The Case for IPTV in India (Part 1)
Check other articles in the series...by Dharma Kuthanur, Guest Author
If you look at different elements of the quadruple play (wireline, wireless, broadband and cable TV), the Indian urban consumer has abundant choices for wireline, wireless and broadband services. In fact, in most areas, there is vibrant competition with 3-4 different service providers vying for the consumer – more choice than what we have here in Silicon Valley!
But it’s an entirely different story for Cable TV – there is little or no competition, and to make matters worse, the highly disorganized sector puts the consumer at the mercy of the local “cable-wallah”. Even government behemoths like BSNL and MTNL appear like paragons of professionalism and organization compared to the local Cable TV franchisees. So, IPTV service providers have their work cut out for them – by providing choice and better customer service, they have an opportunity to grab market share from the Cable TV providers.
Now, let’s take a look at some macro-level data. The number of wireless subscribers is around 140 million, wireline subscribers is around 48 million, Cable TV penetration is at around 60 million households, and Broadband penetration is at just 1.5 million households. If you compare the last number with the first three, its pretty clear that for today’s broadband service providers in India (BSNL, MTNL, Reliance, etc), IPTV has the potential to deliver the following: (1) Additional revenue streams from existing infrastructure assets; (2) Potential to use IPTV as the driver to significantly enhance Broadband penetration and take it beyond the niche PC-owning urban household segment that has adopted it so far.
The large telcos have already widely deployed Broadband infrastructure all over the country, reaching more than 300 towns & cities. Even if they decide not to target the rural market, IPTV presents them with a great opportunity to generate incremental revenue streams and take market share away from Cable TV providers in the Tier 1 & Tier 2 cities.
For Broadcasters and other content providers, IPTV provides a much-needed alternate distribution channel, and they no longer have to fear being held to ransom by the dominant Cable providers (who in the past have used methods like “black-out” threats before major cricket games to force broadcasters to agree to their terms). Besides, they may also gain from more stream-lined billing & collection, which is a serious problem they face with the current Cable TV franchisee model. So the incentives are clear for all the major players in the value chain.
(to be continued)
This segment is part 1 in a 2 part series Segment 2 →
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Cost of broadband itself is not even make it a case for IPTV in India at this point of time I guess. Until and unless somebody show by a novel plan what should be the cost of IPTV service considering a big market out there. I pay Rs. 280/- for almost 100 channels currently being in Bangalore and get digital quality picture. My broadband cost for a 512KBPS link with a cap of 1.25GB download in a month is Rs.999/- + tax which comes around ~1100/-. I don’t see how IPTV can be viable with this high price of broadband bandwidth.
Offlate Telcos like Bharti, Reliance have been applying for DTH licenses. There can be a situation where in the existing DTH operators expand their capabilities and start providing internet and later voice, thus becoming a big threat to the existing fixed line players. Also with DTH/CAS prices low compared to the basic internet connection, IPTV might be a faroff concept in India until and unless the high prices taper down.
Hi Santanu,
You bring up a good point about the cost of broadband in India. But as noted in Part 2 of my column, competition and volumes will drive this cost down. Three factors play a role in this: (1) Other than the access infra in the local loop, most other infra is shared among users. So, more users means less cost per user; (2) They can use volumes to negotiate lower prices from the vendor; (3) Once the infra is in place, they have strong business incentives to deliver as many revenue-generating/differentiated services as possible over the broadband pipe. IPTV can help with all three, by enabling an increase in BB penetration and by delivering a wide range of new value-added services.
Hi Krishna,
I agree that at some stage DTH operators may also go for the triple or quadruple play and start competing more directly with the telcos. RE: your comment on Internet prices being high relative to DTH/CAS prices, pls note my earlier comment above.
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