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“India will be a huge broadband market over the next 3 years:” Rajiv Kapur

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MUMBAI: The Indian Cable TV sector has a gargantuan task at hand. Not only does it have to work towards converting analogue cable TV homes to digital, but it also needs to work towards connecting India with high-speed broadband pipes.

Multi system operators (MSOs) are now working towards strengthening their broadband services. While Hathway Cable & Datacom was the first to launch a 50 mbps broadband service on its Docsis 3.0 ultra high speed network in 2013, Siti Cable and Den Networks were quick to follow suit in 2014. Not only this, several cooperatives that mushroomed post the digitization announcement, are also looking at offering more broadband services. And all this, to improve business as well as their average revenue per user (ARPU).

So are MSOs in India taking the right approach to build a broadband base in the country? Broadcom India managing director Rajiv Kapur tells Indiantelevision.com, “I applaud the MSOs in the country for what they are doing. They are taking the right approach. If anything, they should do more of it.”

The satellite versus cable versus IPTV is probably the biggest war in the broadcast universe, where three different ways of delivering live TV compete with each other. “India is at a very nascent stage for IPTV, and that brings us to the satellite versus cable TV war. Like in any other market, both will co-exist with their own unique offerings. Both have existed with a large enough pie of their own and both bring something unique to the table,” opines Kapur.

Kapur believes that a reason why cable benefits over satellite is because it can provide a two way service. “While one way service is very limited, two way services are way more powerful in customizing things to make them more entertaining, or in gaming context more interactive. Taking a cue from what has happened in the rest of the world, I foresee that the sheer desire to remain competitive against satellite will again lead cable to bring broadband more aggressively in Indian cable market. The market itself isn’t exactly demanding it, so there has to be a little bit of a push to create the demand,” he adds.

Since Indian subscribers are currently not aware of the advantages of a two way pipe, cable operators will need to start making creative use of the pipe that gives two way cable services, which enhances one’s TV watching experience and not just leave it as a pipe. “Even if it is left as a pipe, there are still some benefits for cable operators because the ARPU will still be way higher,” Kapur informs.

Broadband will not only benefit cable operators, but also subscribers as there will be less capital expenditures (CAPEX) and a lower total bill, if they get the services from one operator. “So everyone benefits and this will happen whether it’s a sheer data pipe or there are services in the data pipe, which embellishes TV watching experience,” says Kapur.

According to him, one needs to be a little more patient with broadband as India is going through the basic steps of digitization. “As a country, barely have we been able to figure out how to get such a large footprint of analogue converted to digital. It is a very large market and that makes it that much more difficult. One needs to keep in mind that business relations between broadcasters, MSOs and LCOs are still settling down,” points out Kapur.

The country definitely needs a broadband push and now. Talking about how it will happen, Kapur suggests two types of push mechanism. “The first push is much easier and has already started, which is offering a higher bandwidth speed at aggressive pricing. This kind of push takes a progressive operator to initiate it and we have seen it happening. The second level of push is TV embellishing two way service. If you fast forward into 2016, there will be at least one progressive like-minded large cable operator who will begin showcasing interactive services that others will either be forced to follow or would want to follow,” he suggests.

Talking about the right pricing for broadband, Kapur says that the sweet spot of bandwidth and price is between Rs 800 – 1000. “There is always a package, which is above it and there is a package below it. What will happen with time is that higher speeds will come at the same price. This is the beauty of a competitive market. In a year from now, at least a few operators will start aggressive broadband packages in the market. The side effects of this on other operators starting the same, will take another year or two. So in the next two-three years, India will be a much larger broadband market than it is today,” feels Kapur.

Delay in Digitization

Kapur believes that even if the country sees a large percentage of digitized homes and not 100 per cent, is still a big step forward. “The only benefit of 100 per cent digitization is that one can do an analogue shut off,” he says.

Citing the positives of the delay of digitization, Kapur says, “The sheer magnitude of what needs to be done is very large. The delay gives time and opportunity to MSOs, LCOs and broadcasters to sort out their complex relations and their businesses.”

The pressure to complete seeding of set top boxes (STBs) on time in phase I and II saw many MSOs compromising with the STB quality. “If we have to deploy 50-100 million boxes, it will be a shame to do it without keeping quality in mind. This country shouldn’t waste money in replacing boxes. So there is a big positive in the delay as now the quality matrix of what needs to be looked in hardware procurement will be left uncompromised,” he adds.

Pay TV channel revenues post digitization

Currently there is fear in the masses that prices of pay TV channels post digitization will go up. Kapur feels that while there is an element of truth in that, it is only because in the analogue regime, people were not paying for what they were viewing. “The second television was not being paid for and people were slicing the cable and taking feeds. So in the bigger picture, prices will go up just because of that.”

Citing examples from the telecom sector, where high competition and usage led to reduction of prices, Kapur suggests that hyper competition will force price control even in the cable TV sector. “More services will come, which if taken by subscribers, will increase the ARPU for operators,” he opines.

In satellite, DTH players have existed since over 10 years, however the country witnessed hyper competition amongst players only in 2008-2009. As the DTH market enters its early stage of maturity, more services are being considered and offered to consumers. “All this took a decade. Cable will not take that long because the market is established due to DTH, but it still needs to go through it,” informs Kapur.

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