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The
Rupert Murdoch-controlled Star Group has always been
bullish on DTH in India. In 1997, the bullishness
had got them into trouble as the then government had
banned reception of KU-band signals (over 4800 MHz)
just to spite Star India that was bombarding the media
with information on its DTH plans.
The
situation has undergone a change in the sense that
this time round. Star has kept a low profile on its
proposed DTH venture. Rather, the media has almost
been blocked off on information on its DTH forays
or prospective Indian partners. But the business eagerness
still remains. It is apparent in
what Star Group's new CEO Michelle Guthrie, who took
over from James Murdoch last November, feels about
the potential of DTH in India.
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Star Group's CEO Michelle Guthrie |
In
an interview given to the Hong Kong-based Television
Asia magazine, Gutherie said that Star's Indian
DTH platform is a priority, as is "getting paid
for the subs (subscribers) we aren't getting paid
for."
Attempts
by indiantelevision.com to elicit an official response
from either majority partner (80 per cent) the Tata
Group or Star itself as to what is being served up
on the DTH plate have drawn a blank thus far. However,
informed sources have provided some details as to
just what's cooking.
DIFFERENT
PRICING FOR DIFFERENT REGIONS
Pricing is what can make or break a service provider
in a market as sensitive as India and this is an issue
that is getting a lot of attention.
A customer who takes the full DTH offering of 80 channels
is likely to end up paying Rs 400 on an average. As
far as the total hardware for installing DTH is concerned,
it would be just under Rs 5,000, the sources say.
This includes installation costs as well. There is
no indication, as of now, that the box is going to
be given away free, which was the route Murdoch took
for BSkyB in the UK.
Current
indications are also that the Star-Tata DTH packages
will not be uniformly priced but will vary from region
to region. While in South India, the basic tier is
expected to cost around Rs 200, this may not be the
price a customer pays for the same tier in another
region. This is because Tata-Star expect different
levels of penetration in different areas.
In
Mumbai for instance, even though demand is expected
to be high, there are technical problems that are
likely inhibit penetration. The biggest stumbling
block being the highly congested layout of Mumbai.
With most buildings and colonies in the metropolis
stacked up "cheek-by-jowl", it is no straightforward
task to position a potential customer's DTH dish antenna
where it can receive signals without obstruction.
Except
for the really upmarket localities in the city, most
areas are likely to face such difficulties.
One
point indiantelevision.com is still unclear
about, is whether the proposed DTH service would be
launched under the brand name of Space TV, the company
that had earlier applied for a license and had also
managed to obtain a letter of intent from the Indian
government, despite several question marks against
the company's shareholding pattern that flouted the
guidelines.
There
is also no official communication available whether
the new 80:20 joint venture has paid the Rs 100 million
bank guarantee, as stipulated in the DTH guidelines,
to the government though the buzz in the information
and
broadcasting ministry indicates that this has been
done. All that was forthcoming from the Tatas, the
majority shareholder in the DTH venture, was that
"when there is something to be communicated officially,
the media would be intimated about it." Similar
is the stand that Star is taking as well.
5
MILLION SUBSCRIBERS WITHIN 10 YEARS
According to Star's projections, when a business proposal
was made over 18 months back, the target would be
to acquire about five million subscribers in about
a decade's time.
This
plan may undergo some change considering that some
in the company now believe that the growth in the
number of DTH subscribers in India may be faster than
other places where DTH is a fairly established service.
Why?
A DTH service in India may outstrip conservative estimates
because of the lack of digital terrestrial service
in India and seemingly plateauing off of cable TV's
growth in Asia-pacific, including India.
Though
MPA estimates that in India a DTH service would manage
to acquire approximately seven million subscribers
in 10 years' time, a senior Star executive, on condition
of anonymity, hinted that if properly marketed, a
subscriber base of 10 million could be targeted in
five years time. Do the Tatas agree? The group is
said to be still firming up its numbers on DTH.
A
typical DTH operation is estimated to cost between
$ 400-500 million, but, according to information available,
the Indian DTH project has been calculated to cost
between $250-$300 million by Star. The project's business
angles are said to have been vetted by Ernst &
Young for the Tatas.
Again,
according to information available, the debt-equity
ratio of the DTH venture is likely to be 1:1, which
may change a little when the project actually gets
off the ground. The paid-up capital of the DTH joint
venture would be approximately Rs 8 billion.
The
service was slated to be launched by Christmas time
by the Tata-Star combine. But now with CAS being put
off by the government, on recommendations from the
broadcast and cable regulator, Trai, the duo look
to be thinking of advancing the launch date. To even
before Diwali, some say.
It
would help Star to tap additional subscription revenue
and also take advantage of the part conditioning of
people in the metros at least for paying for watching
TV channels.
Where
Star-Tata combine has an advantage is that the DTH
project can draw on the experience of BSkyB to go
in for unique and more effective marketing of the
service like subsidizing of set-top boxes heavily.
Dwelling
on the drivers for a DTH service, MPA's Couto points
out that aggressive subscriber acquisition is driven
by STB subsidies (partial or in BSkyB's case full
subsidy); premium and differentiated content (sometimes
exclusive such as Premier League Soccer on Sky in
the UK), intelligent packaging and tiering (simple
but gives people a lot of choice and makes it affordable);
customer service and marketing and, of course, deep
pockets and the ability to absorb long term cash flow
losses. "Two billion pounds were invested in
BSkyB, for instance," he adds.
Yes,
it's the financial muscle of Murdoch and the Tatas
that can give a tough time to Chandra and his Dish
TV. But it would be interesting to see which of the
three players manage to beam more direct and easily
into Indian consumers' homes.
Also
read:
What's
cooking on Dish TV?
The
International Scenario
FAQs
regarding DTH
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