IndianMascot
Core Member
What does Digitization mean?
Digitization is a process which converts the information into digital format. In this format, information is organized into discrete units of data (called bits) that can be separately addressed (usually in multiple-bit groups called bytes).Digitization helps preserve the data for long term basis.
Television signals can be received via aerial for terrestrial reception, via satellite as in case of DTH, via broadband connection as in the case of IPTV or via cable from the local cable operator. The reception of television signals through satellite and broadband connection are already operating in digital mode and Government has, as a policy initiative,taken a decision to switch over to digital mode for reception of TV signals both in terrestrial mode as well as through cable from local cable operators.The switch over to digital mode for cable TV systems shall take place in phases and the first phase for digitization of Cable Television shall take place in Delhi, Mumbai, Kolkata and Chennai by October 31,2012.
Digitization of Cable TV put in simple words means,delivery of digital TV signal to the door-step of viewer.With this technology the viewers will get superior picture and sound quality, large bouquet of channels, choice of channels, games and movies on demand.The digital cable TV service will be available through a set top box.
With the inclusion of digital TV into the market the following features will be available to the consumers:
The Information and Broadcasting (I&B) Ministry has accepted the recommendations of the Telecom Regulatory Authority of India (TRAI) for implementation of digital addressable cable television systems in India, to transition from the existing analog cable network.The four metros will go digital this year and rest of the country by December 2015.
Revenue Systems
The pay-TV value chain in India has three main elements :
LCOs will suffer as a result of the complete transparency.In the current scenario, LCOs are required to report the number of subscribers for which they provide last-mile access to the MSOs,for revenue-sharing purposes.However,the lack of digital systems (and hence lack of transparency) allows LCOs to significantly under-report subscriber numbers.
MSOs will reap the greatest benefits and bear most of the challenges in terms of subscribers,MSOs will get a share of revenue from a significantly larger volume of subscribers (as LCOs will be unable to under-report).In terms of ARPU,they will see an upside because of:
Broadcasters Since digitization would bring about full addressability, it would eliminate the menace of under-reporting of subscriber base by LCOs.This will increase in subscription revenues for broadcasters. Further, the increased capacity of digital distribution channel is likely to spur greater investments by broadcasters toward niche,targeted and HD content and lead to diversification of their revenue streams.The carriage costs paid by broadcasters to distributors, which currently remain high in view of the limited bandwidth of analog cable,may decrease post digitization.However,the extent of correction would hinge on the growth in the number of channels going forward - a high growth is likely to maintain high carriage costs for broadcasters.
MSOs Many of the large MSOs till now have remained heavily focused on inorganic growth (mainly through joint ventures with smaller MSOs) in a bid to acquire control over the last mile which is a key competitive advantage.With the threshold subscriber base having been secured, the industry appears set to pursue digitization next. Having indirectly acquired end-customers, the MSOs now face the challenge with respect to customer retention. For a secondary point acquisition,the industry players face the risk of losing the acquired LCOs to another MSO;and for a primary point acquisition,there is the risk of losing the end-customer to alternate technology platforms like DTH and IPTV.Thus, it has become imperative for cable distribution companies (MSOs) to pursue digitization aggressively which could increase acquisition costs for competitors and switching costs for customers. With the necessary investments in digitization, MSOs get a direct access to the customer end, paving the way for better quality service and transparency in subscriber base.The direct access to customers effectively shifts the bargaining power from LCOs to MSOs. MSOs also benefit from this consolidation eventually leading to a greater bargaining power with broadcasters.
Consumer choice Digital cable TV will improve the consumer experience and resolve legacy issues from analog cable services. Consumers will gain access to (1) More TV channels; 2) Attractive tiering options with differentiated content across local,regional and niche genres;(3) A better viewing experience; and (4) Improved quality of service. Digital cable TV will also be affordable for the consumer. As per international benchmarks, spending on pay-TV typically accounts for ~5% of GDP per capita. In this context,digital cable TV in India will be affordable given heavy subsidies on STBs (currently subsidized at ~60-70% by MSOs), which will ensure that consumer spends fall within the 5% benchmark.Consumers will also benefit from new competition as digitization in metros ensures that seven DTH satellite platforms (including free service DD Direct) compete for customers with digital cable operators.
DTH operators Phase I digitization in the four key metros offers a good opportunity for DTH operators to grab high-ARPU customers and increase the platform's reach in larger TAM markets. MSOs envisage about 15–20% churn in cable subs to DTH though some suspect this could grow to 30% in the early stages of Phase I deployment. Subsidized HD offerings will also act as a key differentiator for DTH players as few cable operators have rolled out HD services.
Opportunities in Digitization
The biggest advantage is that the quality of content will improvise.Though the number of pay channels might increase but to win the race they would improvise in their content. There would be a high amount of pressure on free to air channels to remain in the competition and maintain the viewership.
The Television Networks (Regulation) Amendment Bill of 2011 enshrines in law the Indian government's goal of moving all analogue broadcasting to digital signals.The process will be implemented in a series of phases,but the bill's 'sunset clause' stipulates the total switch-off of analogue signals by the end of 2014. By that time,the 88 million households estimated to be receiving analogue cable-TV services will have to be moved onto digital platforms.
Digitization is a process which converts the information into digital format. In this format, information is organized into discrete units of data (called bits) that can be separately addressed (usually in multiple-bit groups called bytes).Digitization helps preserve the data for long term basis.
Television signals can be received via aerial for terrestrial reception, via satellite as in case of DTH, via broadband connection as in the case of IPTV or via cable from the local cable operator. The reception of television signals through satellite and broadband connection are already operating in digital mode and Government has, as a policy initiative,taken a decision to switch over to digital mode for reception of TV signals both in terrestrial mode as well as through cable from local cable operators.The switch over to digital mode for cable TV systems shall take place in phases and the first phase for digitization of Cable Television shall take place in Delhi, Mumbai, Kolkata and Chennai by October 31,2012.
Digitization of Cable TV put in simple words means,delivery of digital TV signal to the door-step of viewer.With this technology the viewers will get superior picture and sound quality, large bouquet of channels, choice of channels, games and movies on demand.The digital cable TV service will be available through a set top box.
With the inclusion of digital TV into the market the following features will be available to the consumers:
- High definition – digital television offers higher picture resolution as well as clarity compared to analog receivers.
- Data casting – either it is SDTV or HDTV, the greatest advantage of digital transmission is that broadcast streams could be compressed that opens the chances of using the spectrum to other purposes.Aside from programming, stations work in wireless network with ability of data casting or transmission of data in television signal that exceeds picture as well as sound for typical television program. Such data which has been data cast through television station could be received in workplaces, schools as well as homes through digital tuner on digital television.
- Multicasting – compression methods allows television to transmit not only single flow of high definition programming but multiple streams to digital receiver programming with high quality of audio and video output. This enables television stations to give more and diverse services to audiences simultaneously.
- More channel programming – digital television are capable of giving more than 200 channels.This also depends on subscription, service provider and the capacity of the set top box.
- Interactive features – digital television can provide extra coverage and further interactive features.
- Less interference – since it gives its users with better quality of sound and picture, chances of experiencing crackling, hiss, ghosting and interference is less.
- Radio – with digital sets,more than 20 radio channels will be available
The Information and Broadcasting (I&B) Ministry has accepted the recommendations of the Telecom Regulatory Authority of India (TRAI) for implementation of digital addressable cable television systems in India, to transition from the existing analog cable network.The four metros will go digital this year and rest of the country by December 2015.
Revenue Systems
The pay-TV value chain in India has three main elements :
- Broadcasters on one side
- distributors in the middle – consisting of a combination of multi-system operators (MSOs) and local cable operators (LCOs) on the cable side, and direct-to-home (DTH) players on the satellite side
- Customers at the end of the value chain.
LCOs will suffer as a result of the complete transparency.In the current scenario, LCOs are required to report the number of subscribers for which they provide last-mile access to the MSOs,for revenue-sharing purposes.However,the lack of digital systems (and hence lack of transparency) allows LCOs to significantly under-report subscriber numbers.
MSOs will reap the greatest benefits and bear most of the challenges in terms of subscribers,MSOs will get a share of revenue from a significantly larger volume of subscribers (as LCOs will be unable to under-report).In terms of ARPU,they will see an upside because of:
- Subscribers consuming and paying for value-added services, such as highdefinition channels and VoD
- The opportunity to bundle broadband to some digital customers.
Broadcasters Since digitization would bring about full addressability, it would eliminate the menace of under-reporting of subscriber base by LCOs.This will increase in subscription revenues for broadcasters. Further, the increased capacity of digital distribution channel is likely to spur greater investments by broadcasters toward niche,targeted and HD content and lead to diversification of their revenue streams.The carriage costs paid by broadcasters to distributors, which currently remain high in view of the limited bandwidth of analog cable,may decrease post digitization.However,the extent of correction would hinge on the growth in the number of channels going forward - a high growth is likely to maintain high carriage costs for broadcasters.
MSOs Many of the large MSOs till now have remained heavily focused on inorganic growth (mainly through joint ventures with smaller MSOs) in a bid to acquire control over the last mile which is a key competitive advantage.With the threshold subscriber base having been secured, the industry appears set to pursue digitization next. Having indirectly acquired end-customers, the MSOs now face the challenge with respect to customer retention. For a secondary point acquisition,the industry players face the risk of losing the acquired LCOs to another MSO;and for a primary point acquisition,there is the risk of losing the end-customer to alternate technology platforms like DTH and IPTV.Thus, it has become imperative for cable distribution companies (MSOs) to pursue digitization aggressively which could increase acquisition costs for competitors and switching costs for customers. With the necessary investments in digitization, MSOs get a direct access to the customer end, paving the way for better quality service and transparency in subscriber base.The direct access to customers effectively shifts the bargaining power from LCOs to MSOs. MSOs also benefit from this consolidation eventually leading to a greater bargaining power with broadcasters.
Consumer choice Digital cable TV will improve the consumer experience and resolve legacy issues from analog cable services. Consumers will gain access to (1) More TV channels; 2) Attractive tiering options with differentiated content across local,regional and niche genres;(3) A better viewing experience; and (4) Improved quality of service. Digital cable TV will also be affordable for the consumer. As per international benchmarks, spending on pay-TV typically accounts for ~5% of GDP per capita. In this context,digital cable TV in India will be affordable given heavy subsidies on STBs (currently subsidized at ~60-70% by MSOs), which will ensure that consumer spends fall within the 5% benchmark.Consumers will also benefit from new competition as digitization in metros ensures that seven DTH satellite platforms (including free service DD Direct) compete for customers with digital cable operators.
DTH operators Phase I digitization in the four key metros offers a good opportunity for DTH operators to grab high-ARPU customers and increase the platform's reach in larger TAM markets. MSOs envisage about 15–20% churn in cable subs to DTH though some suspect this could grow to 30% in the early stages of Phase I deployment. Subsidized HD offerings will also act as a key differentiator for DTH players as few cable operators have rolled out HD services.
Opportunities in Digitization
The biggest advantage is that the quality of content will improvise.Though the number of pay channels might increase but to win the race they would improvise in their content. There would be a high amount of pressure on free to air channels to remain in the competition and maintain the viewership.
- Due to improvisation in content the standard of viewership will also improvise. Television will also attain the global standards. The reach will become broader.
- There would be an overall change in the revenue sharing among the stake holders due to the transparency achieved.
- There would be a drastic change in the viewership measurement and the ratings of the channels.The ratings then would be more reliable and authentic as there would be transparency in sampling and thus error margin will be low.
- All this might help in increasing the FDI of the entertainment industry. As the content and quality will be as per global standards, this will attract more foreign investors.These investments will help generate revenue and thus will build better infrastructure for future.
- With the huge amount of investment required for the establishment of digital television in the country, for the investors to get back invested money and earn profits, adequate regulation of pricing is to be done. Pricing should be done in such a way that neither would it be a burden on the consumer,which will prohibit them from subscribing and switching to digital TV not should it put the investors and service providers in a state of loss.
- Since the entire set up is to be changed for the new plan to be implemented,a standardized technological frame work is to be set up.An adequate supply of well priced and upgraded technology is required for the success of such a futuristic project.A regulatory body needs to be set up to answer and rectify the grievances of both the consumer and the service providers.
- Regulatory issues to do with advertising, content, tariff, quality parameters, readdressal mechanisms will become increasingly more critical.Government and Self Regulatory bodies will need to play a more proactive role.
The Television Networks (Regulation) Amendment Bill of 2011 enshrines in law the Indian government's goal of moving all analogue broadcasting to digital signals.The process will be implemented in a series of phases,but the bill's 'sunset clause' stipulates the total switch-off of analogue signals by the end of 2014. By that time,the 88 million households estimated to be receiving analogue cable-TV services will have to be moved onto digital platforms.
