For Hinduja's Headend In The Sky (HITS) platform - NXT Digital, which was launched earlier this year, the journey so far has been about tussling it out. From procuring the requisite license from the Ministry of Information & Broadcasting (MIB) to getting broadcasters on board, for NXT Digital, it was no mean feat. Focusing on phase III and IV areas of Digital Addressable System (DAS), the venture has made it very clear that they mean business and are here for the long haul.
Led by Grant Investrade managing director Tony D'Silva, the venture is investing heavily in order to achieve the goals that have been set. With an aim to spread its network pan India, NXT Digital has deployed teams on ground to reach out to operators. Speaking to Indiantelevision.com's Anirban Roy Choudhury, D'Silva speaks about the roadmap ahead for NXT Digital, the recent deal with Zee Entertainment Enterprises as well as India’s cable digitisation drive. D’silva makes no bones about the fact that the company is ready to associate with anybody but will not compromise with its transparency.
How did the industry respond to the launch of NXT Digital?
The launch of NXT Digital has been very well received by most markets across the country. Initially people were skeptical about what this system was all about. There was a lot of negative publicity in the market spread by people with various vested interests saying that we would face the same problems that Jain HITS faced. I think we have been able to overcome that gradually. And now we believe that we are a platform to stay. We have made substantial investment and have the financial support to invest more.
What do you think has been the biggest achievement so far for NXT Digital?
The most important achievement is the fact that we have successfully signed all the broadcasters. The deal with broadcasters is for both active and passive services (with exception of Zee), which is a greater achievement. Now I think we have started to move faster. Initially the progress was a little slow because there was a lot of confusion in the market as what will be the last date of DAS Phase III. However, now that there is clarity on the final date, the demand has seen a substantial growth in terms of COPE mini headend systems and set top boxes (STBs).
When you speak about demand, is there any particular region where you are witnessing the demand or is it pan India?
It is indeed pan India. In fact, we are observing a huge demand in phase I and II areas. But considering our decision to not disturb the existing ecosystem, we have decided to focus on phase III and IV markets only as of now. That said, we will review the model whenever needed.
How robust is your infrastructure to meet the growing demand?
We built our infrastructure for a particular demand but we have gone well beyond that demand and hence we have to now re-build our infrastructure. And that’s exactly what we will do to meet the demand.
Infrastructure will certainly not be a problem as far as NXT Digital is concerned. We are evaluating various options when it comes to STBs. DAS Phase IV will have a different affording power as compared to phase III and keeping the diversity in mind, we plan to offer a variety of options when it comes to STBs. By next year we will add one or two more transponders too.
How do you plan to ensure cordial reach out to the operators?
We reach out to the operators through various print, digital mediums, live roadshows etc. Moreover we have an on-ground team, which interacts with the operators. I think the proof of the pudding is in the eating. Once cable operators as well as the market have seen our services, there will automatically be a level of satisfaction and confidence and then they will be our ambassadors.
What’s your take on pricing when it comes to DAS Phase III and IV?
The content pricing is a function of broadcasters. We follow a business model where we don’t make any money from content. We don’t want to make money from content. The lower the broadcaster gives us, the lower we offer to our operators. Broadcasters unfortunately don’t see a difference between Phase III and Phase IV even though we have been repeatedly appealing to them because there is a clear difference in Average Revenue Per User (ARPU) in the two regions. I think it’s the function of authority overseeing the digitisation process to ensure the fact that the price quoted is fair for the entire ecosystem.
Is there a clear enough revenue model?
I think there should be a differentiation in the markets, or another way to look at it is to see what you can afford and pay for it. But I don’t know if the second one is a right option at this stage. And the reason I say at this stage is because the consumer is used to a kind of model and suddenly you cannot give him another rationale and logic. The transition needs to happen after following a logical approach and that is something that I firmly believe in. You cannot bring in a change by being harsh on the end consumers.
How many operators has NXT Digital signed with so far? Are you happy with the number?
We are very close to touching the 500 mark and I am very happy with the number. The number will go up substantially as we come closer and closer to the D-Day. There are a huge number of people who are still trying to figure out the best way forward. The main reason why operators held back was because they were insecure about us not having all the content. After getting Zee on board that problem has been addressed and now we will certainly see the demand going up.
The other problem that we faced in the initial stages was our broadcaster friends campaigning against us. They went on to many operators and mis-informed them saying NXT Digital will also be on the same track as Jain HITS as we will not provide them the content. I think we have proved that these were just rumours and hence they don't count anymore.
What’s your take on the entire digitisation process?
Not all operators are equipped with higher education and hence they do not understand the actual meaning of digitisation. Digitisation does not mean putting a digital head-end and STBs but it is also about managing the backend, packaging and bundling. On the other hand, there are a lot of smart, intelligent Chinese vendors all around laying the trap and there are a good number of operators falling in that trap maybe because of the government pressure or lack of understanding.
The other thing I have been telling the government is that when you look at regulation per se, the entire onus of implementing digitisation lies on the MSO. However, we are forgetting that a very important part of the process is the local cable operator (LCO), who is delivering the signal to the end consumer. Therefore billing, receipt collection, ensuring quality, consciousness and other on-ground responsibilities should remain with the LCO.
The government needs to understand that unlike many other countries, India is not a homogenous market. On a single street you will find slums and multi-storeyed apartments, which are both are consuming content. The LCO cannot go with a fixed price because it will be more than some or less than some. Moreover, he will also have to pay service tax on it. The concept of billing needs to be realistic and practical. There are a lot of things that need to be addressed if we really want to digitise the country.
You are also providing local channel facility, which is something that lacks on DTH. Who takes the responsibility of the content put on those channels?
We have a mechanism through which operators can have as many as eight - sixteen local channels. The benefit is that they are all encrypted and hence piracy is taken care of. We are clear with the operator that whatever content is put up, should follow the Cable Act. If the operator airs pirated content or breaches the law, the broadcasters can inform us and we will switch off signals. We have the power to switch off, which other MSOs don’t and that’s another advantage that we have. We have to understand one thing that the COPE belongs solely to the operator and therefore the liability of whatever is inserted through that COPE is on him.
Can DD Freedish capitalise on the on-ground chaos? If there is a blackout, people may just move to DD Freedish?
DD Freedish is also like any other DTH platform. I don’t think it meets consumer requirements. The consumer knows what he wants to watch. Setting up a DD Freedish and buying an STB is similar investment. It’s just that there is no subscription fee attached to DD Freedish but it has its limitations when it comes to number of channels. And not only channels, the exposure that we offer is far beyond, be it international with global channels, local channels or value added services. So we are far ahead of a platform like DD Freedish and we are not bothered by it.
You had all major broadcasters on board except Zee. How was your experience inking the deal with Zee?
A deal that took four months to be signed cannot be called a smooth one. We went to the MIB, the Telecom Regulatory Authority of India (TRAI) and then eventually tussled it out at the Telecom Disputes Settlement and Appellate Tribunal (TDSAT). For many years now we have been requesting TRAI to come up with a standard Interconnect Agreement (ICA). There are so many operators across the country who cannot even afford to go to the TDSAT. It’s not an easy process; he has to come to Delhi, hire a lawyer and it needs a lot of financial backup. The deal signing with Zee was a learning experience for me. It was a case of dealing with people who say something and do something totally different. It was a clear case of mis-interpretation of law.
What is the way forward for NXT Digital?
Value added services are important to ensure growth and now we are focusing aggressively on that front. I want to make one thing very clear, which is that the Hinduja Group will fight this till the very end. We are not going to be tempered over by anybody in this industry. If there is a genuine problem or concern, we are more than happy to sit and discuss. At the same time, no matter what, we will not be stepped on for nothing. I firmly believe that the whole is always bigger than the individual. If we have all the broadcasters with us and one against, there has to be some vested interest. Our strategy is clear, we are ready to associate with everybody for business or betterment of the industry but we won’t compromise with our transparency.