International experience indicates that broadcasting, which is yet to take off in the Indian telecom sector, has a huge potential for generating revenue. In view of this, the Telecom Regulatory Authority of India (TRAI) has recommended increasing the foreign direct investment (FDI) limit for direct-to-home (DTH) and mobile TV services. Industry experts and associations share their views on the potential of and issues related to broadcasting… 
What are the opportunities for telecom service providers in broadcasting?
Usha Rajeev: Today, broadcasting includes all services through which customers can access content of their choice. The definition of content too has undergone a change to include user-generated content that can be shared on the growing number of social networks. Hence, the opportunities in broadcasting for telecom companies lie in services such as TV over cable, internet protocol TV (IPTV), DTH and internet access.
Prashant Singhal: The advent of convergence has given rise to huge opportunities for telecom operators in broadcasting. Some operators in India have already begun to offer DTH services, and at least two others will launch DTH services later this year. This will result in cheaper and better quality TV signals for people.
While private telecom operators are conducting trials to launch IPTV services, state-owned Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited have already launched IPTV services for their broadband customers in Bangalore, Pune, Delhi and Mumbai.
The other big opportunity lies in mobile TV. Some private operators are currently conducting trials to launch the service. However, it will take time for mobile TV to be rolled out across the country.
Namrta Sudan: Telecom operators have tremendous opportunities in the area of broadcasting services due to the rapid convergence of technologies in the telecom and broadcasting sectors on account of digitalisation. It may now be technically possible for a telecom service provider to provide an array of broadcasting services using telecom networks. Applications such as IPTV or mobile TV are going to provide the muchneeded growth in terms of newer revenue systems and would prove to be great revenue generators. The introduction of broadcasting services by telecom service providers would have a far-reaching impact and would potentially lead to the creation of a generic industry in India.
Girish Trivedi: The changing nature of content consumption is putting a lot of pressure on traditional broadcasting models. Competitive pressures and falling average revenue per user are forcing operators to look beyond voice services. In this scenario, broadcasting services can become a critical component of a service provider’s strategy. In India, IPTV, DTH and mobile TV can offer entertainment on different and personalised mediums. The growth of IPTV is directly linked to the availability of last mile connectivity that is capable of delivering high quality triple-play services. DTH has immense potential for the entertainmenthungry semi-urban and rural population.
Mobile TV is still at an early stage, and issues related to regulation, network speed and compatible handsets need to be addressed before the service can offer a serious business proposition.
What has been the operator experience in broadcasting in other countries?
Usha Rajeev: The global trends vary, but ultimately, the customer’s primary needs are entertainment and social interaction. Customers today are open to fulfilling these needs through any device, and this is leading to the creation of new marketing approaches and mindsets as well as varied distribution mechanisms and business models.
According to PricewaterhouseCoopers’ (PwC) Global Entertainment and Media Outlook, 2006-10 survey, the number of broadband-enabled households across the world is set to double by 2010 from 233 million in 2006. This growth in broadband users will give a fillip to tripleplay and drive the use of bandwidth-hungry applications like digitised music, movies and gaming.
While services such as TiVO are becoming popular in the US, on a global scale, digital TV penetration is quite low.However, the recent PwC Convergence Monitor survey conducted in 17 countries showed that there is significant interest in digital TV services, especially digital video recording (DVR)/delayed viewing. The Global Entertainment and Media Outlook, 2006-10 survey predicts that the global consumer spending on TV, including video-on-demand (VoD) and IPTV, is expected to reach $193 billion by 2010.According to the Convergence Monitor survey, DVR (23 per cent adoption) is likely to be more popular than VoD (14 per cent adoption). IPTV and mobile TV currently have extremely low penetration, the highest being 1-3 per cent in the AsiaPacific region, due to lack of availability and low consumer awareness.
DTH services, though not traditionally part of a telecom company’s offerings, are emerging as an important tool to retain customers in emerging markets like India.
Prashant Singhal: Globally, DTH is a successful service. With regard to IPTV, there were 9.9 million users at the end of 2007. The two biggest IPTV markets are France and Hong Kong.
Mobile TV has been launched in countries like the US, South Korea, Finland and Germany. The service could emerge as a big hit since half the world possesses a mobile phone. It is already a big success in South Korea, where people subscribe to live sports and soap operas. However, in the UK, it has not been very popular. For mobile TV to really take off, the price of handsets has to be low and the content customised according to the country.
Namrta Sudan: Globally, telecom service operators are experiencing growth in the broadcasting area. Though at the initial stages operators in various parts of the world faced certain regulatory and infrastructural problems, periodic resolutions of the same have enabled them to provide different broadcasting services of better quality to their consumers. For example, in view of the convergence of the telecommunication and broadcasting industries, the Government of Taiwan is unifying the regulatory framework for both the aforesaid industries to enhance competition, infrastructural development, etc. The US is another active market for digital broadcasting; TVMobile in Singapore provides live broadcast content; and some telecom operators have been providing digital broadcasting services in Italy since 2006.Therefore, the continued growth of broadcasting services is seen to be a positive development in the telecom industry.
Girish Trivedi: Apart from the telecom company-based IPTV model, hosted and franchised models are gaining traction in some markets.Broadband is becoming an essential service in some markets. A large market is opening up for commercialisation through the convergence of media centres, IP/broadband, distribution technologies, video compression technologies, digital rights management and security.
What are the issues and concerns with regard to DTH, mobile TV and IPTV services? What should be done to trigger growth in these businesses?
Usha Rajeev: The first big question is: Where is the money? DTH, mobile TV and IPTV services require significant investment by the operators ?? not only as capex but for distribution networks and content.
The customer needs a combined offering, one that is reliable and easy to use, along with effective and quality customer service. PwC’s Convergence Monitor survey shows that the battle for the market will be won on customer focus; price-point will be a differentiator only in the very short term. Nearly half the respondents in the survey were willing to pay an additional $6-$8 per month for better service quality and reliability.
Content is the next big challenge ?? there are a number of options such as create and own, buy, partner and acquire. The choice will be based on the organisation’s strengths and culture, and could range from complete outsourcing to a complete in-house model. However, all companies would need to be nimble enough to meet changing customer needs and expectations, while retaining the power as the relationship owner.
The third critical factor is how the operator leverages its content assets, the interplay between revenue sources to pay for content, and advertising.
Prashant Singhal: Currently, most of the cable TV market in India is controlled by over 70,000 small cable operators. For DTH to take off, the government must mandate the introduction of the conditional access system, which is a digital mode of transmitting TV channels using a set-top box. It is then that subscribers will opt for DTH, which provides superior quality TV signals.However, that would result in the end of the neighbourhood cable operator.
As far as IPTV is concerned, growth will be linked to the popularity of broadband services. With just 4 million broadband users in India, it will be a while before IPTV services become popular. Mobile TV is at the trial stage and is yet to be rolled out by operators. The biggest drivers for mobile TV in India will be cricket and movies.
Namrta Sudan: The primary issues and concerns in the DTH, mobile TV and IPTV segments are complex regulatory policy and framework, lack of security, unavailability of local content, inadequate infrastructure, high tariffs, lack of efficient spectrum usage, inadequate consumer awareness and the lack of expertise and technical know-how.
The first step towards the growth of these businesses would be a proper and consistent policy and regulatory framework to create a level playing field for service providers. In other words, the government needs to change the existing policy framework to align and reconcile the telecom and broadcasting industries so that there is a natural convergence of technologies. The FDI norms should also be revised in the broadcasting sector to allow a fresh infusion of capital, technology and expertise in these businesses. The existing telecom service providers also need to technologically upgrade their infrastructure and provide affordable services and handsets to enable consumers to enjoy broadcasting services such as IPTV or mobile TV.
Girish Trivedi: Full-fledged video and attractive pricing have been the initial drivers for IPTV. At present, implementation is one of the biggest challenges for broadcasting services. The broadcasting business case will be determined by market dynamics, infrastructure payback and content sourcing.
Some of the key steps that will trigger growth are:
Technological change, providing opportunities for internet service providers and content providers to reposition themselves in the value chain at the expense of infrastructure players
Solving the traditional problems of content.
Customer authentication, billing and content management.
Do you agree with TRAI’s recommendation of increasing the FDI limit for DTH and mobile TV services to 74 per cent?
Usha Rajeev: Liberation is the key to growth in the global market. Any move to remove barriers is to be welcomed. Given the significant incremental investments required, overseas partners are expected to contribute not only in terms of funds, but also in terms of strategic expertise on handling complex partnerships in content, on digital rights and on IP management. At the same time, ensuring a level playing field for the local market would remain very important.
Prashant Singhal: TRAI’s recommendation to increase the FDI limit to 74 per cent will bring in more capital, the latest technology and global best practices over the next few years. This has already happened in the mobile telephony sector, with global telecom companies investing in India.
Namrta Sudan: Since increasing convergence of technologies in the telecommunication and broadcasting sectors has diminished the boundaries between these two sectors, we are of the view that TRAI has taken the right step towards recommending a complete review of the FDI policy in various segments of the broadcasting sector to make the same consistent with other sectors.
It is imperative that the foreign investment limits be revised and made consistent with other sectors, especially the telecom sector, as the technologies emanating out of these two sectors are interconnected. This would maintain parity with the telecom sector, create a level playing field for service providers, stimulate growth and expansion, create a fresh flow of funds, promote digitalisation of broadcasting, and introduce new technologies and know-how.
Girish Trivedi: TRAI?s recommendation is a step in the right direction.
