TELEVISION in India has undergone dramatic changes over the last 15 years. There has been a proliferation of news, business and entertainment channels, and an average city-based viewer has access to over a hundred channels.

But while the software (content) part of television has witnessed phenomenal changes and improvement – and professionalism – the hardware (equipment, including cable links to homes) side has remained at a primitive stage.

In cities like Mumbai, cable operators started off in a small way in the 1990s, and many continued to remain minor players. Gangsters and shady operators also took a stake in the sector, threatening consumers and dabbling in monopoly practices.

Even today, in many parts of India, the viewer has no choice, as cable operators do not ‘encroach’ on each other’s territory. If a consumer is unsatisfied with his cable operator, the only thing he can do is cancel his subscription; other operators will not offer better alternatives.

Things began to change after the government introduced Conditional Access Systems (CAS) in the metros. But a powerful lobby of cable operators stalled the roll-out of the system across India.

While CAS has been slow to take-off, another promising – and better – technology is direct-to-home (DTH). Cable operators across the country are now a worried lot, as DTH threatens their very existence. DTH operators offer a vast bouquet of channels, and the charges are at par with the local cable operator’s service, whose technology and equipment are primitive.

Last week, the DTH segment got a major boost after the Telecom Regulatory Authority of India (TRAI) – the common regulator for both the telecommunications and broadcasting sectors – directed all broadcasters to compulsorily offer all their channels on a-la-carte basis to DTH operators.

The new rule, which will be in force from December 1, ensures that broadcasters cannot force DTH operators to accept all the channels in a bouquet while offering it to the consumer. Thus, a consumer can opt only for entertainment channels of a broadcaster, reducing his monthly bill.

The TRAI has brought about much-needed transparency in interconnection agreements between the broadcaster and the DTH operator. The regulator felt that problems in the agreements led to delays in the rollout of DTH.

Though DTH is a superior technology, it has not really picked up in India because of the lack of such agreements, depriving viewers of some of their favourite channels.

THE DTH segment is now expected to take-off in a big way. According to analysts, the sector is expected to witness a compound annual growth rate of 35 per cent over the next few years.

There are about 3.5 million DTH subscribers in India, as against 70 million cable homes. At present, there are just two DTH service providers – Dish TV, promoted by Zee TV, and Tata Sky, which is a joint collaboration between the Tatas and Star TV group. State-owned Doordarshan also offers free DTH services of a limited number of its own channels.

Four new players are expected to enter the fray shortly. They include telecommunication giants like Reliance ADAG (Anil Dhirubhai Ambani Group) and Bharti, controlled by Sunil Mittal, whose Airtel brand has been a huge success in mobile phones. Sun TV, controlled by the Maran family in Chennai is also planning to launch its own DTH services.

Sun TV had a major dispute with Tata Sky, and the former refused to offer its bouquet of channels to the latter. When Dayanidhi Maran was the telecommunications minister, Sun TV – controlled by his brother – managed to prevent the Tatas from offering their channels to subscribers.

But after his sudden departure from the federal council of ministers – following family squabbles with his uncle, DMK chief, and Tamil Nadu chief minister M. Karunanidhi – the Sun group is finally giving in. It is also facing problems in the southern Indian state, with Karunanidhi himself launching a separate channel.

Zee TV’s Dish, which was the first to offer DTH in India, claims a subscription base of 2.1 million. Tata Sky, which was launched last year, has already built up a base of one million subscribers. Both the DTH operators offer over hundred channels at competitive rates of around Rs.200 to Rs.300 a month, which in many cases is lower than what cable operators charge for their bad quality stuff.

The entry of four new players is, however, unlikely to impact the existing two DTH operators. According to analysts, cable operators will be the worst hit because of DTH. Already, the cable mafia has struck back, and in parts of Mumbai, they have been threatening employees of DTH operators, and even sabotaging their systems.

Ever since cable TV was introduced in the 1990s, it has attracted gangsters and lumpen elements of regional political parties, who found it an easy way of making money. Most cable operators – not the organised ones, but the bit players – fleeced consumers by offering them indifferent service, deprived governments of taxes, and failed to invest in new technologies.

And now that DTH is on the verge of taking off – threatening their very existence – some of them are desperately trying to prevent subscribers from switching over.

INTERNATIONAL investors are eyeing the huge DTH market in India and unveiling plans to invest in some of the companies. Both the major players – Dish and Tata Sky – have announced ambitious expansion plans. While Dish plans to invest about Rs10 billion over the next two to three years to fund its expansion, Tata Sky plans to plough in about Rs20 billion over the next three to five years.

Says Vikram Kaushik, managing director and CEO, Tata Sky: “We have achieved significant success in the first year of operations. The one-million connection mark in a short span of 12 months vindicates our commitment to transform the way people watch television in India. We expect our subscriber growth to accelerate in the future and cross the eight-million mark in the next five years.”

International investors, who were expected to inject about $200 million into the cable television sector this year, are however, delaying their investments because of uncertainties over the roll-out of CAS.

With the entry of telecom biggies into the DTH sector, CAS is likely to suffer a setback over the coming months. The difference in tariffs – between cable and DTH – is negligible.

DTH rates in India are among the lowest in the world, with the average revenue per user (ARPU) being around $5 a month. Cable operators, including those under the CAS regime, are unable to offer lower tariffs.

The lower ARPU has resulted in an increasing number of Non Resident Indians (NRIs) living in the Gulf, opting for Dish or Tata Sky DTH systems. While cable operators in the Gulf charge hefty rates, Indians living in the Gulf buy the systems at home and take it back with them.

Most of them pay a year’s subscription in advance. Thanks to the vast ‘footprint’ of the Indian satellite, which covers the Gulf region as well, NRIs there are able to watch the programmes from their homes, and at negligible rates.

The launch of India’s geosynchronous satellite launch vehicle (GSLV-FO4) last week from the Satish Dhawan Space Centre in Sriharikota, has also boosted the prospects for the DTH sector. The vehicle placed Insat-4CR, a communication satellite, into geostationary orbit; the satellite carries a dozen high-power Ku-band transponders that will provide, among other things, DTH services.