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DTH: Dream or Delay? - Views on News from Equitymaster
 
 
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  • Feb 10, 2001

    DTH: Dream or Delay?

    Direct to Home services were recently opened to broadcasting companies in the country. We take a look at the implications, the reason for its lukewarm reception by the broadcasters and the possible gainers of a successful DTH transmission.

    What is DTH?
    DTH is a satellite transmission via a Ku-Band (as opposed to the C Band used for cable transmission currently). The Ku-Band satellite transmissions occupy the relatively higher 10 to 17 GHz frequency range. A higher frequency transmissions corresponds to shorter wavelengths and therefore a smaller antenna can be used to receive the minimum signal strength. This makes it suitable for homes in remote areas to pick up signals where cable networks are not in place.

    What are its implications?
    The implications of the introduction of DTH could be far reaching. For one, it could change the balance of power between the cable operators and the broadcasting companies. So far, it is the cable operator who holds the key to the revenues that the media companies earn in this country.

    This is because while a cable subscriber pays Rs 100 per month to the cable operator, the broadcasting company ends up getting hardly Rs 10 per subscriber. This, as Mr. Naganand, CEO, Convergence, Zee group, explained is due to the fact that the cable operators understate their subscribers.

    Assuming around 30 million cable and satellite homes in the country, the revenue for the industry works out to almost Rs 36 bn. Of this hardly 10% accrues to the broadcasters. DTH could change the scenario since signals can be transmitted to a home which were to install a 12-18 inch diameter antenna and a set top box, which means that an intermediary such as the cable operator would not be required. Then the user addressability would allow the broadcasting company to determine how many customers are buying his product. The broadcaster would then be doing the deal directly; the cable operator, if at all he can be called that, would just be running the ground infrastructure. He would become a mere distributor (for the broadcaster) who gets a commission out of that, not an intermediary as he is, at present.

    Will it take off?
    Why then has the industry reaction been so lukewarm when the broadcasters should actually be welcoming it with open arms? This is because between the time DTH was banned in 1997 and the present time, the face of the cable industry has changed.

    It is broadcasting companies who themselves have become cable operators! While Zee has big plans for Siticable, Star has taken a stake in the Rajan Raheja owned Hathway Cable. Similarly, Sun TV's promoters own Sumangali Cable, down South. These companies have spent huge amounts in setting up cable headends and are still spending more money for offering value- added services over their cable networks. Abroad, broadcasters are not allowed to control cable networks but in India the way the industry has developed, this has come to pass. Hence, though the broadcasters complain, on and off, about the moolah being raked in by cable operators, they are now themselves a part of the same industry. Hence it doesn't make sense for them to pour huge sums in setting up DTH infrastructure.

    Another reason for the non-enthusiasm on the part of the industry is the stipulation of a sectoral cap of 20% on broadcasting companies. While broadcasting companies were under the impression that the 20% limit on equity holdings applied to individual companies (witness the spate of joint venture announcements between Zee, Star and Doordarshan) a clarification that the cap applied to broadcasters as a whole (i.e. in a single DTH venture all broadcasting companies put together could hold only 20% equity) put paid to the limited enthusiasm that existed.

    Where DTH could make a big difference is that apart from providing connectivity to the nearly 40 m television households, which are not covered by cable TV, it could be used for broadcasting educational content via community viewing programmes.

    But that could happen if the costs for a DTH subscription are brought down significantly. At present, it could cost a minimum of Rs 15,000 just for the installation of the Ku-Band antenna and the decoder apart from the per month charge of almost Rs 400-500. Compared to that, a cable operator currently charges only Rs 150 per month but provides almost 100 channels.

     

     

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