The problems surrounding the cable industry seem endless at the moment. The industry is too fragmented to put up a meaningful fight against the DTH pack. What more can be expected when 80 million cable TV homes are being serviced by more than 60000 cable operators and 6000 MSO's. Worse, the top 3 of the industry - Hathway, WWIL and Incable address only 25% of the market with the rest being taken care of by (mostly) unorganized players. So easy is the entry in this market that someone with an approval from the head post master of that area can launch a service. Recently the Tamilnadu government launched its own cable network by the name "Arasu". One has to question the independence behind this decision of the government to become an MSO itself. Further to this comes the aspect of technology. 90% of the cable networks in the country are analog in nature. Meaning they cannot carry more than 90 channels (post migration to HFC) with the existing network capacity. It is fair to say that the industry is in the middle of a massive digitization drive converting their existing networks to IP - but only time will tell whether the efforts are too little too late. Promises of pay-per view, red-button, video on demand don't seem too far but the key question is when will they reach the critical mass. With a installed set-top box, a digital cable TV network promises to deliver more than 1000 channels. Arrival of DOCSIS 3.0 compliant cable equipments are definitely a step in the right direction for the industry. What we comfortably forget is that the cable operators hold a substantial chunk of Internet subscriber in the country. They are till date best positioned to leverage on their existing networks which already deliver video(TV) and data (broadband). With further evolution of FTTC or FTTN networks in India, they are the closest to making the Indian IPTV and triple play dream a reality - but the question still remains, who will drive this in a fragmented and cash starved industry. Some years ago, CAS implementation promised to bring in some much needed relief - but lack of political will seems to have put it on the back burner. But these are not all. Years of distrust have also created a lot of bad taste between the TV channel owners and the industry.
In the initial few years of cable TV revolution in India, most of the channels were available free to air. This was both to increase the viewer base and help in better penetration on the Cable industry. Once channels thought they had substantial chunk of the user base, they turned pay channels. Since the structure of the industry is such that the cable operator pays the channel owners on a per subscriber basis, what followed was massive under reporting of subscriber numbers. The cable operators under reported to MSO's who in turn under reported to the pay channel owners. This lead to frequent squabbles between them leading to blackouts ahead of key television events (often sports). In order to cover their costs, the channel owners further increased the rates of their channels which lead to more under reporting. Lack of proper audit mechanism for subscriber numbers is one issue that digitization promises to address. Although the top 3-5 players of the industry are showing interest keeping long term gains in perspective , the more fragmented part of the industry is unwilling to migrate to digital networks - more because of the lack of knowledge of the advantages that digitization would bring. Its not just the pay channels who are unhappy but newer channels who are having to pay astronomical carriage fee to these operators. An extremely skewed demand supply ratio has sent the carriage fee of all channels skywards. There are constraints on the number of channels an analog cable TV platform can carry. Pay channels are generally allotted the premium bands but every other day, there is a new channel vie-ing for the slot of a pay channel thereby pushing the fee upwards. One wonders what is prompting the business leaders to launch new channels left, right and centre when the bandwidth choc-a-bloc is not expected to clear at least until 2010. Here again digitization seems to be the answer. The Content owners are hoping that DTH penetration increases at a faster pace as they are confident that even after digitization of some cable networks, a major portion of the cable industry will still reel under analog platforms.
The flag bearers of the cable industry today are maintaining that they are on par with the DTH players as far as innovation is concerned and their industry today lacks only a face for selling their products. Dish TV has Shahrukh Khan whereas Tata Sky has Aamir Khan among a whole host of other small artistes. But the situation on ground suggests otherwise. As already mentioned, these operators already have a key pipe laid into people's homes through which they can push various other services - with minimal capital investments from the subscriber. Next comes the mobile opportunity - these operators will be under gross disadvantage if they dont leverage on the wireless opportunity when the 3G/BWA auctions get underway. By the time they get their act together and once the consolidation effors reach maturity, one whole line of business will be past them and they wouldnt even know when it went by. It is difficult to blame them because they need to address some much more important short term priorities which threaten their survival before thinking of the long term.
