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Dish TV To Partner With Cable Operators

(By Anupam Saxena and Nikhil Pahwa)

This is interesting: Dish TV is now running a pilot project in Delhi, wherein it has partnered around 30 local cable operators who will act as its agents, and distribute and install DTH connections, according to The Economic Times.

Readers should keep in mind that India is looking at digitizing its TV networks in the metro cities by 1st June 2012, following which neighborhood cable operators – which often operate as mini-monopolies have to digitize their services. One alternative that they have to digitizing their networks, is to tie up with Multi System Operators (MSOs). Now Dish TV is looking to provide them with another option. This is particularly interesting since, when it launched its services initially, Dish TV promoted itself as a business that provided an alternative to cable operators, asking consumers to switch away from Cable TV. The Cable TV operators weren’t particularly pleased about the campaign (read this), but with the deadline approaching, they have to choose. The Economic Times report quotes Dish TV CEO RC Venkateish as saying that they’ll look to rope in 3000 cable operators across the country.

From a local cable operator’s perspective, tying up with an MSO might involve more work, since they might be responsible for maintaining the last mile wireline network, apart from collecting money; in case of DTH operators, it could involve addressing complaints and collecting money, although DTH operators do have online recharge systems, while most MSO’s do not. Local operators will not have to take care of distribution equipment and haggle with local bodies for network deployment, since  DTH only requires limited equipment at the customer’s premises.

In the end, what will probably matter to the local cable operators is essentially what is more profitable for them. As per the ET report, Dish TV will pay commissions on the installation of new connections, in addition to 15%-20% commission when a customer recharges his subscription.

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Local Cable Operators As ISP Franchisees (Nikhil adds)

Like we mentioned before, local cable operators have often worked as neighborhood monopolies, carving out cities into areas of operators, and often cutting wires of competing cable operators in order to preserve their control over their area, leaving consumers with little choice, and at the same time, keeping operations low cost. I remember that, many years ago, ISPs like Sify and Hotwire had tied up with local cable operators to provide Internet services to consumers: the service, largely being run by my local cable operator, was incredibly bad: it used to be down for over a month at a stretch, and the cable operator was not in a position to fix it, often just ignoring complaints. The last straw for me was when the ISP representative who had come to my place suggested to me that the cable operator had ensured that the connection remains inactive, in order to renegotiate his agreement with the ISP. Cable operators aren’t easy to manage, and MSO’s have, over time, learned how to do that. DTH operators will have their work cut out.

Dish TV Q3-FY12

Dish TVreported operating revenues of Rs. 490.5 crore for the quarter ended December 31st, 2011, up 31.4% year on year, with an EBITDA of Rs 120.2 crore, and a loss of Rs 43 crore. During the quarter, it added 740,000 new subscribers, taking its gross subscriber base to 12.5 million and net subscribers to 9.5 million. It reported an Average Revenue Per User (ARPU) of Rs 152. More here.

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