Saving the cable TV business

There was a time in the telecom sector about 5 years ago, when the market was nearing saturation. Then the total sum of subscribers of all telecom service providers taken together was felt to be unnatural. Immediately it was felt that the user base was calculated by just the number of SIM cards sold, out of which many were not active. Later, when the active numbers were calculated, the actual user base again got distorted due to many customers having dual or even triple numbers.

Today, the cable TV industry is undergoing a similar situation, or even more confusing. Hardware vendors have not stopped selling and MSOs have not stopped buying. Post-NTO regime, many MSOs suddenly saw a drop in active set-top boxes. Initial suspect was DTH, but then DTH platform had not grown as much as the loss in number of boxes through the cable TV. Senior professionals blame it on the poor quality of service provided by the last-mile operators (LMOs), or some small MSOs. Intellectuals blame it on shifting of eye balls from TV to small screens.

Now the time has come for smaller MSOs and operators to provide a facelift to their business. There must be at least a provision for what they call a hybrid/semi-Android set-top box for the viewers willing to upgrade their viewing experience. Further, they should be ready to provide broadband services to keep pace with the progressive industry.

A normal customer is not easily prepared to pay for a same standard box, when the LMO wishes to change his signal feed. Here somebody has to put money for the boxes and it is normally the MSO, who is trying to poach viewers of another MSO. In such cases, the new MSO mostly selects a cheaper SD box. Here they can spend little more and seed the upgraded boxes. Broadband and VAS would surely raise their monthly revenues, a portion of which can be earmarked toward maintenance of standard of quality, eventually preventing the existing base of viewers from fleeing to other platforms.

The role of hardware vendors has so far been of lowering margins in the present sluggish market and making promises for after-sales services. They can and must come up with upgraded versions with little price variations.

Pay-broadcasters have played a dual role till now. TRAI made rules for raising the standard of common platform for betterment of the industry and the viewers. Unless prescribed standards were maintained, broadcasters should not have provided their signals to any DPO/MSO. But they mostly tried to safeguard their revenue by turning a blind eye and generating violated rules, with changing business behavior, depending on situational suitability.

Maintenance of standards is the job of the government, they said. And the government machinery down the line was not ample or properly equipped to safeguard the prescribed standards across the country. As a result, the market saw the mushrooming of ill-equipped, small MSOs. At the same time, properly equipped bigger MSOs fell victim to the ground price wars and found it difficult to grow up to a satisfactory level of connections or to maintain a healthy EBITDA. In that case, many of them reconsidered before rolling out value-added services, and kept at bay subjects like triple play.

It is time for broadcasters to do self-introspection with regard to the perceived high-priced flagship channels in preparation of budget-friendly bouquets. Revenue is the essence, but they must not forget to compare smaller revenue from ground versus larger revenue from advertisements, which is directly proportional to availability and eyeballs.

Further, marketing wings of pay-broadcasters should flex their muscles on ground for effectively presenting their content before the viewers with a combination of both ATL and BTL activities, than wooing the last-mile operators. Expecting the operators to sell a pa- channel is wastage of time and energy. Let us adopt the FMCG sales model and concentrate on secondary sales by apt reaching of communications.

Combined will and efforts of all the stakeholders are necessary at this point of time to safeguard the overall interests of the cable TV industry.