Cable cos investing in tech, offer LCOs higher revenue: Ind-Ra

Cable companies have started to invest significantly in technology to enable efficient billing and collections from local cable operators (LCOs)and are incentivising the latter to adopt the move by offering higher share of revenue, says a report by India Ratings & Research.
The report noted that most multiple-system operators (MSOs) with pan-India presence have commenced a shift in their business model to the fixed billing B2B model as an attempt to improve collections.
"One of the large cable companies has invested in an online portal for LCOs which improves transparency levels and also helps in activation and managing of packages," it said.

The collection mechanism for the portal is that the customer pays the gross amount to the LCO and the LCO maintains a pre-paid balance in his account with the MSO. Once the package is activated or renewed in the system, the MSO's share would be directly debited from the pre-paid balance of the LCO.
"This online platform follows an automated dunning process, where each pack has an expiry date and if not recharged before the due date the system will automatically disconnect the signal. In case LCOs want to provide credit to certain customers, the LCO will need to make the payment on behalf of them before the expiry date and collect the same from the subscriber later," the report said.

However, it noted that the LCOs may need incentives, namely higher revenue share and some basic level of training on day-to-day operations to accept the concept.
"The acceptance by LCOs will vary, based on the local dynamics, given the different degrees of resistance to change, and transparency. In the long run, we believe the business profile of MSOs will benefit from a transparent and more effective collection system," it said.