Chief Knowledge Officer & Director, Rainman Consulting, said: “It will be a catalyst for growth rather than re-defining m-advertising. It will help the m-advertising category to grow as telco companies can use the rich consumer behaviour insights they possess for an effective connect. As the effectiveness grow through their ablility to target the right consumer with the right message, then naturally more brands would flock in to this medium. This, I see, is a good start and I am sure the same will be explored by more companies. But the secret of success is how well you use your consumer intelligence from the existing data. Innovative analytics will thus play a big role for its success and that will be heart to success! As companies latch on to that then success is near the corner.”

     

    Sharon Aneja, Director, Earned Innovation & Business Head West, SMG Digital pointed out that for any one who is into the business of brand building, the real handicap is lack of information. If one has data, then half the battle is already won. She said: “Today, there is a need to get people interested at various points of purchase funnel and the communication should not stop once he or she reaches the shop floor. M-advertising can help in getting people more interested in the product even before the purchase decision is made. By taking a lead, Airtel has taken the industry leader position and set a precedent for others to follow in quality messaging and point advertising.”

     

    Ms Aneja feels that the move will open new doors, however the challenge is how one finds interesting ways to use that data. Having worked in theUKusing mobile advertising, she pointed that while the data protection rules are stringent there, the brands have used m-advertising to explore personalized messaging and targeted reach. She added: “I think in India, since it’s still the beginning of mobile advertising, one has seen a limitation in terms of offering which usually revolves around the WAP service. This however will change as technology comes into play. Also as the purchase funnel has changed, brands need to have several touch points to let the consumer experience and know more on the product. Something like location advertising would help on the mobile platform.”

     

    “The real opportunity also lies with the untapped reach which m-advertising can open up. This will give brands and marketers unprecedented reach to communicate to rural consumers which hitherto has been a challenge,” concluded Ms Aneja.

     

    Airtel’s m-advertising will be in compliance with TRAI regulation and would not reach those who have opted for DND. As Mr Beotra pointed that their customer base is huge and those on DND is not such a big number, hence in no way would those numbers affect the reach of Airtel’s m-advertising. However, the move has definitely opened up a new channel for advertisers who are pressed in today’s time to grab the attention of their consumers, both existing and potential in the cluttered market.

    Imaging: Rafiq (images: Microsoft Clipart)

     

  • They have slammed vested interests who were trying to create roadblocks

    Ensure digitised feed from July 1: Broadcasters

    By A Correspondent

     

    Television broadcasters have urged the government to stick to the deadline of June 30 for mandatory cable digitisation in the four metros and slammed vested interests who were trying to create roadblocks.

     

    Cable digitisation in India has been hailed as the break of a new dawn for the entire broadcasting industry and all stakeholders – viewers, cable operators, multi system operators and broadcasters will benefit from it.

     

    “By and large, the industry has welcomed this transformation, but it is unfortunate that there are certain pockets of vested interests that are trying to create roadblocks,” said Uday Shankar, president of the Indian Broadcasting Foundation and the chief executive officer of Star India. “We remain confident that the government, TRAI, the parliamentary committee and for that matter even the courts will not allow these isolated voices to jettison what now is a national mandate.”

     

    Cable digitisation will to allow viewers to get more channels and will give them the option of refusing channels that they do not want. Being digital, it will also provide better quality of sound and picture. For MSOs, this would mean better transparency and ability to get a clearer idea of the number of subscribers. MSOs will therefore be able to declare revenues more precisely. With high bandwidth at their disposal, they will now be able to offer value added services and improve revenues.

     

    But some cable operators have cited unavailability of digital set top boxes and urged the government to extend the deadline.

     

    “The deadline must and has to be met. If it doesn’t happen on time, the confidence in this transition will completely evaporate and investments will not come in,” said Sunil Lulla, managing director and chief executive officer of Times Television Network, which runs Times Now, ET Now and Movies Now channels.

     

    In the current cable regime, broadcasters have been finding it difficult to generate revenues and scale up. “Broadcasters, particularly news broadcasters, have been crippled with huge carriage costs and poor subscription revenues. Digitisation changes all that. We will have far more resources to put into content, which will again benefit the consumer a great deal,” said KVL Narayan Rao, president of the News Broadcasters’ Association and executive vice-chairperson of the NDTV Group.

     

    Digitisation will benefit broadcasters as they will no longer have to pay large carriage fees and will now be able to get better subscription revenues. In the run up to the deadline, over the last two months, many television broadcasters have been communicating the shift towards digitalization at least five times a day.

     

    “Yes, there will be some disruption during this process but this is a game changing transition for the industry in India,” said Mr Lulla.

     

    Source: The Economic Times
    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

     

  • The government has reportedly asked TRAI to review issues dealing with cross-media ownership. The question is if and when implemented, there could be a significant change in dynamics in media ownership.

    Mediaah!: Will cross-media restrictions force Star, Zee & Sun to exit distribution?

    By Pradyuman Maheshwari

     

    There is no official word on it on the ministry website, but some journalists in Delhi were told about how the I&B secretary Uday Varma has written to newly appointed TRAI chairman Rahul Khullar to look into issues of cross-media ownership.

     

    “Major players are looking for expanding their business interests in various segments of print and broadcasting sectors. In this scenario, issue of media ownership and the need for cross media restrictions assumes great significance,” Varma wrote in his letter to Khullar, according to a Press Trust of India (PTI) report on EconomicTimes.com

     

    Adds the report: “Sources said that the I&B Ministry has asked TRAI to look into both horizontal and vertical aspects of cross media ownership, and then give its recommendations. In his letter, Varma has written that at present companies have control and ownership across Print, TV and Radio leading to horizontal integration. While at present there is no restriction for a company to have ownership across Radio, TV and Print mediums, but apprehension have been expressed in the past that control of media organisations in a few hands may prevent plurality of news and views, official sources said.”

     

    According to the PTI report, in his letter, Varma is also have said to noted that there were other implications related to cross-media ownership which included ensuring quality services at reasonable prices. The I&B secretary is reported to have further asked TRAI to look into the issue of vertical cross-ownership where companies owning TV channels were venturing into various distribution platforms like Cable TV distribution, Direct to Home (DTH) and Internet Protocol Television (IPTV).

     

    Hmmm. So this is why the headline: will cross-media restrictions force Star, Zee & Sun to exit distribution?

     

    Now before going any further, and for the benefit of those not in the know, let’s understand what vertical and horizontal cross-ownership means.

     

    Vertical would mean a media company that has ownership of, say, a TV channel also controlling a distribution (cable/direct-to-home/satellite/etc) company. And horizontal  cross-onwership would be a company that has interests in various media vehicles – newspaper, radio, TV, digital and even telecom!

     

    Way back in 2009, TRAI had issued some recommendations which I had commented on. My belief then and now is that the government and TRAI seem to be ducking the more sensitive issue of horizontal integration – namely, a media company with interests in print, radio, television etc. The TRAI believed that there was no threat due to horizontal ownership, but vertical integration – for television was a problem. So, while it was okay for a newspaper or a magazine to have its own distribution facility, that’s not the case for television. But of course the circumstances for print and television are different. In the 2009 recommendations, TRAI felt that there should be a 20 per cent cap on ownership and existing players would get three years to restructure.

     

    It’s been over three years already, and I guess that’s what has got the government moving its feet again.

     

    Mediaah! view: I don’t really think there’s any need for the government to intervene as regulatory and legal actions are already in place. And competitive pressures of course. For instance, a DTH operator cannot blank out a rival network’s channels.

     

    Mind you, the problem is graver with horizontal ownership. The PR executive of a radio station complained to me how she couldn’t ever get publicity in some key markets because rival stations were owned by newspapers. Thus even a minor activation gets a photograph and a report in the paper while that of a rival does not. Competition writes about you only if there’s something negative, she complained.

     

    Similarly television marketers crib how channels owned by newspaper companies have it easy with advertising and editorial space. Thankfully, media buyers are discerning and don’t get taken in by claims – correct or otherwise.

     

    The 2009 recommendations had also seen TRAI saying that limits on licences by a single entity were “adequate” and there is no restriction on control of ownership across telecom and media. Note this was to be reviewed after two years (that is, 2011), though the real changes in dynamics have happened since January 2012 given Reliance Industries and the Aditya Birla group getting involved, albeit indirectly.

     

    My sense is that given recent developments, the TRAI will also look at the issues of mergers, acquisitions and alliances in a bigger way. What the government/TRAI needs to also do is ways to determine and factor in ‘benaami’ ownership. For instance, even if as a broadcaster I may not own over 20 per cent of another ‘vertical’ media entity, what prevents a family member/friend to do it?

     

    It’s not an easy policy to work on, but am sure like various other complex issues it has tackled over the years, TRAI will come up with recommendations for this too.

     

    Buzz me if you have a story to tell. Confidentiality assured. There are various ways you can reach me:

    pradyumanm[at]mxmindia.com, BBM 23050B5D, Gtalk pradyumanm@gmail.com, Twitter @pmahesh and of course the mobile: 98338 76278.

     

    Disclaimer: Although he is CEO and Editor-in-Chief of this site, Pradyuman Maheshwari’s views in Mediaah! are not necessarily those of the rest of the team and MxMIndia.com.

     

  • With just 44 days to go for the Big Switch in 4 metros, Ashish Pherwani & Devendra Parulekar of Ernst & Young address the key business questions

    So will Digitization mean more Revenues?

     

    By Ashish Pherwani & Devendra Parulekar

     

    It is estimated that India has 127 million C&S television homes, out of which around 32 million are DTH, 7 million digital cable and the balance 88 million analogue cable homes.  The first phase of digitization of analog TV broadcast, which covers the four metro cities – Delhi, Mumbai, Kolkata and Chennai – is mandated to be completed by June 2012, while the entire country is to be digitized by December 31, 2014 when analogue signals will be finally switched off completely.

     

    It is expected that the industry will need to invest around Rs75 billion in the process, and Phase I alone will need around Rs11 billion. This is based on the assumption that the cost of digitization per subscriber will be Rs1,500, out of which around Rs600 will be borne by the customer.

     

    The following present some of the key aspects of digitization:

     

    How does digital cable compare with DTH, the current digital distribution leader?

    Digital cable has the capacity to carry 1,000 Standard Definition (SD) channels and surpasses DTH, which can only carry 250-300 SD channels at present due to limited transponder availability. In terms of technology, digital cable is capable of having a “return path”, which is not possible in the case of DTH. This limits the latter’s scope to provide value-added services and dual play. Digital cable is able to provide a larger number of regional channels, and given the growth of the Indian media sector – fueled largely by regional content – this could be a significant advantage for it.

     

    However, in terms of customer connect, management capabilities and readiness, DTH players have a definite advantage, since while they have had B2C from the beginning, most Indian MSOs still have B2B. DTH players already have in place customer-centric systems and processes, including multi-lingual call centres and field engineer forces.  They understand the implications of running a B2C business, having already implemented subscriber management systems, customer relationship management systems, and so on.  Moreover, DTH players have already invested heavily on building their brands, using ambassadors such as Saif Ali Khan, Aamir Khan, Shah Rukh Khan and Abhishek Bacchan, thereby making DTH an aspirationally more desirable product.

     

    Due to the factors mentioned above, it is expected that there will be a churn of subscribers from cable operators to DTH, particularly in Phase I. While certain MSOs peg this churn at 15 per cent in favour of DTH, DTH players are more optimistic and expect to gain up to 40 per cent of MSOs’ customers. This churn will, however, largely depend up the readiness of MSOs to meet digitization deadlines and also take advantage of the marketing and sales efforts of MSO and DTH players.

     

    Another factor that needs to be considered is Headend in the Sky (HITS).  HITS operators may find it advantageous to assimilate smaller LCOs by becoming their technology service providers and providing them with content as well as SMS, CRM and billing services.  However, this could pose issues for MSOs, who are counting on aligning themselves with such LCOs.

     

    Evolution of the distribution system

    The distribution system comprises four key segments:

    • DTH companies
    • Large national multi-service operators (MSOs) – 5-6 players
    • Small MSOs with a regional presence – around 25 players
    • Small LCOs (local cable operators) – around 40,000 players

     

    Currently, national MSOs have interests in several smaller MSOs and LCOs. This is either in the form of investments or JV agreements.

     

    Going forward, the distribution system is expected to evolve, based on the ability of small players to scale up their operations. Today, the main role of an MSO is to buy content from broadcasters, decrypt it and distribute it to LCOs for last-mile distribution to customers. All customer-facing operations are performed by LCOs, which include billing, collection, repairs and maintenance.

     

    Once digital addressable systems are set up, some of the smaller MSOs or more competent LCOs may decide to provide all services to customers themselves. In this event, they may break away from their parent MSOs, and assisted by funding and systems setups, be in a position to manage their customer bases on their own, and thereby gain a large share of the total subscription revenue generated.

     

    Therefore, we expect that broadcasters may not only be dealing with the big 5 MSOs, but the big 50 MSOs as well in a short time, which would be a definite advantage for them.

    The depth of relationships of MSOs with their JV partners and the LCO community will be critical for a successful national roll-out.  It will determine which and how many LCOs team up with each MSO, as well as the share of revenue an MSO can expect to receive from LCOs.

     

    The entry of pure-play global cable operators such as Liberty and Comcast could result in consolidation of the industry.  The proposed change in FDI limits for all cable distribution to 74 per cent, and the sheer size of the Indian TV market, is sure to interest such global players. PE players have shown a significant interest as well, but appear to have taken a watch-and-wait approach to determine how phase I of the digitization process plays out before deciding on whom and how much they will fund.

     

    How will ARPUs move?

    Given the past as a benchmark, one likely scenario is that the base pack of free to air (FTA) channels is priced at around Rs100 plus taxes.  Earlier indications from TRAI indicated a rate of around Rs83 plus taxes, but given that several channels are expected to opt for FTA in the digital arena, this will probably increase.  The cost of this base pack is, therefore, expected to increase at an inflationary rate of around 8per cent every year.

     

    High growth rates of 10-15per cent are likely to be seen in tier 1 and tier 2 packages, which will comprise most of the popular pay channels, e.g., the GEC and sports channels, and be priced between Rs150 and Rs250 plus taxes.  Premium packages, priced at Rs300-500, and including packages that have a large number of niche and HD channels, will probably grow at 15-20per cent per annum.

     

    Compared to the current ARPU of Rs140 per subscriber, we expect that within two years, the average family cost per TV set will increase to Rs250, inclusive of taxes.  The important factor to note is that households with two or more TV sets (according to estimates as high as 20per cent or more in the four metros) are likely to opt for addressable digital systems, and thereby, increase the size of the industry significantly.

     

    Application of a price cap, either at per channel level or a package level, could prove detrimental to the roll-out of digitization.  The equilibrium brought about by market forces would ensure optimal price points from a customer perspective.

     

    The tax impact could be significant as well.  The so far largely untaxed 88 million analog subscribers will now be subject to taxation, and this is likely to result in an increased cost of Rs25-45 per subscriber per month.  In all probability, this cost (around Rs4,000 crore a year) will be transferred to customers by the industry, and therefore, ability to increase ARPUs may be impacted in the short term.  Therefore, the efficiency of the value chain will be critical in determining the actual incidence of taxes levied on LCOs, MSOs and broadcasters.  The cost incurred to digitize networks also needs to be considered in terms of a one-time write-off or by spreading its impact over several years.

     

    How will ARPUs be shared?

    Honestly, we don’t know.  Today, many LCOs retain up to 85per cent of the revenues they collect from their end customers due to under-declarations made by subscribers, and the balance is split between MSOs and broadcasters in a ratio of 1:2.

     

    Different MSOs are proposing different splits.  Some envisage an equal split between the broadcaster, MSO and LCOs.  Some expect LCOs to retain 50 per cent of the collection, even two or three years down the line (given that it would be difficult for them to give up their revenue share).  According to a recent news article, TRAI is considering a regulation whereby LCOs will retain 70 per cent of the collections.  Some sources indicated that MSOs may guarantee revenues for certain LCOs at their current take-home levels for a year or two.

     

    Eventually, once addressability sets in, the share of revenues is expected to be driven by services provided to the customer.  Broadcasters will get a share for the content they provide; MSOs for their buying efficiency and the technology support they provide;  LCOs a share that is proportionate to the last- mile and customer-facing activities they provide.  If we compare this to the telecom sector, 60-70 per cent of the revenues are retained by telcom, as compared to 90 per cent by MSOs and LCOs.  This percentage needs to come down to global levels, where less than 50 per cent is the share of the distributors.  But this will take time.

     

    How carriage fees are likely to move

    Every business has a cost of distribution, and media is no different.  The cost of carriage will remain, one way or the other, whether as a per subscriber technology, a provisioning cost, a fee to place a channel in a package or as one to position a channel within a genre.

     

    There is likely to be some reduction in carriage fees, since digitization will result in eradication of the artificial scarcity caused by the analogue infrastructure.  However, in the long term, carriage fees are expected to continue in one form or the other .

     

    In all probability, strong channels (and those that are included in much-demanded broadcaster bouquets) will end up paying a reduced carriage fee, and weaker ones will pay a higher amount.

     

    The role of TAM

    TAM is expected to continue being the leading provider of viewership measurement services inIndia, since no method or technology is currently planned in any large-scale STB implementation program or any other system to find out which person in a household is watching which part of which program.  It may be possible to determine how many subscribers have subscribed to a channel by aggregating data from leading MSOs, but that is not a measure of actual viewership.

     

    Alternative business models

    Broadcasters and distributors can now think about implementing channels by using innovative methods to share risks and rewards.  Some such methods could be:

    • Broadcasters selling channels to distributors to exploit these in the form of ad sales and subscription revenues
    • Re-packaging existing channels for local audiences of MSOs and larger LCOs
    • Creating channels based on dubbed content from popular channels, to be rolled out as regional language channels across larger MSOs
    • Broadcasters, etc., distributing specially packaged film or music channels on a revenue-sharing basis

     

    The recent recommendation made by TRAI to limit the total advertising time on pay channels to 6 minutes per hour and FTA channels to 12 minutes per hour could also have a significant impact on the number of channels that continue to “go pay,” should such recommendations become the law.  Such a rule would boost transparency in TV distribution, and given that advertisers would not be willing to pay twice for the same audience reach, would also push up per-channel prices significantly.

     

    Moreover, in addition to regular revenue streams, new ones would emerge for MSOs.  For example, Hathway has demonstrated that it can generate 10-15 per cent of its revenues through broadband, and this could become a service other operators can also begin providing. Video on demand, gaming and niche content could also be provided at local levels.

     

    In summary, although the timeline for digitization is aggressive, the ordinance is a concrete step toward enabling systematic growth in the industry and more equitable distribution of revenue across the distribution value chain. All stakeholders are expected to benefit from the digitization process – transparency generally ensures this. It is, therefore, in the best interest of the industry that all stakeholders ensure that this initiative is implemented in as speedy a manner as possible, and make sure that no political, regulatory or any other road-blocks interfere in the process.

     

    Ashish Pherwani is Associate Director, Ernst & Young & Devendra Parulekar is Partner, Ernst & Young