This write up by Devi Leena Bose is based on a study conducted by students of Centre for Culture Media and Governance, Jamia Millia Islamia University, New Delhi in 2010. Part of the CCMG’s research initiative ‘Media Mapping of the Jamia Neighbourhood’, the study mapped the commercial landscape of the Cable TV Business in the Jamia neighbourhood.
Cable TV in India is currently going through an interesting shift in terms of technology, business structure, policy and consumer behavior. While various stakeholders were navigating their way towards complete digitalization, we (Kastoori Rai, Shreya Gautam, SadiaTabassum-Nasr & Devi Leena Bose, all students of M. A. in Media Governance, CCMG) wanted to map the changing landscape (dealt in this paper) and analyse factors driving the policy (not dealt in this paper).
Methodology & universe of the research
The study was majorly interview based where unstructured questionnaire was used. Our focus was on the following key nodes of the Cable TV business:
- Cable distribution: We identified different Multi System Operator (MSOs) and their Local Cable Operators (LCOs) that provide their services in the area. The data gathered was used to analyse current distribution pattern and its reasons.
- Changes in technology: Under this head we attempted to analyse the shifts in technology and understand factors that catalysed the shift and factors acting as deterrents in the process.
- Bundling and pricing: Bundles of television channels that were on the offer to the citizens, was another prime area of focus. In this our primary aim was to identify the difference in choices of channels being offered by various MSOs and LCOs and understand process involved in fixing channel rates and price regulation.
- Revenue generation: Under this head we wanted to explore various sources of income of the MSOs and the LCOs. Gross (or monthly) income earned through advertisements in the MSOs and LCOs, the amount earned by each of the operators through subscriptions or other sources of income. We hoped to gauge profitability of Cable TV business and mechanisms of profit sharing between the MSOs and their LCOs.
- Competition from DTH: We anticipated the coming of the Direct to Home (DTH) a big threat to the Cable TV business. The DTH with its high quality channels and bouquet of value added services had already become popular amongst the customers. Thus, we were interested in: what the operators themselves thought about the DTH, what kind of competition they foresaw (if any) and their strategy to cope with it.
About the area under study
Sukhdev Vihar and Kalindi Colony are middle class areas; most of the people here live in DDA flats and use traditional cable connections. Entire Sukhdev Vihar gets the cable connection directly from Home Cable Network Private Limited because its head office is in Sukhdev Vihar. No LCOs are there in Sukhdev Vihar and very less people use DTH here.
New Friends Colony, Friends Colony (East) and Maharani Bagh are inhabited by higher middle class people. DTH is mostly used here. Khanna (In Cable) is the only LCO in NFC.
Taimoor Nagar is largely inhabited by migrants who form the lower income group. Located opposite to the upmarket Maharani Bagh and New Friends Colony, the lanes here are narrow and roads damaged. Though all the MSOs reach here, the service is through LCOs only. Bharat Nagar is also a lower middle class area but is better than Taimoor Nagar. Here also most people use traditional (non-digital) cable with set top boxes because a considerable amount of population specially students live here on rent.
MSO distribution in the area under study
Below is a briefly summary of our observations during the field visits.
Since South Delhi was Cable and Satellite (CAS) enabled area since December 2006, the channels were divided under two categories Free to Air (FTA) and Paid Channels. The paid channels came in package which varied from provider to provider and were regulated by the set top boxes. Before we delve into understanding the paid channels busines s, let’s first take a look at the FTA channel pricing.
The Government approved rate for FTA was Rs.77, but we found during our research the money charged by the MSO is higher than what is the upper ceiling. The rates for FTA channels varied from MSO to MSO and ranged between Rs 82 to Rs 110 <1>. However on ground we found discrepancy in terms of rates being charged. – Rates charged by Service providers
Table 1: Free to air channels
Interestingly the rates of LCOs in most cases didn’t tally with those of the MSOs. Table 1 (above) gives a summary of the rates being charged in April 2010.
Based on our research and information shared by cable service providers, we identify following factors responsible for this behaviour:
- Cut throat competition and unwillingness of consumers to pay anything above Rs 100 were two major reasons identifies by LCOs. ‘Kamat Cable Service’ informed that 3-4 years back their rate was Rs.150/- but due to stiff competition and also may be due to the presence of a Home Cable LCO nearby (Ishwar) they had to cut down their charges. ‘Kamal Cable Operators’ in Khizarabad lamented that at times he charges Rs.50/- to households who cannot afford cable services. There are many instances of late payment or no payment at all across all the LCOs.
One of the major factors that support this kind of pricing is the fact that the LCOs never reveal their actual consumer base to MSOs.
- Paid Channels and Set Top Boxes : The concept of paid channels came with the introduction of CAS in South Delhi in 2006. With CAS, set top boxes also came in because the paid channels can only be received through the set top box (STB). The rates of set top boxes also vary from Rs 500 to Rs 1750. We also found out that while many of the STBs were previously rented, the renting system stopped because the subscribers tend to keep the STBs and not return them.
Interestingly in order to maintain consumer base, many service providers provide paid channels free of charge along with FTAs, specially daily soap and sports channels (during cricket match). However, the compromise is made in terms of quality and stability of channels.
A sanpshot of cable business structure
With the coming of CAS, the major shift has been in terms of going digital which meant shifting to Optical fibres. However, this shift is not uniform for MSOs and LCOs. Most of the LCOs still prefer Copper Wires since they can be easily moulded and tweaked without much damage. In order to cope up with competition posed by DTH, most of the MSOs have started providing Electronic Programming Guide (EPG) <2> and other Value Added Services.
During our study we found that wires are mostly laid on electric poles or on rooftop of residents. For access to both the places, arrangements either on terms of cash (in case of electric poles) and kinds in form of free connections (in case of rooftops) are made. This unorganized wire installation is a trend majorly followed by local cable operators where the copper wires travel through residences of the users and are moulded according to the demand. On the contrary, the MSOs prefer optical wires laid underground. Theft of cable wires is also reported in many areas because of open and unorganized cabling. This leads to financial loss and are markers of the unorganized nature of the sector.
While major source of revenue generation for MSOs are advertisements and subscriptions, carriage fee paid by broadcasters also adds up as a key source.
LCOs neither get advertisements (mainly because they don’t have registered channels like the MSOs have) nor are they a stakeholder in the fee paid by broadcasters.
As far as business ventures are concerned, most MSOs provide paid internet services like Sify etc. Few MSOs have other business ventures (see Table 2) while most LCOs are engaged in diverse small businesses.
Table 2: MSOs in the area
During our field visits we observed the following common trends:
Most LCOs considered cable business to be less fruitful. LCOs seem unlikely to be major stakeholders and hence have lesser decision making powers in terms of pricing.
Secondly, most of the LCOs are not even aware of carriage fees often levied by MSOs which is reflective of the fact that they hardly get any share.
MSOs are clearly the bigger fishes in the game, not just in terms of business ownership and turnover but also in the sense that they have influential say in deciding and determining the PCS band charges. Interestingly, it is a common practice that PCS charges are fixed with mutual consent of broadcasters and Cable Providers but most of the MSOs we spoke to disapproved of this being practiced by their organisation.
<1> These rates were as communicated to us by the MSO head offices and we are assuming these are inclusive of taxes.
<2> Electronic Program Guide provides users menus displaying program schedule, information about upcoming program etc.
As the data was collected in 2010, the ground reality may have changed since then, especially with a much higher penetration of mobile telephones.