Cable TV

We believe the new cable TV tariff order will benefit everyone - Hathway Cable video CEO TS Panesar

Tavinderjit  Panesar is in the hot seat. As the CEO of the video business of the listed MSO and Rajan Raheja group company Hathway Cable & Datacom, he has to steer it in challenging times.

The company’s share price has been waddling around in Rs 30-40 price range despite being spoken of as one of the jewels in India’s cable TV sector, and attracting investment from international firms.

But, digitisation has put the entire sector under pressure; especially phase III  and phase IV. Phase I and Phase II, while they have been reported as completed, have not resulted in the sector getting the same organised structure that the telecom sector is. Then, ARPUs from subscribers have increased only marginally, even as investments in infrastructure in terms of STBs, content from broadcasters, customer service, and programming have been going up.

To top it all, Indian broadcasters have objected to the draft tariff order that the industry regulator TRAI has issued, and have taken the matter to court. Which has left the distribution sector between a rock and a hard place as no one knows which direction tariffs will take.

In such a scenario, the feisty industry veteran will have to bring all his 13 years and more of TV distribution experience to bear in order to deliver what he has been brought in for. He took over as the CEO of the video business from Jagdish Kumar who departed from the company in November 2016.’s Parvinder Sandhu got into a conversation with Panesar to discuss about the industry, its state and the way forward. Excerpts:

How would you view the overall status of the cable industry?

The pay TV industry is consistently growing year on year in India and digitization has given a further boost to this sector. BARC data  indicates that the total number of pay TV subscribers have risen to 183 million  this year from 152 million in 2016. And there is still much more potential in this industry and enough room for everybody to grow.   In spite of the growth prospects, MSOs are still facing a lot of operational challenges like increasing content cost, inefficient ground collection mechanism and many more. However, from last few years, MSOs have also started adapting to newer and improved technologies and automation systems, thereby able to offer services which are at par with DTH providers.

Today, the MSOs main task is to improve operational efficiency by controlling or reducing the content cost which has reached to level where it neither can be absorbed by the business nor can be passed on to the customer and by improvising processes and systems on the ground. First time in the MSO industry, Hathway has implemented a portal for LCOs through which he can manage his business very efficiently. This has helped us in building trust with the LCO and resulted in improvement in collection efficiency for both, LCOs and us. We are hopeful that the new regulations which are currently being deliberated upon will be implemented thus helping everyone to become profitable across the industry.

With the right steps, there is a bright future for all value chain members i.e. broadcasters, service providers and consumers.

Are DTH services with their competitive pricing of services, threatening MSO business?

Historically, cable TV provides more value for money than DTH. Today also, it is our constant endeavour to maintain the same.

Cable TV has unique advantages over DTH, like personalised 24*7 service to customer by our LCO, no service interruption due to weather, no limitation of bandwidth & hence being able to provide better quality service etc.

Hathway understands the ease of interaction DTH subscribers enjoy with them which MSO industry is also trying to develop through the LCO network using technology and automation. Hathway was the first to create an interactive portal called Hathway Connect for its LCOs making their lives easier, convenient and more efficient. Using this portal, LCO can provide DTH-like experience to customer during his interaction. An LCO has access to every information of their customer which is very useful while interacting with customers. He can do the transaction instantly for the customer through this portal thereby provide necessary comfort to him. This has helped the LCOs run their business efficiently and effectively, in turn offering better quality and high standard & customer delight.

For online payments, we have also integrated our systems with various payment gateways like Bill Desk & Citrus along with wallets like Mobikwik, Free Charge, SBI Buddy, Oxygen, Airtel Money etc. to ensure ease of business for the LCOs and renewal for customers.

We have also recently launched our Value Added Services -- Hathway Special catering to customers looking for additional services over and above broadcaster channels.

We have also expanded our HD channel offering matching the  DTH offering

In short, cable TV has also started providing similar experience like DTH to their subscriber and hence there is no threat to cable TV from DTH.

There has been lot of hype in India for the two years about Make In India, a pet initiative of PM Modi. Has it resulted in any gains for the set-top box manufacturing?

The Government’s flagship ‘Make in India’ initiative has helped India garner visible momentum, energy and optimism in key sectors. India is on the path to becoming an elite manufacturing hub through this initiative and box manufacturers have also definitely got a boost. During the inception of digitization the I&B ministry was talking very proactively to ministry of micro, small and medium enterprises to work out ways for the Indian industry to take advantage of the digitization process. While there are many indigenous box manufactures in India, some of the critical components of the set top boxes are yet to be developed locally. This is why most of the set top boxes are still being imported currently.

What percentage of STBs would be imported by Hathway? Does it source boxes from few Indian manufacturers?

We look forward to using a completely made in India box. However, till many key components are not developed indigenously we will have to import boxes to maintain competitive pricing and quality of service

Essel group chairman Subhash Chandra recently said that STBs being used in India are still very basic, a far cry from technological developments around boxes globally. Would you agree with such an analysis? And, if yes, does such basic boxes hinder in providing better consumer experience in India?

A true visionary and media veteran Dr. Chandra has always envisioned positive growth for the sector. He was one of the first to acknowledge the fact that with superior set top boxes the industry will definitely see more progress. As he correctly said the set top boxes being imported are very basic, and that there are more advanced boxes which can help in creating a better viewing experience for the end consumers.

Though India is considered a price sensitive market, what, according to you, does the Indian consumers really want -- affordable products or high-priced products that can give better consumer experience and a plethora of services?

India is definitely very prudent when it comes to pricing mainly due to affordability factor. However, the aspirational level of the Indian consumer is always very high, and hence he always look for advance technologies for better quality and ease of operation. Also, there is more younger population in India which is always looking for technology and innovations.

Since inception, DTH is thriving more on technologies and hence expensive right from installation to monthly subscription compared to cable TV.Cable on the other hand is always more value for money than DTH, be it the pricing orchannel offering or the wider bandwidth thus offering better picture quality.  We can boast of personalized service which our LCOs offer to the end consumers. They are available 24/7 to address all consumer concerns. In last few years, the MSO and the LCO also have started improving service levels to consumer using various technological initiatives and streamlining processes thereby giving better value for money than DTH which the consumer is looking for.

How is Hathway tackling the challenges of digitisation and technological developments in media that's happening nationally?

For a country as diverse as India, to bring about any change will, of course, have its own set of challenges. Although, mandatory digitisation of cable TV has opened up a whole new world of possibilities ensuring that the broadcasters reap benefits with strong growth in both advertising and subscriptions without any incremental investments, service providers like Hathway are at disadvantage the most with  increasing content cost for the same ground collection. While we have aligned our LCOs to streamline collections through our Hathway Connect portal, as much as possible, there is still scope for improvement. We are also ready for “cashless” operation and promoting it to support India’s central government initiative. Our systems can accept all types of online payments from LCO or customer. We are constantly realigning our business to be able to monetize on digitisation.

What would be Hathway's total subscriber base? Are they all direct subs or also through franchisees/JV partners, if any?

We have a total subscriber base of more than 12 million including our JV partners and subsidiaries.

Does Hathway prefer directly selling to consumers or likes taking the JV route?

Both LCOs and JV partners have contributed to our growth and we acknowledge the positive impact both brings to Hathway. Each has their own strengths and we have been fortunate to be able to capitalize on the same. We will continue to operate using either LCOs or JV partners as per need to consolidate and strengthen our base.

With new video delivery techs, like OTT, coming in and catching consumer's fancy, how do traditional MSOs like Hathway remain relevant? What innovations do you need to do?

With the surge of smart phone consumption in India, we have over the last few years noticed a shift in viewership patterns. Consumers today are very discerning towards the content they view. There is a paradigm shift in wanting to watch content on the go like news and sports as averse to a daily soap.  The shorter format content is preferred over hour or half hour duration content. This phenomenon is more wide spread with the millennial groups and it is only fair to look at OTT as solution for this. OTT has the potential to tap into this entire younger generation and will help in brand positioning. OTT is definitely in the pipeline for us and we will be launching the service soon.

For an MSO, what are the other  areas of monetisation or earning revenues apart from traditional services like cable TV and broadband delivery into homes?

In cable TV, we are looking at innovative way of increasing the top line with value added services.  We have already launched paid value added services under the umbrella brand as Hathway Special. These services will be ad free and can create good attraction for customers. We are planning to expand these services up to 30. Beside these services, we also have our in house channels which can generate ad revenue as additional revenue stream. We are also trying to find new ways to utilize our EPG properties for advertising which can be useful to build up revenue further. At the moment, business is not profitable for us and we are looking at many avenues to improve the revenues so that we can re-invest into the business.

TRAI has floated a consultation paper on infrastructure sharing by various delivery platforms in India. is such a technically, financially and practically feasible?

There has not been much movement in this. It’s a good initiative and we are open to it.

That brings me to the issue of tariff structure proposed by TRAI, which has been put on hold due to a case in Madras HC, as to how does Hathway view the draft tariff proposals? Why are some stakeholders upset with the proposals?

The tariff structure proposed by TRAI will help in creating a level playing field for all as the consultation paper reviews the existing tariff arrangements and seeks to develop a comprehensive tariff structure for addressable distribution of TV broadcasting services across digital broadcasting delivery platforms (DTH, cable TV, HITS, IPTV) at wholesale and retail levels. If implemented, it will bring in more transparency and fuel growth by regulating the broadcast distribution system. The order will help to create a more symbiotic ecosystem unlike current price unregulated one.

Under the current dispensation, the broadcaster is free to negotiate every year with service provider for their content due to which there is year-on-year increase in content cost without any linkage to revenue generated by that content. It has reached to the level where it is becoming difficult for MSO to absorb this cost increase without affecting revenue from customer and market forces do not allow to increase revenue from customers.

We are hopeful that the new regulation will put things in right perspective. The new tariff order gives the consumers the power to choose what they want to watch and ensure content is being distributed with fair trade margin, thus balancing the entire ecosystem. This might be leaving the broadcasters with the fear of losing out on market share or reach of their channels and hence advertising revenues because of which they are opposing the implementation.

However, we feel that new tariff order will bring in much needed transparency in the distribution system in which every key member will be benefited. This forward looking order has been conceived to ensure growth in the industry while improving the current scenario for the broadcasters as well as for the DPOs. We are hopeful that the new tariff order sees the light of day and helps in regulating this entire ecosystem.

What are the expansion plans of Hathway?

While we are open to mergers and acquisitions, we will take viable and judicious financial decisions.  But, our main priorities are optimising our operational efficiency as it will help cut back on unnecessary costs for us. We are continuously devising innovative ways to increase efficiency while reducing cost. We are also continuously expanding and upgrading our technical infrastructure to improve customer delight and reduce customer churn.

Does it make business sense for an MSO to have in-house TV channels also? Does it add value and add to the revenue kitty?

This is one of the major differentiators between DTH and Cable TV. We are at an advantage over DTH due to adequate bandwidth that we have with the flexibility of adding in-house services. Not only does it help in creating niche content for our subscribers but also helps in generating additional revenue for us.

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