DTH Market in India - Opportunities and Challenges

Abstract

India today stands at the verge of a revolution in terms of Television broadcasting. In December 2005, India launched the INSAT-4A, a new generation satellite that will give a major thrust to Direct to Home (DTH) services in the country. With 12 Ku-band transponders, the 3,080 kg INSAT-4A will be the first Indian satellite to meet the requirements of DTH television services. Though a country with 85 million television households, more than 44 million of them with access to cable, India presents a whole host of unique challenges, meeting which will determine the success of DTH. Drop in setup and service costs is making service delivery cheaper for the service provider and the drop in settop box prices have made DTH viable to Indian users. With the mandated introduction of CAS (Conditional Access System) on cable networks in India, cable television services are becoming more expensive thus bringing the gap between overall cost of service down. India has a large un-tapped market of households that do not subscribe to cable and also large areas where the terrain makes cable un-viable. The Indian Government regulations on DTH mandate that Indian Satellites be used for DTH services, allow foreign investment of only 49% in the venture, steep license fees and revenue sharing clauses and ban on adult content. Also subscriber management systems and open architecture set-top boxes are being recommended. All these directly impact rollout of DTH services and it’s profitability. While the major competition for DTH in India will come from the incumbent cable television network, new technologies like broadband and IP TV are already posing a threat. The service model chosen by the DTH operators will have a big role to play in winning over the “price sensitive” Indian household. Subsidizing of set-top boxes is not happening in a big way and the debate between open and closed architecture set-top boxes is still hot. In our opinion, the battle for the television airwaves in India will be fought based on 2 C’s, Content and Cost. Content gains importance considering the rich cultural and language diversity in India that makes regional programming attractive and due to the impact of the huge Indian film industry – “Bollywood”. DTH also faces the challenge of “switching” cable subscribers to their service by being cost competitive with a higher value offering. The Indian Space Research Organization (ISRO) has big plans already on the anvil for future satellites that will give more transponders for DTH transmission. The INSAT-4A launched in December 2005, is being followed by the 4B, 4C, 4D and 4E. India with 15 percent of the world’s population, large untapped markets for television and an upwardly mobile middle class is definitely a huge opportunity to be tapped provided service providers address India’s diversity, pricing issues and adapt to government regulations.