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How Picking Up Stakes In Cable Operators Will Benefit RIL


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Mukesh Ambani’s Reliance Industries is reportedly in talks with major cable operators, including MSOs (Multi-System Operators) such as Hathway, Den, Digicable and InCable to pick up a minimum 26% stake, according to Business Standard. According to the report, RIL wants to rope in cable service providers as last mile connectivity partners for its forthcoming 4G internet services. The report cites two independent sources to confirm the development. It also quotes an RIL spokesperson who reveals that the company has been in talks with several potential partners to roll out the service with a partnered approach, making use of its own and its partners’ assets. However, the spokesperson did not get into specifics.

How Will RIL Benefit?

– Easy Reach:  Partnering cable operators and MSOs will help RIL in setting up a large distribution network for its 4G internet services at the local level. Since, the majority of the market is still connected via Cable networks, they would have a better reach. It would allow RIL to leverage the operators’ network for sales, support and service, and RIL would not need a major investment in building up a retail presence.

– Triple play: Also, operators like Hathway offer their own internet service, while some local operators offer these services via franchise agreements with partners such as Sify. RIL will also give these operators the incentive of offering high speed internet services, which are much more superior to the operators’ existing offerings and compete with other ISPs. The promise of triple play integrating internet, voice and tv, which Broadband providers have not been able to so far successfully offer to a wider audience, might be pitched through cable networks.

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– Content: As far as content is concerned, the investments will allow RIL to offer the operators’ local content, and there might even be local ad partnerships through the network. Since internet has the potential to offer interactivity, local services such as classifieds, can be integrated in an interesting manner. But we don’t think that content would play a major role in the tie-up. RIL has already done a deal with Network18 through which it gets preferential access to the group’s web and television properties.

– Fiber Infra?: As the report points out, the large operators have a good fiber optic infrastructure which can be leveraged by RIL. Although last mile delivery would not be through a wired network, since RIL’s internet license allows it to offer access through wireless and it’s also reportedly investing 4G enabled internet devices such as tablets. But it would definitely help connecting network equipment through inter and intra city fiber network. RIL is already rumored to be in talks with R-COM to use its fiber network and towers.

Cable operators in turn will benefit from investments, since they need to further invest in digital infrastructure to meet the 2012 target set for digitization in metros and 2014 target for total digitization. As we pointed out earlier, this will definitely lead to more ISPs and cable networks joining forces.

Related
The Lowdown: The RIL – Network18 Deal
RIL To Offer 4G Internet Services At Rs10/GB; Tablets At Rs 3,500: Report; Our Take
RIL To Partner With RCOM For Network, Voice Services: Report
The Next Generation: Reliance’s Plans To Ram India’s Sluggish Broadband Sector

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  • there will be quality issues 

  • Mahesh

    I feel cable operators can be beneficial only for last mile. If you think that the fibre network of cable operators can be used as a backbone…I differ. A good network operator will not use the cable operators network as backbone. Yes reliance was trying to introduce triple play since long time. Cable operators can help them in introducing it on last mile networks. That’s the benefit that I can think of in RIL buying stake in cable operators on the fibre front

  • interesting long term play. I can see them within 3 years of launch at the most going after the last mile cable operators and gobbling them up offering them a sort of reverse entry in the broadcasting services business.

    this will allow them to create a uniform platform for distribution as well as allow them to put their brand out there. Question is how will they deal with the quality issues as Maya pointed out and also from the under reporting.

  • Om

    Why is Mukesh Ambani and RIL not made a culprit for acquiring 4G licence in a covert manner from Infotel (who was the only one who got all India licence). They did the same act like Unitech and DB reality who by acquiring 2G spectrum at cheap rates and sold it for a profit even before roling out services or like Loop-Essar  deal where dummy company (Loop) was bidding for ESSAR there by cheating Indian government and public. Even one including media and other politicians are silent on this. Has he bribed everyone?