Indian Cable Sector Heads for Shakeup
The move is significant for the cable operators, their telecom and satellite rivals, and equipment vendors, as the regulatory body is keen to encourage investment in state-of-the-art digital cable networks that can offer broadband Internet access, and believes a "supportive regulatory environment will facilitate the future growth... Emphasis has been laid on long term stable, organized, and supportive licensing framework to encourage innovation and investments in the sector."
Nearly all of India's 78 million cable subscribers receive only TV services delivered across analog networks, though there are about 370,000 customers receiving cable broadband services, according to the latest figures from the regulator. But now, in the face of increasing competition from satellite services and emerging IPTV services, the TRAI wants to see the cable sector upgrade its networks and systems and play a role in India's small but emerging broadband services market.
"Cable TV operators can contribute a lot in this direction as it will not only increase broadband penetration but will drastically improve Cable TV operators business model," notes the TRAI.
India's broadband market (which includes all connections at 256 kbit/s and above) needs all the help it can get. While the country has shown an almost insatiable demand for mobile services, uptake of broadband has been slow, with the country boasting only 3.87 million broadband users at the end of March this year, including the 370,000 cable modem users. Nearly 3.3 million use DSL services, while 110,000 get their broadband Internet access via Ethernet LAN connections, and 50,000 have fiber access links.
TRAI's recommendations for the cable sector include: a new licensing scheme, including separate licensing for local cable TV operators and larger multisystem operators (MSOs); mandates for all existing cable networks to be digitized within five years of the introduction of the new licensing regime, and full digitization within three years for any new entrants; "encouragement of advance transmission technology"; and an "emphasis on network digitization."
The TRAI concludes: "It is hoped that these forward looking recommendations will boost orderly growth of the Cable TV services in the country and will also provide new business opportunities to Cable TV operators for reaping the benefits of technological advancements." The regulator has requested industry feedback by July 21.
The news was warmly greeted by India's cable players, but executives aren't getting their hopes up just yet, as recommendations don't always lead to concrete action.
Vikas Bali, a company president at New Delhi-based Digital Entertainment Networks Pvt. (DEN), which has about 5 million cable subscribers, was working his way through the 154-page TRAI dossier when Light Reading called. He says the move is "forward-looking and progressive... It has some positive aspects," but adds that he would be a lot more optimistic if he knew that the "good intentions would become reality -- this needs to lead to actual regulation. There have been TRAI recommendations sitting with the government for years that have never been acted upon."
Digital Entertainment Networks, which has operations in eight regions around India and is backed by some unannounced private equity funding, is already investing in digital technology from NDS Ltd. , and providing subscribers with "high-end set top boxes," says Bali.
DEN's strategy is to upgrade its entire network to deliver triple-play services using a mixture of cable and telecom infrastructure, though the company has yet to make its infrastructure decisions regarding broadband access architecture. "We're currently ensuring that our cable services are of an international standard, and we'll move onto Internet and data services a bit further down the line," adds Bali.
— Ray Le Maistre, International News Editor, Light Reading
Interested in learning more on this topic? Then come to Broadband 2.0: Making the Business Case, a 2-day roadshow that will provide attendees from among India's fixed and wireless carrier communities with an exclusive and intensive overview of how broadband wireline and wireless services can be enhanced to improve ARPU, ROI, and churn. The event will be staged in New Delhi on September 10 and Mumbai on September 12.