It has been around nine years since the Union Cabinet approved the proposal of the Ministry of Information and Broadcasting (MIB) for mandatory introduction of digital addressable system (DAS) in cable television (TV) services in India. This was done to overcome the drawbacks of analogue TV, which include among others, limited channel-carrying capacity, poor video quality, lack of à la carte channel selection, and under-reporting of subscriber base by local cable operators (LCOs). The digitization process was to be implemented in four phases, with a complete switch off of analogue signals by December 31, 2014. The process has, however, faced inordinate delays; and as of December 2018, around 90 percent of the 197 million TV households (HH) in India (~177 million TV HH) have been digitized. Direct-to-home (DTH) has led the digitization, having digitized 56 percent of the TV HH (100 million), with the balance 44 percent accounted by multi-system operators (MSOs). Within DTH, private players have accounted for ~70 percent, and DD Freedish (subscription-free DTH service owned by Prasar Bharati) has accounted for the balance 30 percent.
As on date, digitization of Phase-I and Phase-II markets is complete, except Chennai (Phase-I) and Coimbatore (Phase-II) in Tamil Nadu (TN). The digitization process in TN was held up, following the ruling of the Madras High Court in 2013, which restrained switching off of analogue signals, pending MIB’s decision on Tamil Nadu Arasu Cable TV Corporation Limited (Arasu Cable) DAS license, which was applied in 2012. The same was granted in April 2017, with time till August 2017, for a complete switchover to DAS. Despite the deadline, the present level of digitization in TN stands at only ~65 percent, impacted by the alleged monopoly practices of Arasu Cable.
Digitization in Phase-III and Phase-IV markets was affected due to stays granted by various High Courts, following shortage of set-top boxes and other related components during CY2015-CY2016. Subsequently, in April 2016, all these cases were transferred to the Delhi High Court, which dismissed them and set a deadline of December 31, 2016 (extended to January 31, 2017 for Phase-III and March 31, 2017 for Phase-IV markets) for switching off of analogue signals. On the cut-off date, ~70 percent of Phase-III and Phase-IV markets (excluding TN) were digitized. Currently, while digitization in Phase-III markets is complete, Phase-IV markets have achieved ~90 percent digitization. MIB now targets full digitization by March 2020, as part of its Mission Digitization program.
Digitization of cable TV services has required significant capital investments by the industry. Till March 31, 2019, DTH players (Dish TV India Limited, Tata Sky Limited, Bharti Airtel Limited) have invested ~`29,500 crore, while the major (top four) digital cable players have invested ~`8400 crore toward digitization.
The balance ~20 million TV HH to be digitized are in Phase-IV markets, which primarily comprises rural areas, where the pace of digitization has remained slower than in other phases, given their lower per capita income. Furthermore, owing to the uneven terrain and fragmented market, MSOs find it uneconomical to invest in extending digital cable in these areas. DTH is thus deemed to benefit in the last leg of digitization. DD Freedish has been a beneficiary of the impediments faced by private DTH operators and MSOs and has recorded a robust growth in subscriber base, currently estimated at 30 million.
The New Tariff Order (NTO) implemented from April 1, 2019, has created a level-playing field between DTH operators and MSOs; and thus, quality of service has become an important differentiator for customer acquisition. However, teething problems in its implementation has resulted in some churn of subscribers from MSOs to DTH, especially as subscribers face issues with pre-defined packs offered by LCOs. While DD Freedish is out of the ambit of NTO, its popularity can get affected as popular channels have pulled out of DD Freedish, following their conversion to pay from free-to-air.