Digitisation to spur 30% growth for digital cable till 2015: Frost & Sullivan

MUMBAI: The tightening of Government rules for cable TV digitisation, along with possible increase in foreign direct investment (FDI) inflows and consolidation, will prod over 30 per cent growth for digital cable till 2015, according to a Frost & Sullivan report on digitisation in India.

However, it is noted that several cable multiple-system operators (MSOs) in India are more than likely to miss the Government-proposed October-November 2012 digital deadline, which mandates use of set-top boxes (STBs) in metros.

Frost & Sullivan estimates the current penetration rate at a little over 25 per cent, or 7.7 million subscribers. India is the third largest market in cable TV penetration in the world with 85 per cent of total TV households, and 126 million cable subscribers.

According to Frost & Sullivan Research Director Vidya Nath, "The current shortfall will require an investment of INR 3,000 Crore, at least, in metros. Though current digital penetration data reports from the Ministry of Information and Broadcasting are implausible, we are bullish on the future growth potential of the cable TV market in India."

Cable digitisation in India holds immense business potential in terms of service and investment. It will unlock new revenue streams for the TV industry, with positive impact on the broadband market as well due to upcoming TV-Internet services, the research agency noted.

Multiple service offerings, spectrum efficiencies, and transparent system operations are expected to bring about a revolution in digitisation of television services in India, at the same time creating an advantage for broadcasters, MSOs, STB manufacturers, consumers, and stakeholders.

"While strong Government hand in regulatory mandates will drive faster penetration, the cable industry needs to take initiatives from within to speed-up implementation," observes Nath. "Digitization bodes well for the cable and the broadcast industry in the long term. A more thorough path of evangelism and consolidation is what is required to encourage transition toward digitization through the local cable operators‘ (LCOs‘) network."

At present, investment requirements for digitisation are very high in India and hence the process requires extensive subsidies to produce and purchase equipment, which eventually compels local cable operators to consolidate.

According to Frost & Sullivan, FDI in digitisation would result in higher returns and rise in broadcast, cable, and direct to home (DTH) services in India. Also, it will leverage the opportunity for technology support, subscriber acquisition, and strengthen smaller players.

Another area where Frost & Sullivan identifies prospect for digitisation is the approach toward switchover. The transfer process should be executed strategically, as the technology used for switchover in the first phase would act like a barometer and help determine quality of switchover in the entire region.

In India, the transition process in areas that solely rely on Digital Terrestrial Television (DTT) should preferably begin with low-population densities. The switchover policy in India is expected to occur in four phases, with the final phase due for completion by 31 December 2014.

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