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IDOS 2014: Trust amongst stakeholders holds the key to increasing ARPUs

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GOA: The broadcasters, multi system operators (MSOs) and the local cable operators (LCOs) need to trust each other to solve most of the issues that affect the cable TV industry. While the dialogue between the trio has begun, there is still lack of trust and this has to change, is what the industry stalwarts expressed at the ongoing India Digital Operators Summit (IDOS) 2014, organised by Indian Television Dot Com and Media Partners Asia.

?The current reality is that the players within the chain have at least started talking to each other, which was missing earlier. So with digitisation, this is one of the most positive moves that has happened,? says IndiaCast CEO Anuj Gandhi. He also emphasises on the need for the MSOs to resolve the jigsaw puzzle with the LCOs to ensure better Average Revenue Per User (ARPU). ?The MSOs need to get the LCOs on table and understand their issues,? he says while adding that the last mile needs to be seen as partners in the cycle.

Agreeing with him was Hathway Cable and Datacom MD and CEO Jagdish Kumar, who feels that the last mile needs to get returns on the services he provides. ?But that will need collective work. We need to grow the ARPUs from the current Rs 180 to Rs 250-Rs 300,? he says.

For Siti Cable CEO VD Wadhwa, the reason for lack of trust lies in the history of cable television ecosystem. ?Historically, the understanding has been that the last mile retains a large part of revenue. Now with digitisation, underdeclaration is not possible and so the LCO is suffering from fear psychosis that he will lose his subscribers,? he says.

The Siti Cable CEO also feels that there is a need for MSOs to give the LCOs access to the SMS so that they can feel a certain ownership towards their customers. ?There is a need for a policy which is well documented, transparent and honoured,? he adds.  

From the time government announced digitisation of cable TV homes, it is the regulations and the courts that have been driving the business. ?Let?s not get the regulator involved in areas where we can resolve the issues. We need to put together a commercial document which is uniform across,? opines Star India president and general counsel Deepak Jacob.

One of the biggest concerns for the stakeholders is increasing the currently low ARPU. ?The DTH industry has done well on this front. While we started with Rs 150 in 2008, we have gone up to Rs 200-Rs 220 in phase III and phase IV markets, where the cable industry still has a ARPU of Rs 150,? informs Videocon d2h CEO Anil Khera. He also feels that the cable industry cannot have different rates for different markets.

The DTH industry faces a huge threat from Freedish, which is becoming a great proposition in phase III and phase IV. ?I see more threat from Freedish, if the platform gets the general entertainment channels onboard. According to me, all these channels should be made ?pay? on Freedish as well,? opines Khera.

While talking of the threats the industry currently faces, Jacob also highlights the threat that comes from state governments playing a role in the content and distribution market. ?The Tamil Nadu and Punjab markets are pretty much locked because of the monopoly of the state government in the region. The disease is growing, with more states looking at the same. We should ask the government to implement recommendations to curb this,? he says.

Another point discussed during the session on ?Unity and the way forward for the next five years? was if the DTH operators have an opportunity in phase III and phase IV markets with the extension of digitisation dates.  Says Dish TV CEO RC Venkateish, ?DTH in phase I and II continued doing what it did when it had started. But phase III and IV is a different kettle of fish and so we at Dish launched Zing. The delay means loss in momentum.?

Hathway is looking beyond cable in the phase III and IV markets. ?We are looking at broadband as the margins from here are far higher than cable,? informs Kumar who says that while broadband currently is at 20 per cent, it will increase significantly in the future.

As for increasing ARPUs, Gandhi suggests that there is need to look at the basic packs. ?We need to work on making the basic pack light, so that consumers see value in the higher packs,? he says. According to him, the MSOs like the DTH operators should start getting into a multi-year or five year deals with broadcasters, rather than the one year deal that they have currently. ?This will help him sort his content cost and also give them more confidence, which they can then pass on to the LCOs,? opines Gandhi.

The MSOs have taken a lot of debt for digitising phase I and phase II. ?Now when we approach the investors, we will need to have a roadmap for them to invest,? informs Kumar.

Can phase III and phase IV be underestimated, answers Jacob, ?We shouldn?t underestimate these two phases. The households in phase III spend close to Rs 300-Rs 350 on telecom and VAS services, while phase IV spends some Rs 250 on it. And these households are trying to watch all the content on their phone. So this is the matrix the cable TV industry should follow.?

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