The DTH market is set to sizzle

Sitting in his second floor office at the Press Trust of India building in New Delhi, Prasar Bharati Corporation chief executive officer K S Sarma demonstrates Doordarshan's direct-to-home (DTH) service with a flourish.

The state-owned broadcaster is offering a bouquet of 29 television channels, including 16 of its own, and 10 All India Radio (AIR) radio frequencies.

"Soon we will be able to offer another 100 channels," beams Sarma as he clicks on his remote to tune into AIR's north-east station on the Electronic Programme Guide (EPG) on his television screen.

Doordarshan's DTH service has not yet been formally launched "� Prasar Bharati is waiting for prime minister Manmohan Singh to do the honours "� but Sarma insists that the public can avail of the service as both the signal and the equipment are available in the market.

At Zee's DTH facility at Noida, on the outskirts of Delhi, Zee group vice chairman Jawahar Goel expresses a similar pride in his newly built phase two of the DTH infrastructure.

"The earlier facility was for the head-end in the sky (HITS) project. From here we run our DTH service Dish TV's operations" he says, pointing to a bank of small TV screens beaming a mix of 80 free-to-air and pay channels. The first floor of the same building houses a bustling call centre to service DTH subscribers.

Goel summons his 23-year-old son Gagan to his second floor office to take stock of marketing strategies for the second year of Dish TV's operations. "We are targeting 2 million subscribers this year," says Goel, staring at the giant-size plasma TV in his room.

With at least two DTH service providers having rolled out their operations, the battle for the DTH market is heating up. As Doordarshan and the Zee group's DTH services (under ASC Enterprises) move to sew up the market, the Star group's DTH venture with the Tatas is waiting in the wings.

At least two other companies "� Jain TV and Essel Shyam "� have applied for DTH licences while Sun TV is rumoured to be cocking an eye at the business.

So will Doordarshan be a threat to private DTH operators? Perhaps not immediately. "We are not competing with the private operators at all," clarifies Sarma. At the moment, it's a non-commercial venture, but Sarma says he's willing to lobby with the government to allow Prasar Bharati to convert its DTH platform into a commercial venture.

"Since we are increasingly asked to fend for ourselves, we need to generate revenue," he adds.

Sarma says that he's happy with the public's response. Doordarshan has distributed 10,000 set-top boxes free of cost, while another 50,000 have been reportedly sold in south India.

"Having said that we are not competing, we are bound to get a fair chunk of the market," feels Sarma, whose target is the 20 crore people who do not get any TV signal (terrestrial or cable & satellite) at all.

Sarma's confidence stems from the fact that Doordarshan's DTH service is free. The television viewer has to make a one-time investment of Rs 3,000 in a dish and a set-top box to enjoy digital quality signals without having to go through a cable operator or ever having to pay for the channels.

But will people shell out Rs 3,000 to watch Doordarshan? Sarma thinks so, with the cluster of private channels being an added attraction. "Besides, you must remember that people do not really like paying for "pay" channels.

When the conditional access system (CAS) was implemented in Chennai, only three per cent of the TV viewing households invested in the box to watch pay channels," he points out.

Star India's chief executive officer Peter Mukerjea also believes that Doodarshan's DTH project is an excellent concept. "It enables viewers in far-flung areas of the country to see far more channels at a knock down price. This is genuine social upliftment," he says. Star is expected to offer its free-to-air Star Utsav for Doordarshan's DTH service.

But Zee's Dish TV is unfazed by Doordarshan's Rs 160 crore venture which is much smaller than its Rs 500 crore operation. Dish TV is enjoying the advantages of the first mover in the DTH market. It has also signed up 1.5 lakh paid subscribers.

"In the current financial year we are looking at another one million subscribers," says Gagan Goel, who's been assigned the task of growing the Dish TV business. He admits that the project has moved slower than expected in the first year since it was launched in October 2003. "First, it was a new concept that needed to be explained to people. Secondly, we were busy putting the infrastructure (dealer network, call centre, subscriber management system) in place," he says.

Zee appointed 5,000 dealers to push its set-top boxes. It offers the boxes at Rs 3,990 and the basic bouquet is priced at Rs 114 a month. It has also introduced a monthly installment scheme to finance the set-top box.

Zee first looked at "cable dry" areas, defined as remote places without cable TV. Consequently, Dish TV is available not only in India's remote corners such as Leh, Laddakh, Kargil and Drass but also on board Indian Navy ships.

Says Star's Mukerjea: "Zee has a semi-urban strategy. It's not a bad strategy considering that of the 85 million TV households, 45 million are cable & satellite while 40 million have no cable. If you price it right, you can reach some volumes outside the main cities." Star, however, is looking at the nationwide market, he adds.

Not everyone is impressed by Dish TV's performance. A former senior Zee executive argues that to succeed in rural markets, you need to be successful in the cities as well. "Besides, in rural India, Doordarshan could turn out to be the more trusted brand," he adds.

He thinks that Dish TV is squandering its chances. "For the last one year, it enjoyed a 100 per cent share of voice but has not been able to do very much," he says.

Media marketing men also point out that Dish TV has not managed to create a buzz around its brand, though it was the sole DTH service provider for almost a year. "The problem lies in its marketing and content strategy," says one media marketing expert.

Dish TV also was disadvantaged by the fact that entertainment channels Star Plus and Sony refused to join Dish TV's DTH platform.

The marketing issues may be resolved soon. To create awareness of its DTH services, it has employed 150 vans and equipped them with a Dish TV antenna, a set-top box and a television set. The vans, on a cross-country tour, offer a taste of digital quality transmission to potential consumers.

It's also turning its attention to the "cable frustrated" and "cable content" (people looking for premium content and digital quality viewing) markets in cities.

Jawahar Goel adds that Dish TV has some high-impact marketing initiatives up its sleeve for the festival season, when people are in a mood to spend money.

Though he refuses to provide details, he admits that Zee's DTH service will be bundled with high-end television brands at consumer electronics shops. Dish TV will add 30 new channels by November.

Yet the big threat for everyone remains Star, which is expected to bring superior content to its Rs 1,600 crore DTH venture "� if the government clears it. The government is apparently linking the Tata-Star application for a DTH licence to Star's refusal to join the Zee platform.

The government wants to include a "must carry" clause in the contracts it signs with DTH licensees. This will force Star and Sony to join Zee's DTH platform. Says a top information and broadcasting ministry official: "We want to add a "must provide" clause so that platforms become non-discriminatory. As broadcasters fight among themselves, we need to safeguard the commonly viewed channels."

Mukerjea believes that the government has three reservations about the Tata-Star application. First, it has asked Star to supply its channels to everybody.

He argues that this is contrary to the concept of competition and asks how, if all three platforms look identical, does Star compete, except in terms of price. "Internationally, there is no precedence for such a "must supply" clause where a broadcaster has to supply (content) to all the platforms. This is a sure-fire way of killing competitive offerings," he says.

Secondly, the government seems to be worried about whether the Tata-Star venture will become a monopoly, considering the combined strength of the Tatas and Star.

"DTH is all about consumer choice. And if you give a choice, where is the question of monopoly," asks Mukerjea. Lastly, the government apparently fears that Star will eventually acquire the Tata group's 80 per cent stake in the venture over a period of time. Says Mukerjea: "We've told the government we will do everything according to the law of the land."

As Jawahar Goel admits, Star has the financial muscle as well as the international experience to successfully run a DTH venture. Yet the longer the government delays granting Star a licence, the longer Doordarshan and Dish TV have to get their DTH act together.

Even if the Tata-Star venture gets a DTH licence, it may take a long time to put up its infrastructure, a lead time Zee and Doordarshan can fruitfully exploit. Mukerjea says that Star has not sourced set-top boxes or done anything else since it has not obtained a letter of intent for its project.

The battle for the DTH market has not yet been really joined, but everyone realises that the stakes are high "� at least a million households every year, according to Mukerjea. So when will Star join the fray? Over to information and broadcasting minister Jaipal Reddy for an answer.

(With additional reporting by Palakunnathu G. Mathai in Mumbai)