The Telegraph
Since 1st March, 1999
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Cable at the crossroads

Midnight oil was burnt for hours on Friday ' and well into Saturday ' at the headquarters of the company that gives Calcutta its electricity. At stake was a stranglehold over the city's cable trade.

A trade where fixed price is a misnomer and fair practices an anachronism; where quality of service is devoid of all standards and method of redress a mirage.

Amidst all this, the largest multi-system operator (MSO) in the CMDA area has just changed hands. Saturday morning saw the Goels taking the beam baton that belonged to the Goenkas till Friday. The cable distribution arm of the Rs 7,000 crore RPG Enterprises, Indian Cable Net (formerly RPG Netcom), had passed on ' most dramatically ' to SitiCable, the cable distribution wing of the Rs 1,400 crore Zee Group. All for an estimated Rs 48 crore.

A coup it was, for Siti stepped in just when the Sun was ready to rise in the east. For the uninitiated, the Marans' Sun Network had been in talks to take over Indian Cable Net for months and was within striking distance when SitiCable stepped in to seal the deal and deny the Chennai-based beam biggie its debut in this part of the world.

Murmurs about the city's largest MSO looking for buyers started doing the rounds in early 2005. Keen to exit from a business that had offered little except trouble in the past few years, RPG group's cable arm set out on a buy-me-out scout.

'There's nothing left in this business for us,' RPG Group's vice-chairman Sanjeev Goenka had told Metro early this year. 'The cable operator doesn't pay up, the broadcaster is baying for his dues and if that's not enough, other kinds of pressures come into play.'

And so, it was just a matter of months ' and money ' for the RPG group to exit the cable conundrum.

By early February, Sun had emerged as favourites for Calcutta's cable crown. The twist in the tale came last week, with SitiCable ' prodded by Writers' Buildings (the MSO's officials were summoned there earlier this week and told of the government's preference, sources said) ' putting up an offer to buy out its rival.

As on Friday, Indian Cable Net had around 35 per cent of market share while SitiCable had around 20. The rest was divided between Manthan and CableComm.

With a simple majority, the largest MSO would now try to either take over the remaining service providers or lure operators away with hefty discounts, offered industry observers.

Jawahar Goel, head of SitiCable and brother of Zee boss Subhash Chandra, dismissed such talk. 'We are happy with the market share we have currently and are not looking at increasing that immediately,' he said on Saturday evening.

The churn and the change

The cable coup also comes at a time when the channel churn is reaching choking point.

Over the past six to 12 months, the Indian skies have seen the entry of more channels than they have over the past few years. News, kids and entertainment have been the prime genre picks and more, including sports, are in store.

The limited network capacities and available space on the average viewer's TV set has resulted in a mad scramble for coveted positions in the spectrum.

'On an average, around 55 channels reach every TV set. After allotting the compulsory Doordarshan channels and the 40-odd pay channels, only a few slots remain. And every new channel wants one of the slots,' explains an MSO official.

MSOs charge anything between Rs 1 and Rs 5 lakh as the premium amount for placing channels in prime positions. With SitiCable emerging the single largest MSO by far, its bargaining power vis-'-vis new entrants and those still in queue goes up significantly.

For the viewer, the potential positives include more value-added services. SitiCable's Headend In The Sky (HITS) mode of delivery, which allows all channels to be downloaded from a single satellite, could prove a key driver for technology upgrade.

'After market consolidation ' with districts as a focus area ' the next battle would be to offer a better quality of service to compete with emerging platforms like DTH,' says a market analyst.

Network upgrade and uniformity would force last-mile operators with decade-old equipment ' often the culprit for channels not reaching the consumer despite being beamed from the MSO control room ' to play catch up.

Internet over cable, pay-per-view and other value-added services could even see a return of the set-top box in a new avatar. Indian Cable Net had recently offered its subscribers the choice to access channels through the box, with add-ons like virtual classroom.

'Consumers have proved time and again that they are willing to shell out a little extra for better service. Digital transmission through boxes would offer a superior experience and once the viewers get used to it, they would not want to compromise,' adds the analyst.

The numbers and the game

Yet, little else has changed on the ground, sporadic efforts from the state government and the service provider notwithstanding.

If nomenclature ' from Goenka to Goel ' is what matters at this moment, number is the problem that persists.

Under-declaration remains the bane of the beam business. Roughly, only one-sixth of the money raised from the ground every month actually reaches the coffers of STAR, Sony, Zee, ESPN and other broadcasters, collectively. Average declaration by Calcutta cable operators continues to hover around the 15 per cent mark.

'Two existing MSOs merging to form the single largest MSO means that SitiCable would now try to sort out some of the mess on the ground,' hopes an industry veteran.

Indian Cable Net had tried to bring some method to the cable madness by proposing a 40 per cent declaration plan. The rationale was to force operators with lowest declarations to raise theirs to 40 per cent.

Then came the move to shed bad debts, even at the expense of market share. It was switch-off of a different kind as Indian Cable Net went on a disconnection spree targeting a black list of long-term defaulters. The numbers dropped ' from 200 cable operators to around 120 ' but the results were immediate. Within months, broadcasters started receiving timely cheques of collections from the ground.

Self-regulation ' players framing and adhering to a set of common guidelines ' could now be easier to achieve.

'Till around August 2002, when RPG Netcom and SitiCable were the only two MSOs in business, there were far fewer problems,' says a broadcaster of an entertainment bouquet.

'Payments would arrive on time and operators would adhere to some basic rules since migration options were limited. There were very few switch-offs, too. There's reason to believe that things will revert to a similar situation.'

Another address to watch, of course, is Writers' Buildings. Ever since the Telecom Regulatory Authority of India prodded state governments to play a more active role in overseeing the cable trade, the Bengal government has been quite proactive, a fact that finds mention in SitiCable's first communique after the Friday takeover.

And now, the government is hoping to resurrect its failed cable census and ease the cable chaos. 'Work is on,' says an official steering the project. 'And this takeover one hopes will bring in some discipline to the industry.'

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