With the March 2017 deadline, all analog signals have been switched off in the entire country. However, it seems that it will take at least 69 months before India can declare to be a digitized nation.
The Indian television industry with more than 170 million television households ranks as the second largest market globally after China. The distributors, comprising local cable operators (LCOs) and multi-system operators (MSOs), direct-to-home (DTH) service providers, IPTV service providers, and terrestrial TV service provider (Doordarshan), play an important role, operating as the key intermediaries between the content providers (broadcasters) and end consumers (subscribers). While, under a digitally addressable cable TV system (DAS), MSOs decrypt signals supplied by broadcasters via satellite and pass them onto LCOs, who act as local retailers offering last-mile connectivity through set-top boxes (STBs), in the DTH space, encrypted signals supplied by broadcasters are directly decrypted by end users. However, over the years, limited bandwidth availability and lack of subscriber addressability had resulted in the concentration of bargaining power with the LCOs providing last-mile connectivity to the subscribers. The implementation of the DAS mandated by the MIB (Ministry of Information & Broadcasting) over four phases seeks to plug the gaps in the distribution value chain, improve subscriber addressability, and improve content monetization for distributors with higher bandwidth availability.
The mandate was, in Phase-I digitization of TV households in the four metros, Mumbai, Delhi, Kolkata, and Chennai; Phase-II focused on the 38 top cities with a population of one million-plus; Phase-III focused on the rest of urban India; and Phase IV therest of India; primarily comprising of the rural, unorganized part of the country.
While Phases I, II, and III saw reasonable success, the 61.08 million TV homes across the country (Chrome Data and Analytics pegs this figure at 89.5 million households.) under Phase-IV are far from digitized. In any case, in accordance with the MIB notification, all analog signals have been switched off on March 31, 2017.
Among the states to be covered in DAS Phase IV, Tamil Nadu has the highest number of TV homes, with 8.15 million households followed by Andhra Pradesh and Telangana with 7.6 million TV households. The other states included are Kerala with 4.77 million TV households and Karnataka with 3.8 million. Other states are Maharashtra and West Bengal, totaling 4.92 million and 3.86 million households respectively, while Uttar Pradesh has 5.99 million TV households.
According to MIB, 64.4 million STBs were seeded in Phases III and IV areas of DAS, excluding Tamil Nadu, which meant 67 percent of the total requirement. Thus, 33 percent STB seeding was left to be done before the deadline of March 31, 2017. For Phase-IV, actual seeding data was up to 50 percent, as some MSOs have not been filling seeding data in spite of repeated requests from the ministry.
In Tamil Nadu and Andhra Pradesh, there are still 30 percent analog homes, which translate into 27 million households, as per Chrome Subscriber Establishment Survey (SES).
Tamil Nadu has remained a challenging market since the rollout of Phase-I, nonetheless, the state reported seeding of
2.9 million STBs in Phase-II as against targeted households of 6.6 million. The center has recently issued Digital Addressable System (DAS) license to the Tamil Nadu Arasu Cable TV Corporation Ltd. (TACTV). This should take care of its 7.052million subscribers across Tamil Nadu.
"For Arasu to order the set-top boxes, seed them, and activate them will take time; also to reach every village and operator, it might take a year.The whole TN is connected by them. My sense is that procuring STBs alone might take about three to four months. Andhra Pradesh too is a huge and a tough market. While, on the other hand, Punjab might happen in next two months. It is a highly digital market," comments Anuj Gandhi, Group CEO, IndiaCast.
In states like Madhya Pradesh and West Bengal, there seems to be a shortage of set-top boxes. Besides, some of the interconnect agreements between MSOs and broadcasters remain pending. In the election states – Manipur, Goa, Uttar Pradesh, and Himachal Pradesh – the progress of digitization was very slow. Only after the results came out, some action was seen in these markets. Parts of MP, Chhattisgarh, Orissa, and Haryana still have active analog signals in rural areas, says the Chrome survey.
It is not an easy task by any standard. The region is too vast and spread out, and tough in topography and expanse. In fact, even the exact data on how many cable subscribers there are in these areas is not available.
As per the latest Chrome SES, 50 percent of rural India is dominated by DTH players, while 20 percent by digital and 30 percent by analog players. MSOs definitely see a drop in subscribers as DTH is taking shape in rural India. Free Dish dominates rural India with more than 23 million subscribers (25 percent market share) and it might come up as the biggest gainer during cable-dark period. Broadcasters are expected to see a drop in viewership contribution by rural India but as per ground movement, within a month analog households will move to either digital or DTH. As per Chrome, this is an opportunity for DTH players and a challenge for digital players.
Infrastructure sharing proposed by the TRAI would also provide answers. Some areas in Phase-IV will find connectivity through satellite communication, HITS, and cable operators. Smaller LCOs cannot afford to put big digital head-ends. Bigger players will have to do it and extend infrastructure sharing.
Digitization will allow for streamlining the business model and make it more transparent as per TRAI guidelines. Digitization would lead to the introduction of new services for customers, and new revenue stream for all stakeholders not just impacting the seeding of STBs but also delaying monetization of currently seeded boxes in DAS Phase-III and IV. This is further impacting overall earnings of not just the MSOs but also of the government.
Digital India is a dream which is over-arching and in step with taking India ahead. Digitization is not just about the cable TV Industry, it is more about bringing access of digital content, choice, and better services to customers. It is about building an inclusive system which gives power to choose the type and quality of content to customers.