We researched the cable TV business in our locality to understand:
- The structure of the business
- How it works
- What changes it has gone through over a period of time
- How the coming of DTH affected the cable business
In the area around New Friends Colony viz. Sukhdev Vihar, Sarai Julena, NFC, Friends Colony East, Ashram, Taimoor Nagar, Bharat Nagar, Maharani Bagh. My report will try to summarise the first two objectives of the research.
Sukhdev Vihar and Kalindi Colony are middle class areas; most of the people here live in DDA flats and use traditional cable connections. Entire Sukhdev Vihar gets the cable connection directly from Home Cable because its head office is in Sukhdev Vihar. No LCOs are there in Sukhdev Vihar and very less people use DTH here.
New Friends Colony, Friends Colony (East) and Maharani Bagh are high profile area. People here mostly use DTH. Khanna (In Cable) is the only LCO in NFC but it’s big and well established. In such areas MSOs usually provide connections directly.
Taimoor Nagar comes under low income group area. Here people’s living standard is below middle class. Roads are damaged, lanes are very narrow and it is very difficult for a MSO to reach there directly that’s why a number of LCOs are there. Most people here live on rent and this is possibly one of the major reasons of high demand of cable connection.
Bharat Nagar is also a lower middle class area but it is better than Taimoor Nagar. Here also most people use Traditional cable with set top boxes because a considerable amount of population specially students live here on rent.
We interviewed both the cable operators and customers. Questionnaires used in the interview were sometimes structured but most of the time they were unstructured. We started our research with close ended questions in order to get the rough idea of the business and when we got the outline of the map we proceeded with the open ended questions to get in the depth of the business. Sometimes, we cross questioned the cable operators to get the exact figures because most of them were not ready to give the right information. For our archival research we went to the post office where we got the list of all the registered cable operators of our study area with the help of which we came to know that which are legal and which are not.
Satellite is the main broadcaster which provides feed to either multi system operators (MSOs) or to independent cable operators (ICOs).
MSOs are the big players in the market they either provide connection directly or they give connections to franchisee or local cable operators (LCOs), because it is difficult for them to reach each and every place.
ICOs are also the big players but not as big as MSOs. They provide connections either directly to the homes or in some cases to the LCOs, but they don’t have any franchisee.
Franchisees are small cable operators and they run their business by the name of that MSO from where they get the feed. Sometimes they take connection from more than one MSO in order to avoid problems like electricity, dues etc. They don’t have their own name.
LCOs are small cable operators which provide connection to a very small area. They also get the feed from MSOs but they run by their own names.
MSOs in the Study Area
Home Cable Network Private Limited: The name of its owner is Vicky Chaudhry and it was established in 1991, most likely at the time when cable was introduced in India. This MSO covers the largest part of our study area viz: Sukhdev Vihar, NFC, Friends Colony (East), Maharani Bagh, CSIR Apartments, CRRI apartments, Taimoor Nagar, Bharat Nagar, Sarai Julena. According to their accounts department they serve approximately 6.000 households but when we saw on their website the figure appeared was 68,000 which in any way doesn’t match with the prior figure. This kind of disparities can be seen in other figures also because the cable operators never tell the truth specially when you go to them and say that you want to know about their business but you can possibly get the information from them about their competitors. So if you want any information about a cable operator do not go directly to them but go to their competitors. It has its head-end in Sukhdev Vihar from where they operate their entire business.
Hathway Cable and Datacom Limited: It is the only ICO in our study area. It was established in 1995, four years after the Home Cable was established. Its head-end is in Mumbai. We can say it a franchisee of the Hathway Cable because it is not limited to Delhi only, but has a national reach and the people who are running it in Delhi are not its owners but they are the branch of Mumbai based Hathway Cable business. It serves only Maharani Bagh, Taimoor nagar and Kalindi Colony (in our study area) which is around 6,000households.
IndusInd Media Communications Limited: It is the recent MSO, established in 2002 but has penetrated pretty well. It is the second largest MSO in our study area after Home Cable. The areas under its range are Maharani Bagh, Jamia Nagar, Kalindi Colony Bhagwan Nagar, Sukhdev Vihar, Taimoor Nagar, Okhla.
Spectra: It is not in the market yet but it is the emerging one.
LCOs in the Study Area
Malik Communications (Home Cable): It provides connections to the larger part of Bharat Nagar which is around 1,000 households.
Bhola Cable (Home Cable): It serves only 80-100 households in Bharat Nagar.
Ninder (Home Cable): Oldest LCO in Taimoor Nagar which initially use to cover the area up to Maharani Bagh but as the cable business evolved new players stated coming into the field and it remained confined to only small part of Taimoor Nagar (around 800 households).
Ishwar (Home Cable): It is very small LCO in Taimoor Nagar and serves only 80–100 households.
Kamal Communications (Home Cable):Nil
Hathway doesn’t have any LCO.
Kamat (Indusind Media Limited): It is the largest LCO in our study area, situated in Taimoor Nagar.
To start a cable business you have to go through the process of registration otherwise your business will be considered as illegal. In order to register you have to submit the following documents:
- Identification proof
- Recent electricity bill as an address proof
- If you are living on rent then you have to submit a NOC (no objection certificate) from the owner of the area you are operating out of
- List of the channels that you’ll be providing to your customers
All the above documents must be varied by the police and the end you have submit the registration fee also which is Rs. 500.
Number of channels provided by the MSOs and LCOs is almost the same besides the private channels which varies in each case. All of them provide 84 free to air (FTA) channels and charge for the rest. South Delhi is CAS (Conditional Access System) since 2006.
The difference in the number of channels is not much. Even though MSOs are in collaboration with broadcasters they do not hesitate to provide the opponent’s channels.
The content of the MSOs is broader. They generally have their own editing department and marketing department for advertisements. LCOs mostly show movies on illegal channels.
Despite South Delhi being a CAS zone, the LCOs give the customers access to paid channels illegally without extra payment. This leads to disappearance and re-appearance of the paid channels and bad signals also.
We can see the difference in the monthly charges of different cable operators which possibly depends on the socio-economic condition of the area, demand of cable and distance to be covered. They also provide concessions if we take more than one connection at a place.
Private MSO Channels: Home Cable (Home Movie, Home cinema), Hathway (CCC, Win Movies, C News, ITV), In Cable (CVO, IIE In).
Private LCO Channels: Malik, Bhola, Ninder and Khanna do not have any private channels. Ishwar has Private channel named Manoranjan on which he shows movies to his customers. Kamat and Kamal also have private channels but these channels do not have any name. They also show movies on these channels.
There is a shift from analog to digital. Optical fibres are being used in the main line because they can be cut at any place. MSOs use optical fibres because they have to cover more distances. Small LCOs mostly use copper wire because of their local reach and it gives clearer picture also. Some of them have started using steel wires also because their business is reducing day by day and it’s much cheaper then copper wire.
Set Top Box is a device that converts the signal into content which is then displayed on the television screen. Set top boxes were introduced with the introduction of CAS in Delhi. Set Top Box is to catch the paid channels. We found huge disparity in the charges of set top box provided by different MSOs or LCOs (see table below). Different packages are also available to the customer according to their desires. According to some MSOs Electronic programming guide (EPG) is to be introduced soon.
The operators use the electric poles to supply their cable connection. As per the LCOs they have to pay regularly to the local government electrician. Wires are often seen travelling over residencies and often a monetary compromise between the household and the operators. Theft of cable connection is also spotted.
Revenue generation is mostly through subscription and advertising in case of MSOs but LCO’s revenue is generated through subscription only. LCOs do not get the advertisements possibly because of their limited approach.
Both MSOs and LCOs have to pay 12% entertainment tax to the government. MSOs have to pay an amount to broadcasters also which is a kind of rent and in the same way LCOs also have pay some money to their MSOs but it has been found that the amount payable to the MSOs is not fixed. In most case it is suppose to be 20% of the total amount received but it varies.
It was observed that MSOs generally are not engaged in any other job which is entirely different from their cable TV business mainly because of the two reasons; firstly, they do not have time for any other job and secondly, they don’t feel the need of it because they are getting enough money out of it. Although they provide internet connections it’s because they don’t have to put much efforts into it as they already have all the set up established. But on the other hand LCOs are mostly engaged in other activities which are there in the table below because for them this cable business is not sufficient enough to meet their living requirements.
Problems with MSOs
- Under reporting and revenue leakage.
- Wire cutting by opponents.
- Because of Common Wealth constructions constant unearthing of wires lead to disruption that’s why people are moving towards DTH.
Problems with LCOs
According to LCOs this business doesn’t have any future especially after the DTH (Direct to Home). They are not very happy with their business although they were before. Increasing competition is also one of the reasons. As per the LCOs it is game of money and muscle. One who has both these qualities can survive otherwise it is not an easy task. When we talked to them following problems came up:
- Customers do not pay the monthly fee at time.
- Initially LCOs use to give set top boxes on rent but customers started steeling the boxes because of which they now only sell them.
- Opponents cut the wire.
- Government has made CAS compulsory in south Delhi region.
- In area like NFC people prefer to have DTH because of the benefits mentioned below.
Effects of DTH
According to cable operators and consumers following are the benefits and shortcomings of DTH:
- Free from interference of any third party (cable operator)
- No problem of electricity cut or wire cutting disruptions
- Quality better than Cable
- Add on services given
- Cable is cheaper than DTH. Not everyone can afford it. Those who live on rent cable is always a better option.
- During rain and bad weather, DTH sjgnals are not very clear while cable transmission is unhindered by weather.
- Service is prepaid in case of DTH while it’s postpaid in cable.
- LCOs are threatened by the coming of DTH but MSOs are not and in order to resist competition from DTH, MSOs prefer tie ups with More LCOs. MSOs are trying to put add on services like movie on demand in order to beat competition.
- As per the MSOs, Cable TV business is a profitable one but LCOs say it has no future. Difference between the opinions of two is possible because of:
- MSOs have bigger market; their business is much larger than LCOs.
- MSOs generally go for bigger mergers and expansions compared to the LCOs
- MSOs get the advertisements which are a huge source of revenue in itself but LCOs don’t.
- MSOs don’t consider DTH a major threat while LCOs do.