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DTH players were on a dream flight in India so far, but the delay in rollout of Phase II of CAS has dampened expectations. vareen gadhoke ray & surbhi chawla discuss the upcoming trends and how DTH players can make them count

When Direct-to-Home (DTH) first came along, it brought the promise of streamlining the highly fragmented pay-TV market in the country, which had hitherto been the stranglehold of local cable operators (LCOs). All that the players really had to do was conquer, which they continue to do, through mud-slinging, comparative advertising and even some cheap ground level tactics. DTH was a very welcome platform for broadcasters and media houses, which were fighting these LCOs on the grounds that they were not declaring their total subscriber base. The launch of the first phase of Conditional Access System (CAS) brought more transparency, thereby aiding higher yield in subscription revenues. But the launch of the second phase of DTH, which was to make CAS mandatory in more areas of the country, has been delayed quite unexpectedly. This has stymied their dream run, and slowed down their onward march quite considerably. In such a scenario, what does the future portend for these players in India?

DIRECT TO HELL OR HEAVEN

The future of pay-TV in India is being driven by media owners and distributors, which are expanding market share with an eye on profits, rather than at the expense of profits. The major concern for this sector was that at a very nascent stage, seven major players (Dish TV, Tata Sky, BIG TV, Airtel Digital, Sun Direct, DD Direct and the newly launched Videocon d2h) along with organised CAS operators (like Hathaway and Sify) were slugging it out to get the maximum share of this growing pie. As a result, the first phase of growth saw the basic DTH box being offered at a subsidy, and at times, even virtually free of cost to catch hold of the early adopters and get them to experience this new wave of technology. The plus point of this can be seen from the fact that the Indian pay-TV sector generated sales to the tune of $6.5 billion for financial year ending March 2010 [Media Partners Asia (MPA)].

However, thanks to the continously intensifying tussle among the players, the sector is facing the same fate as the telecom operators. DTH players too are unable to garner as much in ARPUs. The tempering of their enthusiasm due to delay in Phase 2 rollout make it worse.

Yet, all is not lost. As per projections by MPA, the industry is expected to touch $12.1 billion by 2014 and $18.5 billion by 2020. In terms of volume, broadcasters and LCOs are most likely to lead in the long-term, while LCOs and cable multi-system operators (MSOs) will lead in terms of margins. Vivek Couto, Executive Director, Media Partners Asia, avers, 'Cable MSOs will probably face the most challenging future. Nonetheless, most national MSOs will be able to forge stronger last-mile links with the consumer for the long-term, with positive implications for future funding as well as large-scale deployment of digital pay-TV and broadband.' Furthermore, Indian pay-TV subscribers are expected to grow from 105 million in 2009 to 149 million by 2014 and 173 million by 2020.

THE TECHNOLOGY GIMMICK

On the question of who will make money, differentiation in services and products would help in 'unlevelling' the playing field. The next wave of growth for DTH would undoubtedly be paved by superior technology and advanced features, not to mention high quality content. Even in the developed countries, technological advancement is helping drive the next phase of growth. 'As a matter of fact, in UK, almost 60 per cent of all DTH boxes are DVR boxes and the expectation from the Indian market is huge,' shares Alan Dishington, GM, NDS India. The silver lining for the operators is that the digital video recorders (DVR) or the HDTV boxes that are being offered are not massively subsidised. 'The launch of Reliance Big TV HD DVR is part of Reliance Big TV's relentless pursuit of quality and profitable growth by blending the best in technology, content experience, reach and service,' says Sanjay Behl, CEO, Reliance Big TV.

But this can also become a me-too game in some time.

Content exclusivity will be another important game changer. Sanjiv Kainth, country manager, India and South Asia, IRDETO, agrees, 'There has to be a certain amount of exclusivity of content allowed to fuel competition and differentiate product offerings of the various operators... else it will be difficult for the ARPUs to increase.' Understandably, content providers are quite upbeat about the new opportunities that have opened up in this sector. A case in point is the upcoming FIFA World Cup and how Tata Sky, Sun Direct and Dish TV have already announced tie-ups and promotional packs to cash in on the greatest football jamboree. States Jawahar Goel, MD, Dish TV, 'We've strategically timed the launch of our HDTV box to coincide with FIFA. Later, we also plan to get Commonwealth Games on the HD platform.'

A DIGITAL QUAGMIRE

Being a low ARPU and cost sensitive market, the addition of new subscribers is very important for the growth and sustainability of the DTH business in India. However, the subscriber churn is of high concern to all operators. DTH operators are focussing on innovative offerings for better retention and ARPUs. Adds Salil Kapoor, COO, Dish TV, 'In the last two years, we've been working very hard to deliver quality service. '

The pay-TV market is not something, which will remain static in the long run. The growth will be fuelled not only by the new subscribers but also by the existing ones who migrate to a higher level of services. India is a huge market and the volumes will be there for some time to come. While the Phase II delay does affect their plans, DTH players will have to win their battles on technology and content.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Terror regroups

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The army might have uprooted many militant groups operating from Pakistani soil, but it has not deterred terror outfits from regrouping and striking back, writes Shahid Husain

The attack on Lahore's Jinnah Hospital on May 31 by the militants in an attempt to free their wounded fellow Moaz alias Amir Moavia, who was being treated there, amply demonstrates that malignant aggression has penetrated deep in Pakistan society. Moavia was injured during a recent attack on two worship places of the Ahmadis. The Ahmadis are considered religious outcasts of sorts by almost all the Muslim religious factions, though the Pakistan Constitution asserts they are equal citizens.

One of the Pakistan's top defence analysts, Dr. Hasan Askari Rizvi, explains the phenomenon and thinking behind the attacks in a conversation with TSI, 'The attack on Ahmadis puts forth two things: First, it was a soft target that the militants used to assert their ability to challenge the Pakistan state and the provincial government; secondly, it also relates to the extremely negative sentiments the orthodox Muslims have about the Ahmadis,' He adds, 'The militants must have thought that the people would sympathise with their action, which was actually the case.'

A large number of fundamentalist groups have cropped up in the impoverished Pakistan since 2001. Links between many of these new and existing groups have strengthened, say experts, giving rise to fresh concerns for stability. Successful army operations against the militants in Swat and South Waziristan under the leadership of General Ashfaq Pervaiz Kayani have forced militants to re-group themselves and co-ordinate with each other in more ways than one' be it in terms of logistics or collection of funds. Leadership elements of al-Qaeda and the Afghan Taliban, along with other terrorist groups, have made Pakistan's tribal areas their home and now work closely with a wide variety of Pakistani militant groups. They find many sympathisers amongst the educated middle and upper middle class.

Hassan Abbas, a fellow at the Asia Society, writes that Punjabi Taliban network is a loose conglomeration of members of banned militant groups of Punjabi origin that have developed strong connections with the Pakistani Taliban, Afghan Taliban, and other militant groups based in FATA and the North-West Frontier Province (NWFP). The Punjabi Taliban provide logistical support for attacks on cities in Punjab province and include individuals or factions of groups such as Jaish-e-Mohammed, Sipah-i-Sahaba Pakistan, and Lashkar-i-Jhangvi and their various splinter groups, along with small cells unaffiliated with any large group. The Punjabi Taliban are distinct from the traditional Pashtun Taliban, experts say. They are usually more educated and more technologically savvy.

Since there is also greater coordination between all these groups, say experts, lines have blurred regarding which category a militant group fits in. For instance, the Pakistani Taliban, which were committed to fighting against the Pakistani state, are now increasingly joining insurgents fighting U.S. and international troops across the border in Afghanistan. U.S. Central Command Chief General David H. Petraeus, in a CFR interview, says the groups have long shared a symbiotic relationship. 'They support each other, they coordinate with each other, sometimes they compete with each other, `and` sometimes they even fight each other.' The pressure exerted by the US government on the Pakistan army and government is making things worse, pushing Pakistan to a journey towards the unknown. The ruling classes in Pakistan are happy that they are being provided massive 'aid' to fight the militants, despite the fact that the country is being run on the loans extended by the International Monetary Fund (IMF) and the World Bank. Peter Symonds, a frequent contributor to Global Research, wrote an article that was published on May 16, 2010 titled: 'America's War on Pakistan: US Warns Pakistan of Severe Consequences'. It reads: 'The Obama administration has seized on the failed car bombing in New York's Times Square on May 1 to insist that the Pakistani military step up its war on Islamic militants and extend its operations into North Waziristan. The US demand is being backed by thinly disguised warnings of economic reprisals and military interventions'.

In a CBS interview recently, US Secretary of State Hillary Clinton said: 'We've made it very clear that if, heaven forbid, an attack like this that we can trace back to Pakistan was to have been successful, there would be very severe consequences.' Under interrogation, Shahzad has allegedly admitted training in Taliban camps in North Waziristan, although the amateurish character of the bombing attempt indicates otherwise. A Tehrik-e-Taliban spokesperson has denied any involvement. Is the alleged terrorist an agent provocateur providing an alibi to proponents of 'Long War' to intrude into Pakistan after Iraq and Afghanistan?

An American analyst wrote recently that the US leadership itself creates a monster, then inflates it and then fights it. How true is it for Osama bin Laden?

Clinton is also insisting that Pakistan and India shun their differences. Nobody differs from such pious assertions. But how come Clinton, or for that matter any other US leader, suddenly becomes a peace nick? The motive seems to be simple: Pakistan armed forces should concentrate on 'war on terror' rather than look with scepticism towards India with which it had fought four unproductive wars during the last 62 years.

General Kayani is reluctant to open another front in North Waziristan. 'It seems Pakistan would undertake an operation in the North Waziristan, but at the time of its choosing. The Pakistan military wants to consolidate its position in Orakzai, Khyber and Bajaur before launching an attack in North Waziristan. It may take a couple of weeks, if not months,' Rizvi believes.

'Pakistan's economy is on the verge of collapse, with gross domestic product falling from more than 8 per cent growth in 2005 to under 3 per cent last year. More than $3.5 billion in US economic and military assistance is in the pipeline, and a nearly $8 billion International Monetary Fund agreement and a $3.5 billion World Bank financing package are pending,' writes Symonds.

Faced with a severe energy crisis, hundreds of thousands of loom workers in Pakistan are likely to be laid off. Inflation has crippled not only the working classes but even the middle classes. One find thousands of low-income employees having food at free food centres run by eminent social activist Abdus Sattar Edhi because they can't buy food with their meagre salaries.

The ruling elite look the other way. The economic and political turmoil can push the people of Pakistan towards anarchy since forces that could resist malignancy either do not exist or are too weak and fragile.


An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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