Tuesday, October 13, 2009

DTH is a scale biz in India

The DTH industry has invested Rs 250 billion to build scale into their business model, but it is badly hurting their pockets.Dragged down by low ARPUs (average revenue per user), high customer acquisition costs and exorbitant taxation, DTH companies are bleeding profusely. "The DTH sector has piled up a subscriber base of 17.5 million over the first five years. The total investment stands at Rs 250 billion and all of us are bleeding," said Tata Sky managing director and chief executive officer Vikram Kaushik. Taking a dig at the Telecom Regulatory Authority of India, Kaushik urged the need for a broadcast regulator. "Trai has an overhang of the telecom sector as that was the first thing they regulated. We desperately need a broadcast regulator who can understand our requirements," he said, while speaking at the India Digital Networks Summit 2009 here today.

The under-reporting by the cable TV operators is keeping ARPUs artifically low and hurting everybody. "This is the crux of the problem and Trai has not understood this," said Kaushik, who heads a DTH service that has the "best" and the "healthiest" ARPU among all the operators in the country. The fierce competition over pricing is also being led by Sun Direct, the DTH company promoted by Kalanithi Maran. "Disruptive pricing is hurting not just the DTH companies but also negatively impacting the entire process of digitisation in India. This is unsustainable," said Kaushik. Sun Direct, which has the fastest run in subscriber growth, has an ARPU of under Rs 100 as against Tata Sky's Rs 200. "We have to compete with the cable TV operators and build a business case around it. We have already reached 4.3 million subscribers," said Sun Direct COO Tony D'Silva.

Emphasizing the need for equity in pricing, taxation and a level playing field among the different distribution platforms, D'Silva said the government should understand that cable and DTH operators are addressing the same consumers. "So why have different policies for us," he questioned. Speaking about low ARPUs, high content cost and taxes, Airtel Digital TV CEO Ajai Puri said, “DTH is a scale business in India and has a great potential to grow. But the business model is still a big question mark.” NDS Asia-Pacific SVP Sue Taylor said the government should encourage the sector and do away with such a high level of


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