Digital TV: Digit interviews Airtel’s Shashi Arora

Digital TV: Digit interviews Airtel’s Shashi Arora

The way you watch television changed considerably when Direct To Home (DTH) services arrived on the scene a few years back. You were no longer at the mercy of the cable operator. Now things are set to change again, with the deadline for Digitization of the cable TV networks looming large.

We speak with Mr. Shashi Arora, CEO – DTH & Media at Bharti Airtel to understand how digitization will change the landscape of the broadcast industry, the rapid shift towards High Definition channels, and the taxation issues that the DTH operators face.

Is digitization a boon for the industry? Or will the current issues like under-reporting by cable operators still continue?
Digitization of cable network will hugely benefit the entire ecosystem consisting of the government, broadcasters and consumers. For consumers, this translates into wider choice of TV channels, better quality of transmission, increased value added services and paying for what they view. For the government, greater customer declaration will lead to better tax compliance and tax revenues. Lastly, broadcasters will enjoy a reduced dependence on advertising revenues with subscription-based services as well as a lowering of carriage fees. I think digitization is a must for a country like India as remove the biggest issue like underreporting and is a win-win situation for all stakeholders.

How big is this opportunity for DTH as an industry to gain new subscribers?
India has about 148 million television households of which 85% (126 million) come under the cable and satellite (C&S) connectivity. Of these C&S homes, cable reaches to 80 million homes, while the rest are connected by either DTH (around 41 million) or digital cable Set Top Boxes (5 million) or Internet Protocol TV (around 0.05 million). Hence there is a huge untapped market for operators offering digital content with over 100 million homes waiting to be converted to a digital platform in 3 years time – the largest in the world at this point.

Will it be possible for Airtel’s DTH offering to compete with the cable operator in terms of pricing of channel packages and the one time cost of buying the hardware?
A regular SD box from Airtel digital TV costs as low as Rs. 1590, which includes installation charges as well. We also offer a year warranty on Set-top box maintenance. We offer more than 300 channels. Compare this with the cable offering which will be a shade lesser than the prices but lesser number of channels. Also, to ensure money is not a deterrent for customers – we have a national entry tariff point ‘Value pack’ which starts at a nominal price point of Rs. 158 taxes and comes with 191 channels and services. There is a special entry pack for the 5 south states package called ‘South Super Value pack’ which starts at Rs. 140 taxes and comes with 119 channels and services. DTH platforms offer value for money. Apart from pricing, I am certain that Airtel digital TV scores over cable in terms of multi lingual 24×7 Service accessibility, technology advantages like latest MPEG4 DVB S2 technology, 7.1 Dolby digital Plus surround sound, Universal Remote, Weather Proof Signal Capability, more than 300 channels and services, Highest number of HD Channels, exclusive Airtel movie channels and many more

DTH operators have always been on the wrong side of service tax structures. Is that hampering the ability to offer services at even lower rates?
Yes. Currently, about 33% of the monthly tariff realisation from the customers goes to the government in the form of taxes and fees. For an industry that is today an ‘essential’ service, this high incidence of tax is detrimental to the consumer and the industry. I am sure that if the taxes are rationalised, the customer will experience digital content at a much lower price points. The tax structure has to be made a level playing field with cable for DTH industry to compete.

If the tax structures are a burden on DTH operators, why not just increase subscription costs?
The DTH industry is already under severe pressure on cash flows and profitability because the STBs are sold at below cost price since the benchmark is the cable market. We are competing with the local cable operators who give new connections with almost zero charge and provide artificially depressed tariffs due to 80% under declaration. This has forced the DTH industry to give new connections at a highly subsidized rate. If we simply increase the cost, our services will become highly uncompetitive compared to the cable operators. Unless there is a level playing field with cable, DTH industry will continue to bear enormous losses.

With regards to channel offerings, how many new channels (HD and SD) and services can we expect on the Airtel Digital TV platform? We are hearing that some rivals are facing a transponder space crunch, but Airtel has two satellites in operation.

We have added more than 80 channels in the past 12 months. We will continue to add more channels keeping in mind the consumer requirements of each micro market.

We have planned ahead and have adequate capacity planned. However, in a country with 815 approved channels and 13 official languages, there will always be a need for additional transponder capacity. As more HD channels come up the demand for transponder capacity is going to go up further.

How big will the space issue be in the future, considering most popular channels will be available in the HD avatar as well? How does Airtel Digital TV plan to handle this?
Space will be a near term constraint for all operators given the emergence of HD channels.

While we have the highest number of HD channels amongst all operators, transponder capacity will always be a scare resource in a content rich country like India. I guess the only solution is to plan well in advance to ensure that we create adequate capacity for our needs.

Tapping regional markets has always been an issue for most DTH operators. Could we see a change in that, or will the regional operators, the likes of Sun Direct, remain strong in certain regions?
I think it circles back to the level playing field debate. If the regulation ensures a level playing field in terms of wholesale pricing and tax regimes, there is no reason why we cannot complete with all types of operators.

We have seen on-demand services arrive on the DTH platforms. When will they be launched on the Airtel Digital TV platform? What new services could we expect next?
We have been building our interactive TV applications portfolio. Currently, we have a very strong games application with a significant consumer base. We have also have added several new iTV applications in the past 12 months like iFasal, iDarshan, iKidsworld, iEnglish and iRadio. Beyond this, we have a powerful SVoD and PPV channels under Airtel Movies. The idea is to have the right applications appealing to each segment. We continue to explore and invest in newer products and applications to drive differentiation, consumer engagement and revenues.

What kind of growth is the DTH industry expecting this year? What will be the main reasons for this?
According to market estimates, DTH subscribers’ base in India is growing at a CAGR 18% and is expected to surpass 41 million by the end of March 2012. The industry has been growing at 11 million or thereabouts for the last 3 years. This year with the CAs implementation in 4 metros, we expect a slightly higher industry growth.

Can we expect more players in the DTH space this year? Or has the market stabilized with the current players going strong?
The DTH industry continues to bleed heavily because of 33% taxation/fees regime and having to compete with local cable operators, subsidizing new connections and leading to depressed tariff plans. In the global scenario, there are not more than 2 pay DTH operators anywhere including USA, which is the second largest DTH market of the world. We in India have 6 pay DTH operators and 1 free DTH operator. How many more do you think will have the financial appetite to enter into a loss making business?


Shashi Arora, CEO – DTH & Media, Bharti Airtel


Vishal Mathur

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