Who is changing my TV and how?

Cable TV Digitization will impact how millions engage with the characters of the famous soap operas and how the crazy cricket fans consume a Tendulkar six. With 88 million households across the country being impacted, its worthwhile having a look at changes.

Cable TV digitization is truly a game changer. Not only the consumer but also the content producer and broadcaster will benefit from this move. While it has taken a long time coming, the consequences of this landmark move are truly phenomenal. The consumers are obviously set in for a real treat, as we would explore in the later part of this piece, the Cable TV industry itself is at the cusp of a revolution. A lot of positive change is expected but the move is certainly a challenging one as well for the industry. It is companies like Cisco with servicing capabilities at each end of the entire value chain (glass to glass) that are helping the cable TV industry take this big leap forward.

Entertainment revolution
While the industry grapples with the technical demands of this move, the consumers can look forward to a far better entertainment experience. The prospects of digitization not only assures a whole array of superior entertainment services to the consumers but also of convergence of other technologies and features like high definition content and broadband accessibility coming their way. Peeush Mahajan, CEO, Fastway, a cable distribution company catering over 119 cities says, "Indian consumers will now get access to a world class TV watching experience with services like Video on Demand, more than 500+ channels and subsequent availability of a broadband connection on their cable TV connection and all this at very affordable prices"

You might think that all these services are also available with DTH providers so what is the big deal? But there is more to the story. The switch from analog signals to digital ones is only the first step and the industry is gearing up for a massive change going forward. Sanjay Rohatgi, Senior Vice President, Service Provider, Cisco, India & SAARC, says "Today's consumers want their television viewing to be personal, social and an interactive experience. They want content to be delivered anytime, anywhere and on any device. Digitization opens a huge opportunity for cable service providers to monetize investments, and evolve as 'experience providers' ".

Industry metamorphosis
Cable TV digitization as a move is certainly a great policy initiative by the government as it is not only beneficial for the end user but it has all the ingredients to make the cable TV industry an attractive one for the corporates. The channels seen on TV (pay channels or free to air channels) are created by different broadcasters and transmitted from satellite to receiving stations (head- ends) owned by Multi System Operators (MSOs). The MSOs in turn re-transmit these signals through cables to the LCOs, who have their own last mile cable network to individual homes. Over the years the LCOs have been dominating the market by offering Video/pay TV services and they had the end user relationship. With digitization this is set to change as billing relationship or end user management will be controlled by MSOs. New government policy streamlines the revenue distribution amongst BROADCASTERs, MSO and LCOs.

As per a study done by ASSOCHAM, MSOs will reap the greatest benefits. MSOs will get a share of revenue from a significantly larger volume of subscribers (as they will have the direct relationship with subscribers). In terms of ARPU, they will see an upside because of subscribers consuming and paying for value-added services and the opportunity to bundle broadband to some digital customers.

The challenges
With such a massive step forward, challenges are apparent. MSOs being the biggest beneficiaries will also bear most of the execution challenge associated with meeting the aggressive digitization deadlines. The financial pressures associated with digitization could drive consolidation among the smaller MSOs, which have limited access to capital. Furthermore, about 20 per cent of analog cable TV subscribers are expected to churn to DTH (instead of migrating to digital cable) to avoid paying additional costs for settop boxes.