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indiantelevision.com's Breaking News
 
BSNL, Reliance broadband threaten cable trade
 
Indiantelevision.com Team

(18 April 2003 2:00 pm)
 
MUMBAI: The broadcasting and cable fraternity is certainly not smiling. To add to their existing problems in an evolving market such as India, non-media companies are jumping into the entertainment delivery bandwagon.
 
 

Bharat Sanchar Nigam Limited (BSNL) has announced its foray into the broadband segment at a nominal fee of Rs 1000 per month and "free" set-top boxes. Another big gun, Reliance Infocomm, is also mulling its foray into the broadband entertainment sector.

A cable industry veteran says: "The threat of outside competition is looming large over the cable trade. The competition is not from the next-door cable operator or multi-system operator (MSO) who is eating into one's territory but from DTH (direct to home) and from telecom companies who offer broadband services."

Both these "attacks" come at a time when the cable industry is grappling with uncertainty related to the implementation of the conditional access system (CAS) and direct-to-home (DTH) television service.

BSNL, the country's largest telecom service provider, will offer broadband services in several cities in a phased manner by the end of 2003. BSNL will reach out to the service using existing last-mile copper wire connectivity and xDSL (Digital Subscriber Line) technology bypassing the fibre optic networks. Reliance Infocomm is also expected to make its foray around the same time. The content aggregation system for the project is already in place.

Cable industry sources say that these behemoths could wipe out the smaller cable operators. All these threats will lure away consumers (seeking content) from the cable distribution networks.

Also, broadcasters who want consumers to get into the habit (mode) of paying for content are opposing telecom operators who would offer TV content and other services under a single umbrella to consumer households.

A cable operator who is also a Reliance Infocomm mobile phone services user says (on conditions of anonymity): "Reliance is already aggregating content for its mobile telephony services and has joined hands with several content providers including broadcasters and news channels. Everything is available on the small mobile screen from the central server. It won't be difficult for Reliance to make the transition from the small mobile screen to the larger TV screen."

Jaideep Pujari, a software engineer, agrees: "The business of content providing has undergone a plethora of change with the digitalisation of content. Digitised content can be stored and distributed in various ways - DVDs, DTH, broadband, Internet, mobile telephony amongst others. There is a lot of flexibility and multiple options available in terms of quick data transfer. One need not depend on the traditional cable distribution system which has ruled India since the last decade or so!"

Industry observers say that companies such as Reliance Infocomm can leverage its fibre-optic network to provide a wide array of services to consumers. They feel that consumers will not be able to refuse a good offer from Reliance Infocomm.

"If Reliance offers a consumer a single package comprising wireless in local loop, mobile phone facilities, Internet broadband and cable TV services at a lower rate than what consumers end up paying for each individual service, will consumers refuse? Also, Reliance has deep pockets and will be able to sustain at lower margins or even losses for some time - but the cable operators will be wiped out if they offer such rates," says a cable operator from Mahim, Mumbai.

And the fear of the cable operators is very real. According to the information available with indiantelevision.com, one of the plans being mulled by Reliance is to sell a consumer the company's telecom services and throw in the cable service free as a sop. Later, these sops can be increased with newer services being offered - including gaming for children on cable as also on cell phones. Now if that happens, the friendly neighbourhood cablewallah can say goodbye to his business.

However, broadcasters have their own reservations against this kind of an approach wherein a telecom company offers content on demand. A programming executive working with a broadcasting company says: "If consumers can access content at their own convenience, then the concept of "prime time" disappears. Advertising revenues will be hit. Broadcasters won't be able to charge a premium for their content offerings and existing prices will remain static or dip. Consumers will get the option of deleting ads and TV commercials."

Telecom companies will ensure that households pay a fixed amount for popular movies and then will allow them to watch the same over a specified time interval - which could be as long as 24 hours!

Broadcasters want consumers to get into the mode of paying for content. Concepts such as interactive TV and Open TV are detrimental to their interests. One can empathise with them as programming costs are still high.

One cannot help remembering the words used by Sony Entertainment Television chief executive Kunal Dasgupta in an interview with a leading publication. "If you pay peanuts, you will get monkeys!"

Are the pampered consumers listening?

 
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