Daybreak DTH

DTH has made India the largest buyer of set top boxes STBs and it will soon become the worlds largest DTH market. Though the increased demand for STBs has brought down the hardware cost that forms a

major chunk of operators cost,the industry is still beset by many structural challenges. The absence of a level playing field on content cost versus analogue cable,rampant under-declaration by the cable industry and a high incidence of taxes make it a steep climb to profitability for DTH operators. Tax incidence of over 35 is amongst the highest for any industry,even though this one plays such a critical role in fulfilling the governments agenda of reaching infotainment to the remotest parts of India. In particular,entertainment tax levied by states has no logical reasoning and the custom duty imposed on STBs needs to be withdrawn. Also,the licence fee of 10 is only levied on the DTH platform,amongst all other forms of distribution. This anomaly should be corrected soon.

At present,wholesale tariffs from broadcasters and the costs of all channels put together come to nearly Rs 1,400 for cable operators and 50 per cent of this is levied on DTH operators,while the Indian customer is willing to pay at best between Rs 150-250. It seems that the incumbent cable industry has taken recourse to under-declaration to correct this anomaly of high content cost. But DTH,being a completely transparent addressable system,has no such recourse. DTH today is less than 20 per cent of the total Camp;S households in India,but contributes over 50 per cent of broadcasters subscription revenue and thereby ends up subsidising the incumbent analogue cable industry.

We believe that DTH has the potential to repeat the success story of telecom,where all the stakeholdersconsumers,broadcasters,operators and governmentwill gain immensely. Apart from the width of availability of linear,regional content,DTH for many has become the means to catch up with the latest movie releases that otherwise would probably have taken months or some quarters to be released beyond the top few towns. This will go a long way in helping fight piracy and protect the interests of the rightful producers of content. Advertising too has become a very rewarding option on DTH,which furnishes a better return on investment for advertisers by paving the way for authentic measurement of viewership. Also,it serves as a new vehicle for localised advertising.

Being the largest integrated telco that has a presence across all screensmobile,PC and TV Airtel finds itself uniquely positioned to participate in the next wave of growth for DTH-broadband hybrid models. The advent of new wireless access technologies like 3G and BWA will make it possible for customers to experience the true power of two-way interactivity even on DTH. The need to be entertained coupled with a diversity of broadcast channels,gaming and interactive services will be big growth drivers for DTH in 2011. The regulator too has taken a step forward towards the digitisation of infotainment services by recommending 2013 as the sunset date for analogue systems.

The author is director and CEO-digital TV services,Bharti Airtel