2. Success ka digital highway
• Simply, use of addressable STB for Cable TV services.
• No cable TV services will be possible without STB. (Cable
or DTH)
• In 4 phase till Dec 31,2014
What is Digitalization & Deadlines
3. Success ka digital highway3
• Are Digitalization timelines firm?
• What is best option to GO DIGITAL
• How can I fight competition – DTH, Organised MSO etc.
• How and at what cost, pay content will be available.
• How to do DAS compliance. Is it very complex and expensive?
• Ownership issue of Network
• How Network can be monetized further. Broadband, VAS, HD etc.
• What is benefit of structured business.
• What is the best technical solution for STB, Headend etc.
• How customer will feel happy.
Key Concerns- MSO/LCO
4. Success ka digital highway
• MSOs
• LCO Management
• Billing and Collection
• Network Management
• STB Management
• Customer Management
• Broadcasters
• Government and the economy
• Consumer choices
• Cable Industry & Transformation
Impact of DAS Regulation
5. Success ka digital highway
MSOs
• Many of the large MSOs till now have remained heavily focused on inorganic
growth (mainly through joint ventures with smaller MSOs) in a bid to acquire
control over the last mile.
• The MSOs now face the challenge with respect to customer retention.
• For a secondary point acquisition, MSOs face the risk of losing the acquired
LCOs to another MSO; and for a primary point acquisition, there is the risk of
losing the end-customer to alternate technology platforms like DTH , HITS,
IPTV etc.
• With the necessary investments in digitization, MSOs get a direct access to the
customer end. The direct access to customers effectively shifts the
bargaining power from LCOs to MSOs.
• Lack of availability of funding for smaller and regional MSOs. A shift to digitized
regime will require large capital expenditure on digital head-ends, back-end
infrastructure, and STB installation. Regional and smaller MSOs, which account
for more than 50 percent of the cable TV market, finding it difficult to raise the
required capital .
6. Success ka digital highway
MSOs
• An MSO will have to redefine the potential role of LCOs in a digitised world
.However, a key question will be of how willing LCOs would be to relinquish their
stronghold over end customers and what measures are agreed upon between
MSO and LCO to protect LCOs existing income.
• MSOs will need to partner with LCOs for roll out of STBs, education of consumers
and servicing customers.
• LCOs will also play a role in collections and increasingly ARPUs.
• MSOs can use digitisation as an opportunity to enter new markets, but first,
they must protect existing markets from competition.
7. Success ka digital highway
MSO-LCO Management
• MSOs will have to redefine the exact roles/responsibilities of LCOs and what
financial offers/ Revenue share to offer to them.
• How LCOs should be involved in billing (who prints and distributes bills), or
collections (physical vs online collection options), new customer acquisitions (and
corresponding commission to LCOs), the installation/activation/deactivation of
STBs, handling of complaints (as a first point of call, as feet on-the-street to resolve
a complaint and service charges), and what their share in various revenues should
be.
• MSOs will need to finalize the agreement required for new understanding made
with LCOs.
• MSOs need to identify the training needs of LCOs’ existing manpower to service
their customer base and develop the technical capabilities to deal with digitisation.
The training aspects should center on the sale, installation, activation/deactivation
and billing of STBs.
• They will also have to ensure that the LCO and his team are able to up-sell their
packages and VAS offerings and defend their offerings from competition.
8. Success ka digital highway
Billing & Collection
• Billing & collection would involve various strategic decisions around bill generation, bill printing,
bill distribution, collection mechanisms and the updating of collections.
• MSOs will need to choose between a physical and virtual bill, depending on the associated cost
implications. In case of a physical bill, options such as ads on the bills can be explored to offset
printing and delivery costs.
• They also need to decide when to generate bills, where to print bills and if LCOs can handle
these aspects. Irrespective of strategy, MSOs would clearly be dealing with large volumes of bill
generation and distribution and, thus, will need to ensure timely and accurate bill generation.
• The collection of payments would constitute the next steps towards Tax compliances for STB,
Subscription revenue etc.
• This would involve training all customer facing personnel and ensuring that the collection data is
received in time and customer balances are updated on time when alternative payments/checks are
accepted, along with the timely transfer of data from credit card companies, banks .
• MSOs will also need to take decisions on the customer’s “my account” page, whether it should be on
the EPG, and what information should be shared on the page.
• Data security is very important in this operation as it would require dealing with customers’
personal information and payment details, and MSOs would need to comply with data privacy laws
under India’s Information Technology Act.
9. Success ka digital highway
Digital Headend and Network Management
• Network management includes aspects such as Composition of Digital Headend,
data security, future requirement, regulatory compliances. Such decisions would
involve understanding if IT infrastructure and applications can support increased
volumes, and accordingly upgrading IT capabilities (team, hardware, software and
network) vis-à-vis expected changes in transactions and volumes.
• MSOs will need to ensure that their existing reporting capabilities are enough to
provide timely and accurate data for management decisions & regulatory compliances
• They will also need to ensure the storage and security of private and confidential
data,.
• MSOs need to have backup infrastructure ready in the case of system, location and
communication downtime, and build adequate redundancies to ensure that the
customer experience does not stop or deteriorate.
• MSOs will need to evolve from B2B to B2C business, which is a matter of scaling
tenfold upwards from their present scenario.
• Lack of Skilled and experience manpower who can operate Digital Headend etc.
10. Success ka digital highway
STB Management
• First step will be to manage activities related to the procurement, deployment and repairs of
STBs.
• Closure of technical specificationand BIS certification.
• MSOs will have to undertake procurement planning to decide how many STBs to purchase and when,
along with delivery timelines.
• Perhaps, MSOs will need to de-risk their supply chain by splitting orders between different
suppliers.
• MSOs will need to plan for storage and distribution and arrange for additional warehousing
capacity if required and decide if they need to pre activate STBs.
• The challenges involved would include ensuring the accurate disbursement and tracking of STBs
to LCOs, along with the management of inventory and re-order levels across warehouses and
distributors, monitoring the activation of STBs and collection for installed STBs.
• They will also need to decide upon the insurance, warranty and maintenance plans. The
challenge will be to deploy adequate personnel and resources to monitor the servicing, repair and
replacement of STBs, as required, and effectively managing reverse logistics. Such activity will also
entail the adoption of efficient supply chain management practices.
• LCO in a city with an average base of 1,500-2,000 subscribers may need to seed around 10 to 15
set-top- boxes every day. Most households would typically demand that the installation, which
takes about an hour, be done during a limited time window of 6-8 PM on weekdays or during
the weekends. This may lead to delays in the installation process.
11. Success ka digital highway
Customer Management
• Customer management would involve interactions with customers following STB
activation.
• This will be particularly important during the first three months after activation, when
most customer queries will arise and customers need to be educated
• MSOs will need to set up a call-center led service delivery, capable of handling expected
volumes, which can be in house or outsourced, depending on the cost implications.
• They will need to decide on the languages that the call center would support. They
would also need to develop back-end capabilities to effectively link call center
operations to the CAS system, subscriber management system and various payment
gateways.
• MSOs could face challenges in ensuring that the service levels offered to customers are
within the acceptable parameters in all spheres including TRAI regulations, including
package-change requests, revenue collection, the execution of VAS and the handling of
complaints.
• Another critical aspect will be the integration of the call center with offline operations,
and ensuring that the change in the touch point from the LCO to the MSO does not
adversely affect customer experience.
• MSOs will need to ensure KYC compliance within a reasonable time of activation and
manage document handling, storage and retrieval efficiently with the help of an adequate
MIS.
12. Success ka digital highway
Broadcasters
•This will increase subscription revenues for broadcasters.
•The increased channel capacity of digital system will motivate broadcasters
toward niche, targeted and HD content.
•The carriage costs paid by broadcasters in view of the limited bandwidth of
analog cable, may decrease post digitization.
•MSOs will have to decide how to define carriage and placement charges after
digitisation and re-negotiate existing deals with broadcasters.
•Renegotiation of content costs with MSO’s. Cost will significantly change based
on the strength and the audience of the channel.
•The broadcaster’s ability to push less popular channels will tend to reduce.
•Will seek frequently reports from SMS, CAS systems of MSO.
13. Success ka digital highway
Government & Regulators
• Present Govt. loss on Taxes are approx 10,000 crs/ yearly.
• The government therefore has sufficient incentives to push digitization.
• Digitization will also help the government pursue India's broadband
goals and thereby help to boost economic growth.
• Its already almost 3 years that Digitalization is in process. 42 big cities
has already seeded arrox 40 mn STB.
14. Success ka digital highway
Consumer Choice
1. Digital cable TV will improve the consumer experience and resolve legacy
issues from analog cable services.
1. Consumers will gain access to
a. More TV channels;
b. Attractive packaging options with differentiated content across local,
regional and niche genres;
c. A better viewing experience; Digital quality
d. Improved quality of service
e. Proper billing
f. Customer care services
15. Success ka digital highway
Cable Industry Transformation
• Some estimates expect a 6X (Times) increase in subscriber revenues for
cable MSOs. Subscriber declaration levels are expected to increase from 15%
currently to 100%.
• Additional drivers and differentiators will come from bundled broadband
and high-definition (HD) services.
• Broadband will reduce the payback period on digitization;
• The main challenges , apart from managing subscriber churn to DTH, are
Carriage and placement (C&P) fees which will drop by about 20–50%; and
• Incentivizing revenue-sharing agreements have to be struck with LCOs in
order to drive digital into the home services.
• Automated compliances to various regulatory authorities will ensure the
transformation of MSO/LCO to structured company.
