SKYLINE BUSINESS

SCHOOL

DTH-CONCEPT AND ITS 4PS

GUIDE: MRS. MANISHA MAHINDRATTA

SUBMITTED BY: RAHUL SINGH ROLL NO. 520760136 BATCH: L2S2- D

Acknowledgment

I take this opportunity to thank one and all who have helped me to do my thesis on DTH/SATTELITE TELEVISION. Right from the starting of my thesis to the completion of this project report I have been very fortunate to have worked with highly professional people. I would like to thank Miss Misba Sr.buisness development Manager TATA SKY, for helping me and guiding me all through my thesis. I express my sincere gratitude to her for becoming my external Guide. I am extremely thankful to MRS. MANISHA MANDIRATTA from SBS (SKYLINE BUSINESS SCHOOL) for his timely guidance and patient hearing.

I also extend my sincere thanks to all those who have been of some help at every stage of my thesis. While I express my heartfelt gratitude to all of you whose assistance and support has enabled me to accomplish my goal, the blame for any shortcomings that remain must rest on my shoulders. 2

Contents Acknowledgements .. Content. Direct to home/ satellite television. Overview How it Works Competitors (Indian market) Tata Sky Inception and Heritage The brand Revolutionize television viewing Partners Business support Offerings Technology (IT) Channels offered Dish TV. The Group Features Transponder & Capacity Apna DTH DTH Project Overview Features Channels offered Research Methodology Research Analysis SWOT Analysis. 4PS OF DTH PRICING STRATEGY. PRODUCT STRATEGY. PLACING STRATEGY.. PROMOTION STRATEGY.. DTH VS CABLE.. WHAT GIVES DTH THE CUTTING EDGE CAS. Advantage DTH VS CAS RECOMMENDATION.. Strategic and Success Factors Where to Place bets FUTURE OF DTH IN INDIA (CONCLUSION.. ANNEXURE-1 3

ANNEXURE-2 Direct to home/ satellite television

DTH: stands for Direct-To-Home television. DTH is defined as the reception of satellite programs with a personal dish in an individual home. DTH services were first proposed in India in 1996. But they did not pass approval because there were concerns over national security and a cultural invasion. In 1997, the government even imposed a ban when the Rupert Murdoch-owned Indian Sky Broadcasting (ISkyB) was about to launch its DTH services in India. Finally in 2000, DTH was allowed. The new policy requires all operators to set up earth stations in India within 12 months of getting a license. DTH licenses in India will cost $2.14 million and will be valid for 10 years. The companies offering DTH service will have to have an Indian chief and foreign equity has been capped at 49 per cent. There is no limit on the number of companies that can apply for the DTH license. How it works Direct to home technology is quite a sea change from what the cable network offers. Heres a step-by-step guide to the new system, including some potential snage you are likely to encounter. Satellite Satellite beams the channels to the minidish fixed on your balcony, outside window or on terrace. Service provider Service provider uplinks all channels to its dedicated satellite.

Apartments For apartment blocks, the entire building can use a single big dish and carry connections to different set top boxes on individual TVs. Dish size depends on distance between it and the TV; 60 cm dishes are most common. For Delhi, you need to align it in south east direction. Set Top Box Minidish relays the channels to your set top box, where they are decrypted and sent to you TV. Viewing Card Viewing card like a mobile sim card carries you unique ID number with your subscription details. You can access DTH only when this credit card sized card is inserted in the set top box. You can watch DTH without disturbing you cable connection if you choose to, with cable feed in normal TV mode and DTH in AV mode. Remote Control Your remote comes with the DTH kit. It interacts with the set-top box instead of the TV. If you plan to install DTH, get ready for handling complex options on your remote like multi-lingual choices etc Payment: You pay your subscription in advance (like a pre-paid cell connection) through credit cards, smartcards, cheques or cash. Your viewing card is updated automatically The first commercial DTH service, Sky Television plc (now BSkyB), was launched in 1989. Sky TV started as a four-channel free-to-air analogue service on the Astra 1A satellite, serving the United Kingdom and Republic of Ireland. By 1991, Sky had changed to a conditional access pay model, and launched a digital service, Sky Digital, in 1998, with analogue transmission ceasing in 2001. Since the DTH nomenclature is 5

rarely used in the UK or Ireland, the popularity of Sky's service has caused the terms "minidish" and "digibox" to be applied to products other than Sky's hardware. BSkyB is controlled by News Corporation. PrimeStar began transmitting an analog service to North America in 1991, and was joined by DirecTV Group's DirecTV, in 1994. At the time, DirecTV's introduction was the most successful consumer electronics debut in American history. Although PrimeStar transitioned to a digital system in 1994, it was ultimately unable to compete with DirecTV, which required a smaller satellite dish and could deliver more programming. DirecTV eventually purchased PrimeStar in 1999 and migrated all PrimeStar subscribers to DirecTV equipment. In 2003, News Corporation purchased a controlling interest in DirecTV's parent company, Hughes Electronics, and renamed the company DirecTV Group. In 1996, EchoStar's Dish Network went online in the United States and, as DirecTV's primary competitor, achieved similar success. AlphaStar also launched but soon went under. Dominion Video Satellite Inc.'s Sky Angel also went online in the United States in 1996 with its DTH service geared toward the faith and family market. It has since grown from six to 36 TV and radio channels of family entertainment, Christianinspirational programming and 24-hour news. Dominion, under its former corporate name Video Satellite Systems Inc., was actually the second from among the first nine companies to apply to the FCC for a high-power DTH license in 1981 and is the sole surviving DBS pioneer from that first round of forward-thinking applicants. Sky Angel, although a separate and independent DTH service, uses the satellites, transmission facilities, & receiving equipment used for Dish Network through an agreement with Echostar. Because of this, Sky Angel subscribers also have the option of subscribing to Dish Network's channels as well.

Dth in India has majorly three competitors TATA SKY DISH TV APNA DTH

TATA SKY Inception and Heritage

Incorporated in 2004, Tata Sky is an 80:20 JV between TATA and STAR. Tata Sky endeavors to offer Indian viewers a world-class television viewing experience through its Satellite Television service. TATA Brand The Tata Group is one of India's largest and most respected business conglomerates. It comprises 93 operating companies in seven business sectors: information systems and communications; engineering; materials; services; energy; consumer products; and chemicals. The Tata Group has operations in more than 40 countries across six continents, and its companies export products and services to 140 nations. The Group and its enterprises have been steadfast and distinctive in their adherence to business ethics and their commitment to corporate social responsibility. This is a legacy that has earned the Group the trust of many millions of stakeholders in a measure few business houses anywhere in the world can match.

SKY Brand The SKY brand, owned by the UK-based British Sky Broadcasting Group, brings to Tata Sky the reputation of more than 20 years experience of satellite broadcasting. SKY is well known for the innovative products and services launched by BSkyB, such as DTH broadcasting in 1989, digital satellite broadcasting in 1998, interactive television services in 1999 and the SKY+ personal video recorder in 2001. Tata Sky joins an international group of DTH businesses that includes platforms as far apart as the UK and Italy in Europe, and Mexico and Brazil in Latin America

Revolutionize television viewing Tata Sky is set to revolutionize television viewing in India through its superior digital quality picture and sound. The service aims to empower the Indian viewer with Choice, Control and Convenience through its wide array of programming and interactive features.

Tata Sky offers viewers a variety of channels ranging from entertainment, sports, movies and music to news and documentaries in DVD picture quality and CD quality sound. Extensive Customer Service Network Tata Sky has established an extensive customer service network across the country. It has engaged a field force of approximately 3000 service engineers, who will be complemented by high-end 24x7 call centers, manned by multi-lingual customer service associates, trained to solve all customer problems. Tata Sky takes direct responsibility for hardware installation at subscribers homes, as well as for providing after-sales service. Tata Sky will also retail its hardware and prepaid recharge vouchers through popular consumer electronic stores to enhance customer convenience.

Partners Tata Sky has invested in state-of-the-art digital infrastructure and has partnered with global leaders in digital technology for the pay television market.

Satellite: Tata Sky has leased all 12 Ku-Band transponders on ISROs Indian satellite, INSAT 4A, which is the most advanced and high-powered KU-Band communication satellite in the region and is developed keeping in mind local requirements. The satellite enables Tata Sky to offer superior picture and sound quality with a wider range of channels.

Business Support Software: NDS: Tata Sky has partnered with NDS, the leading provider of technology solutions for pay television. NDS systems has played a key role in the end-to-end system architecture and launching the nationwide digital service. The NDS Video Guard conditional access solution provides superior broadcast security, and enables Tata Sky to offer multiple programming and pricing packages. NDS end-to-end systems to be deployed by Tata Sky to offer an unprecedented range of digital and interactive TV services in India Tata Sky to offer greater choice and superior quality of pay television services to subscribers across India Tata Sky joins other world-leading international DTH operators in deploying proven NDS solutions to support their business . Tata Sky is investing in building a high quality digital infrastructure in the country to offer a superior television viewing experience to Indian households. The service will enhance the choice for viewers looking for the best of pay television services in the country. Tata Sky aims to become India's largest digital television platform, offering consumers a wide array of programming choices with interactive features and superior picture and sound quality. NDS is working with Tata Sky to build a world-class broadcast infrastructure. NDS systems will play a key role in the end-to-end system architecture and launching the nationwide digital service. The NDS Video Guard conditional access solution provides superior broadcast security, and enables Tata Sky to offer multiple programming and pricing packages. NDS's Media Highway middleware and Value@TV interactive infrastructure will enable Tata Sky to offer interactive services to subscribers. NDS engineers in Bangalore will be key in the design, delivery and service support of the end-to-end solution. The digital technology of Tata Sky DTH service will eliminate many recurrent problems that consumers face while watching television in India. The DTH satellite signal is always on and will eliminate instances of service downtime caused by power

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cuts and cable cutting. The Tata Sky service will have fixed channel positions and pretuned audio levels. Tata Sky Ltd., a joint venture of TATA and STAR, is committed to build a state-ofthe-art Digital infrastructure for Pay Television in India. Tata Sky plans to introduce a nationwide Direct-to-Home (DTH) service that would allow it to reach every Indian home, however remote it may be. The service plans to offer its subscribers the best of cable channels, new innovative programming and interactive services. About NDS NDS Group plc (NASDAQ/Euro next Brussels: NNDS), a majority owned subsidiary of News Corporation, is a leading supplier of open end-to-end digital pay TV solutions for the secure delivery of entertainment and information to television set-top boxes Siebel: Tata Sky has selected Siebel, leaders in Customer Relationship Management (CRM) software, to support operations across the areas of call centre and field service operations, customer order management and product configuration. Kenan: Comverses Kenan FX billing software has been selected to support billing for all residential, institutional and commercial customers. The Kenan software has been enhanced specifically for Tata Sky, to support a first in industry pre-paid billing capability which will provide customers with the ability to pay as you go. SAP: SAP the leading Enterprise Resource Planning (ERP) application suite, has been selected by Tata Sky to support the companys materials management, sales and distribution, finance and control and human resources requirements. IT: Sun Microsystems: Tata Sky has selected Sun Microsystems to provide world-class technology infrastructure, which helps the company to deliver high-level service standards for its Satellite Television service. The servers ensure maximum up-time, fault recovery and load management. Sun has also provided Tata Sky with installation, engineering expertise and support.

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Dig comp: Tata Sky has partnered with Thomson and Hum ax, world leaders in digital broadcast terminology, for building top-of-the line dig comps, customized specifically for the Indian markets. The technologys feature rich design will enable Tata Sky to deliver multiple programming, pricing packages and interactive services to its customers.

Our offering In addition to new channels and exciting interactive features, Tata Sky will offer all popular television channels, thus becoming a one-stop shop for all the television entertainment needs of customers. Vision Tata Sky plans to launch its Satellite Television service with top-of-the-line infrastructure. It aims to revolutionize Indian entertainment by offering superior DVD quality picture and CD quality sound.

Channels offered . Star World Star Utsav (Hindi) Star Movies Star Gold Star Plus Star News (Hindi) Star Vijay (Tamil) Star Sports ESPN Star One (Hindi) 12

Channel V MTV National Geographic AXN Ten Sports History Channel Sony Entertainment Television (Hindi) SAB TV (Hindi) Sony PIX SET MAX Animal Planet Discovery Channel Discovery Travel and Living Sahara one Sahara filmy MH1 ETV Bangla (Bengali) ETV Gujarati ETV Kannada ETV Marathi ETV Oriya

ETV (Telugu) Nickelodeon Fashion TV Animax Toon Disney Disney Channel Hungama TV Aastha Jaya TV (Tamil) 13

Aaj Tak (Hindi) Headlines Today NDTV Profit NDTV 24x7 NDTV India (Hindi) DD News Times Now Asianet (Malayalam) Asianet news (Malayalam) Kairali (Malayalam) DD 1 DD Bangla DD Malayalam DD 8 Telugu DD Sports DD 5 Tamil DD Marathi Active Newsroom Active Star News Active Khabar Active Wizkids (coming soon) Active Games Showcase (coming soon)

Interactive channels

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Dish TV

Dish Tv is an Essel Group venture. Essel Group has a vast range of national and global business interests that include media programming, broadcasting & distribution, packaging, entertainment, online gaming and telecom, in close synergies with ventures active in the areas of content, distribution and infrastructure. Essel Group has always been a pioneer - Zee TV the first Indian satellite channel, Siticable the first MSO, Esselworld the first theme park, Play win the first online lottery, Essel Propack, which is the worlds No. 1 in packaging - were all revolutionary concepts in their respective fields. Continuing with the same path-breaking tradition, the group now brings to you a new era of digital quality TV viewing.

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Dishtv uses NSS-6 to broadcast its programmes. NSS-6 was launched on 17th December, 2002 by European-based satellite provider, New Skies (one of the only four fixed satellite communications companies with truly global satellite coverage) Dishtv - India's first KU-band DTH entertainment service, hopped on to NSS-6 at from an INSAT satellite in July 2004. The change in the satellite was to increase the channel offering as NSS 6 offered more transponder capacity.

Salient Features of NSS-6 1. Versatile Ku-band and Ka-beams can be easily cross-strapped or interconnected, offering enhanced connectivity throughout Asia with complete access to Europe and the United States through New Skies global network. 2. Higher transmission power enables customers to use smaller antennas (75-90cm) or obtain higher throughput with existing antennas. 3. NSS 6 is also equipped with extra on-board redundancy for critical units, minimizing risk of single-point failure throughout the projected 14-year operational life of the satellite. 4. Ideally suited for DTH and emerging broadband applications.

Transponder & Capacity Satellite TV and radio channels are transmitted back to earth via a transponder on a satellite. NSS-6 dish TVs service satellite has more than 60 high-power 36 MHz -equivalent Ku-band transponders that are tailored towards direct-to-home (DTH) and multimedia services.

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Additionally, up to 15 highly linearized transponders can be assigned to each of the six beams to respond to changing market demand. Each Ku-band beam is formed by an independent high-gain antenna system, offering 51-53 dBW in key markets. Going the DTH way has a lot of benefits. You are automatically upgraded to a host of world class features that makes television viewing a pleasurable experience. Have a look at some of the key add on benefits that DISH TV brings to your home. Digital Picture Quality

The exceptional digital and direct-to-home transmission ensures you watch all your favorite programmes in true DVD quality. Stereophonic Sound

The Direct-to-Home satellite transmission treats your ears to a true theatre experience by providing awesome stereophonic sound. Geographic Mobility

No matter which part of the country you are in or moving to, DISH TV with its all India coverage ensures direct signals where ever you are. Uninterrupted Viewing

With DISH TV at your home, as long as your equipment is connected to a power source you can enjoy uninterrupted transmission of your favorite programmes. Capacity up to 400 Channels

DISH TV can offer you up to 400 entertaining channels. And that's not all, every month more channels will be added to provide complete entertainment to your family.

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APNA DTH

DTH Project Overview: Prasar Bharati (Doordarshan) DTH Platform (Details of Satellite, Channels, Coverage and DTH Terminals) General Doordarshan is the world's largest terrestrial broadcaster with over 1400 terrestrial TV transmitters located throughout the country covering approx. 88% of India's geographical area. Doordarshan has setup a DTH platform to carry 33 FTA TV channels and 12 All India Radio channels on its DTH platform which can be received throughout India on Free-to Air (FTA) basis by consumers. The number of TV channels will be increased to 50 and All India radio channels to 40 in due course of time as per 'A Doordarshan press release' NSS-6 India Subcontinent KU Band Spot Beam Satellite & Coverage

Doordarshan is using New Skies Satellite (NSS) series NSS-6 Ku-band high power satellite with a footprint covering India and neighboring region and located at 95 E. Doordarshan's DTH Bouquet

Doordarshan's DTH platform is known as DD Direct Plus. This bouquet comprise of following 18

TV channels: DD CHANNELS 1. DD - NATIONAL 2. DD - NEWS 3. DD - SPORTS 4. DD - BHARTI 5. DD - INDIA 6. DD - MALAYALAM 7. DD - BENGALI 8. DD - ORIYA 9. DD - GUJARATI 10. DD - PUNJABI 11. DD - NORTH EAST 12. DD - PODHIGAL 13. DD - SAPTHAGIRI 14. DD - CHANDANA 15. DD - SAHYADRI 16. DD - KASHIR 17. DD - RAJYASABHA RADIO 1. AIR VBS 2. AIR MARATHI 3. AIR GUJARATI 4. AIR BANGLA 5. AIR NE 6. AIR TELUGU 7. AIR TAMIL 8. AIR KANNADA 9. AIR HINDI 10. AIR PUNJABI 11. FM RAINBOW 12. FM GOLD PRIVATE CHANNELS 1. KAIRALI 2. SUN TV 3. ETC PUNJABI 4. AAKASH BANGLA 5. JAIN TV 6. AAJ TAK 7. HEADLINES TODAY 8. STAR UTSAV 9. TV 9 10. BBC WORLD 11. ZEE MUSIC 12. SMILE TV 13. MH 1 - Music Channel 18. DD - LOKSABHA EDUCATIONAL CHANNEL 1. GYANDARSHAN

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Initially, it provides 33 channels and will add 20 more channels after 4-6 months. The formal launch of Doordarshan's DTH has been made by Dr. Manmohan Singh, Prime minister of India. Ground Network Doordarshan has deployed 10,000 DTH terminals comprising

120 cms, 90 cms and 60 cm antenna and associated hardware.

Research methodology
Research methodology: Primary research was carried out to know the various problems faced by consumers taking in account all the DTH competitors and cable operators .This data was be collected by: End-user interaction: in order to collect these various MDUS were visited and focus group discussions were held to know the customer perception. Various questions were asked which made end user carry out a discussion which resulted in mixed responses from various people Corporate dialogue: this data was collected by organizing activities at various corporate premises in which they were shown all the value added features of the product and then were judged on there responses the same set questions were used for them too. Primary research also includes the 4ps used by all the DTH players and there marketing strategy Secondary research would be carried out on the concept of DTH and the Govt. policies about the Cable operators and CAS, secondary research would also form an 20

essential part of the thesis as various newspaper and magazines would be used to validate the data given by the researcher.

RESEARCH ANALYSIS

The data so collected by focus group discussions, corporate dialogue, and from secondary sources like newspapers and websites was analyzed on the basis of the swot analysis Strengths Weakness Opportunity Threat

The DTH market was analyzed by knowing customers responses in favor of it and against it. The customer perception about the recharge model and the kind of product helped in devising the SWOT analysis. The activity in various MDUS and corporate houses made the analysis easier: MULTI DWELLING UNITS: SARGODHA APPARMENT DWARKA 21

SEEMA APPARTMENT DWARKA HEMKUNT APPARTMENT NEHRU PALACE VASUNDHRA APPARMENT MAYUR VIHAR

CORPORATES: NALCO WNS CITI BANK VOLTAS RDM REEBOK JWT

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Strength
Right products, quality and reliability. Superior product performance vs. competitors. 24 hrs after sales service Direct delivery capability. Product innovations ongoing. Better product quality and reception The viewers are empowered as they control what they watch and how much they watch. Management is committed and confident. Requires very low volts of electricity Various new content from west would be added for the viewers

Weaknesses
Less of value added service The content offered is the same when compared to cablewallahs and even less. The product is costly ,and penetration would be difficult as cable has already made its entry long ago Heavy rain and snowfall can disrupt the signals for a Dth Local cable channels cannot be watched by viewers

Opportunities
Could bring in more value added services with the coming of 3g and could build the internet infrastructure through the same network

Threats Legislation could impact

adversely making the scenario for MSOS even worse. Could distract from the core business 23

 Profit margins will be good. End-users respond to new ideas. People are fed up with the service and quality of cable so that could be on factor for the success of DTH

The emergence of IPTV and WIFI TV can be mar in the growth of DTH The cablewallahs can indulge in malpractices and can cause damage to the wires and even the dish No barriers to the new entrants in the market can be a serious threat to the DTH operators

4ps OF DTH PRICING STRATEGY Dish TV offers three packages. The Maxi package costs Rs 3,690 to the consumer who gets 125 channels. The Welcome package offers 80 channels and costs Rs 3,390. For Rs 3,290 you get the Freedom package with 60 channels. All packages include the price of set-top box, installation and three months of viewing charges. The set top box comes with a guarantee of 1 year. Dish TV also offers 60 days of free service after installation. Per month charges works out to Rs 374 for Maxi, Rs 225 for Welcome 24

and Rs 74 for Freedom packages. Highlight: Dishs Maxi plan is the most comprehensive, and expensive, channel package offered by any DTH player TATA SKY The Tata Sky hardware is priced at Rs 2,999. Installation and activation costs Rs 1,000 which includes a one-year comprehensive warranty. The viewing charge is Rs 200 per month. In all, it comes to Rs 4,199. Right now, Tata Sky offers a single viewing package. The viewer gets to see about 59 channels now. Highlight: Tata Skys interactive features and games, as well as a Rs 100 subscription discount on additional TV connections in the house DD DIRECT PLUS This is Doordarshans DTH service. Installation cost ranges between Rs 2,000-Rs 3,600 depending on quality of the equipment. This includes the set top box, dish, LNB, antenna and installation charges. High-end set top boxes come with a one-year warranty. Direct Plus carries about 35 channels, including 15 private TV channels. Aaj Tak, Zee Music, Jagran, BBC and Star Utsav are part of the package. DD plans to add 15 more channels to the bouquet. Highlight: Once installed, its totally free CABLE Cable rates in the city vary, more or less, between Rs 100 and Rs 400, depending on your locality. On average, you get to see 70 to 100 channels PRODUCT STRATEGY

Operator Initial charges Features Rs. 3999

Tata Sky Rs. 3200

Dish TV

Set top box, dish activation, Set top box, dish initial one year warranty subscription (varies

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according to scheme chosen) Subscription Rs 200 per month Choose from three schemes: Rs 2 a day (45 channels); Rs 6 a day (only non-English channels); Rs 10 a day (all 160 channels) Channels 59 Pay Channels And A Few Almost all channels of Zee, Free To Air, Includes Star, Star, Sony bouquets, ESPN Sony, DD and ETV all regional channels except channels like bouquets, NDTV, Discovery, those of the Sun group. National Geographic, MTV, Exclusive Today, channels Catch No Zee popular FTV, MH1, Aaj Tak, TV TCM, Boomerang, Trace regional TV, Zee Action, Zee classic, ABC channels, Subscription fee only an introductory offer

subscription fee introductory

Specials on the dish Tata Sky Interactive TV offers menu of channels, a weeks TV listing on screen, reminder facility for up to 50 programmes at a time, gaming interactive news (enables you to catch the same story simultaneously on four channels on multiple windows), interactive education for kids, movie on order, Search & scan (lets him check the cricket score even as she is watching saas-bahu, without disturbing the show.

PROFILE OF TATA SKY

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Incorporated in 2004, Tata Sky is an 80:20 joint venture between the Tata Group and STAR, offering viewers a world-class television viewing experience through its directto-home (DTH) television service. The Sky brand, owned by the UK-based British Sky Broadcasting Group, has more than 20 years of experience in satellite broadcasting, and is well known for its innovative products and services. With this service, Tata Sky has joined a select international group of DTH businesses that operate in areas as far away as the UK and Italy in Europe, and Mexico and Brazil in Latin America. Sky television is a digital service that brought to your TV through a satellite dish. Unlike the analogue signals that you receive through a standard television aerial, digital television has superior picture and sound quality which is on par with that of a DVD. By subscribing to Sky you can receive the hundreds of channels offered by Sky including Sky One, Sky Movies, Sky Sports, MTV and The Discovery Channel. There are also a huge amount of interactive services available, including a television guide, games and shopping. There are additional television services that are provided by Sky including Sky HD which features breath-taking quality visuals and surround sound and Sky+ that allows you to pause and rewind live TV. Sky television is the only place where you can watch new episodes of 24, Lost, Battle star Galactic, Prison Break, live Premiership football matches, live cricket and much more.

Areas of business Tata Sky offers viewers a variety of popular channels in categories ranging from entertainment, sports, movies and music to news and documentaries in DVD-quality picture and CD-quality sound. The service further aims to empower television viewers with choice, control and convenience through a wide range of programming and interactive features, thus becoming a one-stop shop for all the television entertainment needs of customers.

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With state-of-the-art digital infrastructure and partners that include global leaders in digital technology, Tata Sky provides for hardware installation at subscribers' homes, as well as after-sales service through an extensive customer service network that provides complete customer care. Tata Sky also retails its hardware and prepaid recharge vouchers through popular consumer electronic stores to facilitate consumer access. Business partners Tata Sky has invested in state-of-the-art digital infrastructure and has partnered with global leaders in digital technology. Indian Space Research Organization: The Company has on lease all 12 KU-Band transponders on ISRO's Indian satellite, INSAT 4A, the most advanced and high-powered KU-Band communication satellite in the region. The satellite enables Tata Sky to offer superior picture and sound quality with a wider range of channels. NDS: Tata Sky has partnered with NDS, a provider of technology solutions for pay television. The NDS Video Guard conditional access solution provides superior broadcast security, and enables Tata Sky to offer multiple programming and pricing packages. Siebel: Tata Sky has partnered with Siebel, leaders in Customer Relationship Management (CRM) software, to support operations through call centers and field service operations, customer order management and product configuration. . Comverse: Comverse's Kenan FX billing software supports billing for all residential, institutional and commercial customers. The software has been enhanced specifically for Tata Sky to support a new industry pre-paid billing service that allows customers 'to pay as you go'. SAP: SAP's Enterprise Resource Planning (ERP) application suite supports the company's materials management, sales and distribution, finance and control, and human resources requirements.

Sun Microsystems: The company provides world-class technology infrastructure to Tata Sky, which helps in delivering high levels of service standards that ensure maximum up-time, fault recovery and load management. Sun has also provided Tata Sky with installation, engineering expertise and support.

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Thomson and Humax: The company provides top-of-the-line dig comps, customized specifically for the Indian markets. The technology allows Tata Sky to deliver multiple programming, pricing packages, and interactive services to its customers.

Tata Group profile

The Tata Group comprises 98 operating companies in seven business sectors: information systems and communications; engineering; materials; services; energy; consumer products; and chemicals. The Group was founded by Jamsetji Tata in the mid 19th century, a period when India had just set out on the road to gaining independence from British rule. Consequently, Jamsetji Tata and those who followed him aligned business opportunities with the objective of nation building. This approach remains enshrined in the Group's ethos to this day. The Tata Group is one of India's largest and most respected business conglomerates, with revenues in 2006-07 of $28.8 billion (Rs129,994 crore), the equivalent of about 3.2 per cent of the country's GDP, and a market capitalisation of $73.6 billion as on December 13, 2007. Tata companies together employ some 289,500 people. The Group's 27 publicly listed enterprises among them stand out names such as Tata Steel, Tata Consultancy Services, Tata Motors and Tata Tea have a combined market capitalisation that is the highest among Indian business houses in the private sector, and a shareholder base of over 2.9 million. The Tata Group has operations in more than 85 countries across six continents, and its companies export products and services to 80 countries.

The Tata family of companies shares a set of five core values: integrity, understanding, excellence, unity and responsibility. These values, which have been part of the Group's beliefs and convictions from its earliest days, continue to guide and drive the business decisions of Tata companies. The Group and its enterprises have been steadfast and distinctive in their adherence to business ethics and their commitment to corporate social responsibility. This is a legacy that has earned the

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Group the trust of many millions of stakeholders in a measure few business houses anywhere in the world can match.
Purpose At the Tata Group our purpose is to improve the quality of life of the communities we serve. We do this through leadership in sectors of national economic significance, to which the Group brings a unique set of capabilities. This requires us to grow aggressively in focused areas of business.
Our heritage of returning to society what we earn evokes trust among consumers, employees, shareholders and the community. This heritage is being continuously enriched by the formalisation of the high standards of behaviors expected from employees and companies. The Tata name is a unique asset representing leadership with trust. Leveraging this asset to enhance Group synergy and becoming globally competitive is the route to sustained growth and long-term success.

Five core values The Tata Group has always sought to be a value-driven organisation. These values continue to direct the Group's growth and businesses. The five core Tata values underpinning the way we do business are: Integrity: We must conduct our business fairly, with honesty and transparency. Everything we do must stand the test of public scrutiny. Understanding: We must be caring, show respect, compassion and humanity for our colleagues and customers around the world, and always work for the benefit of the communities we serve. Excellence: We must constantly strive to achieve the highest possible standards in our day-to-day work and in the quality of the goods and services we provide. Responsibility: We must continue to be responsible, sensitive to the countries, communities and environments in which we work, always ensuring that what comes from the people goes back to the people many times over. Unity: We must work cohesively with our colleagues across the Group and with our customers and partners around the world, building strong relationships based on tolerance, understanding and mutual cooperation. 30

ABOUT THE TATA GROUP

Tata Group management The Tata Group is headed by Group chairman Ratan Tata. The Group Executive Office and the Group Corporate Centre are the two decision-making bodies that define and direct the business endeavours of the Tata Group. Each company has its own management. Chairman's chamber Messages from Group Chairman Ratan Tata and articles and interviews featuring him. Company heads The people at the helm of Tata Group companies.

GEO and GCC The Group Executive Office and the Group Corporate Centre, the two top decisionmaking bodies of the Tata Group.

Tata in business The Tata Group's business activities are conducted through 98 companies operating in seven business sectors. It has a presence in six continents and holds leadership 31

positions in many industry segments, among them tea, software, automobiles, energy and hospitality. With revenues, in 2006-07, of $28.8 billion (Rs129,994 crore), it has a market capitalization of $73.6 billion as on December 13, 2007.

Leadership with trust The Tata Group is one of India's oldest, largest and most respected business conglomerates. The Group's businesses are spread over seven business sectors. It comprises 98 companies and operates in six continents. It employs some 2,89,500 people and collectively has a shareholder base of over 2.9 million and market capitalization of $73.6 billion as on December 13, 2007.

Dish TV Interactive features include pause and play live TV, picture in picture (multiple windows allow simultaneously watching of channels; surf other channels in a smaller window while watching one show), Record programmes on six different channels at the same time, move on demand gaming. News interactive plans include enabling the viewer to get detailed text info on the news of your choice. Dish TV also offers a few exclusive channels like TCM (movies), Boomerang (kids), trace TV (fashion), Euro News, ABC and two Goal TV (football) channels.

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DTH (DIDECT TO HOME OR DESIGN TO HOME)

We have spent more than a decade doing what we lovebuilding some of the finest homes in Texas. We are passionate about fullfilling the hopes and dreams of our Homeowners. This is our family-owned business, and we stand behind each and every home we build. We believe everyone deserves a home that makes them feel secure and content. A home they can be proud to enjoy with family and friends, making memories for years to come. So each day you can find us analyzing, planning, testing, creating and evalutating every aspect of our business. It is our commitment to you, our Homebuyer, to continually rise above and beyond the basic standards and deliver superior quality that you deserve. The proof is in our full range of custom services, building methods, and inspection programsall created with you in mind. Its true, our company has a tendency for always thinking big. One day, we asked ourselves, Why should we just offer 10 years of warranty coverage like everyone else? Our homes are built to last much longer than that. In fact, we have so much confidence in our finished product that we provide a 20 year limited structural 38

warranty, unmatched by any other homebuilder in Texas today. It seemed like a great idea at the time and it still is! If youve been looking for a new home for any amount of time, youll agree that not all Homebuilders are alike. Some just say they can modify your home to fit your needs. We do it. Some just claim to build structurally sound, eco-friendly, costefficient homes. We build them. Browse through the website and learn why weve been the choice for more than a thousand satisfied Homeowners. We can sum it up in just a few words... we know the way home!

Michael E. Feigin, CEO Raised in Texas, Michael first met his wife Barbara while attending college in Springfield, Massachusetts. After college, they both headed south to pursue their dreams in our own Lone Star State. Before starting Design Tech Homes, Michael led the Houston division of one of the most successful homebuilding companies in the country. Today his expertise in construction management, coupled with his passion for customer service, gives him the ability to take Design Tech Homes to the highest level of success. Barbara M. Feigin, CFO Barbara Feigin gained many years of experience in Houston as a certified public accountant with one of the largest international accounting firms. Today she keeps the Design Tech Homes financial team on the cutting-edge of operational excellence. Together, through combined skills and leadership, they have formed a highly competent management team with the goal of providing high quality products and services to families throughout Texas. Barbara and Michael Feigin, along with their children Matthew and Rachel, extend to you a sincere invitation to become part of the Design Tech Homes family of Homeowners.

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PLACING STRATEGY TATA SKY and DISH TV have both worked on the place from where they can be easily accessed by the end customers. TATA SKY being new in the business has tapped big consumer durables outlets and big dealers for the placement of the product; it has bought this place from the dealers so that they can show the demonstration of the product to the customers. TATA SKY in its initial strategy has also made arrangements for demonstrations in multi dwelling units and corporate houses. DISH TV being an old player in the market has already made its channel structure and now is putting more emphasis on after sale service.

CO. Places the product at

DEALERS (MSO) organizes demo

Sends engineers For installation END USER

provides with recharge coupons to customers

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PROMOTION STRATEGY Dish TV (Handled by Lowe) has been around for a while now. They are the first DTH operator in the country. Their latest TV Ad tells you the benefits of going Dish - pause live shows, get the language of your choice, movies that you like and so on. While the ad itself is executed well, good production values and so on, there is no major idea to it. For they are only highlighting product benefits. In other words, the product idea is the TVC Idea. DISH TV has even made its presence felt in the print media and has done a lot of good work in that sphere TATA SKY (handled by Rediffusion Y&R) is the latest player in the DTH sector. And what an entry! While the basic proposition is pretty ordinary - Entertainment will never be the same again - the way they have built on this to make a TV commercial is fantastic. Having found one little emotional/non-rational hook, they exaggerated the benefit - by dropping old TVs, Music systems, and even eye-wear from high-rises. The TVC grabs attention as well as communicates the idea and the product story well. TATA SKY has not been able to exploit the print media well which makes DISH TV to have a higher edge but the way TATA SKY has done its penetration in all the TATA CO.S and other corporate in Delhi and Mumbai it makes them the real go getters as far DTH is concerned

* THE TV AD OF TATA SKY AND WEB BASED AD OF DISH TV HAS BEEN ATTACED IN THE ANNEXURE

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DTH VS CABLE Over the years many adjectives have been prefixed to this breed arrogant and unprofessional to name cable wallah. Missing out on a major football match or being unable to watch the slog overs of an important cricket international has often resulted in loud curses and abuses. And, yet there is often an overwhelming sense of helplessness. The cable guy is irreplaceable; he controls the remote of entertainment in our lives In the wake of the opening up of the earth and skies (literally) to private operators, India is all set to see a "war of the accesses". With very few large players, a widespread geography and an extremely rowdy and unorganized cable operator setup, the options between DTH and Cable as access modes are both set to woo the ever increasingly discerning Indian consumer. Finally, theres life without the intermediary. In millions of homes across the country, home entertainment is getting redefined and revolutionized as DTH (direct to-home) companies move into top gear. The DTH technology has been available in India since Dish TV started offering its service back in October, 2003. But the scene warmed up early this month with the coming of Tata Sky on August 8. Now with regulations on channel sharing gradually falling in place, size of the bouquet (number of channels on offer) has grown huge making DTH an attractive proposition for the consumer. Three players DD Direct Plus (Doordarshan), Dish TV (Essel Group) and Tata Sky (a joint venture between Tata and Star) are making a bold pitch for the 110 million television homes: 63 million cables and 47 million terrestrial. Other DTH aspirants include the Anil Ambani group and Sun TV, both planning to enter the fray. Currently, DD Direct Plus, launched in December 2004, leads the pack with about 4.5 million subscribers; many of them rural. Dish TV has about 1.3 million subscribers. 42

Of them 70,000 are in NCR. Just-arrived Tata Sky is unwilling to divulge subscriber figures. The private players are offering a lip-smacking fare. Apart from the much sharper picture quality you got to see it to believe it theres stereophonic sound, interactive television, gaming, break-free cinema, multi-audio programming. You can also store a programme and watch it later. Tata Sky has also engaged 3,000 engineers to cater to customer problems. However, the truth is that there are more choices before the consumer than ever before. Healthy competition between the two technologies will ensure that cable operators, including those in the final mile, improve their quality of service. The customer finally has the option to think beyond the cable guy. The DTH system of broadcasting scores over its cable counter part in the following areas: Higher subscriber accountability since the system eliminates the cable service

provider in the distribution chain. Thus there would be no under-reporting of subscribers as is prevalent in the current cable system. Premium quality service can be made available through the DTH system. The

quality of transmission in the case of DTH system is much better than that of the conventional cable system. DTH would be more accessible in remote areas where the cable's excessive

length may make the system expensive or technically un-acceptable. DTH is good news for smaller channels because the digital technology allows a

provider to compress between eight and 10 channels on a single transponder. So most big broadcasters are likely to be left with plenty of unutilized transponder space. But archaic rules and regulations will act as a dampener.

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Even though the law allows DTH to be set up in the country it is difficult to foresee major investments being made due to archaic regulations formulated by the government. The latter has come out with the following recommendations: 49%. Programs and/or channels distributed through DTH should only be uplinked Broadcasting/cable companies cannot hold more than 20% in the venture. Foreign investment in the form of NRI/OCB/FII cannot exceed more than DTH control should rest with resident Indians. Investors would have to shell out Rs100mn up-front and share 10% of their from India so that they confirm to the programming and advertising codes.

yearly revenues with the government. Coupled with the entry fee the investor would need to furnish bank guarantee of Rs400mn for a 10-year license period. A subscriber management system and an open architecture set top box will need to be in place. The broadcasters unanimously termed the DTH policy as un-realistic and too expensive. Chief among them is the 20% equity restriction for broadcasting/cable companies in the DTH project and the huge costs involved in the form of entry fee and sharing of revenues between the broadcaster and the government. It is not hard to see why the broadcasters are visibly perturbed. Firstly the service provider would have to create an infrastructure which would need investments of over Rs10bn before any the operations can begin. Secondly a 100-channel operator will have to hire around 14-16 KU band transponders pay heavy royalty to the original channel owners set up subscriber management system and incur considerable expenditure on sundry overheads. Coupled with the interest and depreciation cost on the capital outlay of Rs12bn the total recurring cost would be in the region of Rs6-7bn per annum. Revenue model of a DTH service provider (Rs mn): Total revenues Operating cost Interest (18000) (3800) (1800) 44

Depreciation Profit Investments

(1200) (11200) (12000)

ADVANTAGES OF CABLE TV OVER DTH While DTH is one option available to viewer and a premium one at that cable is already present in 35 million homes of the country. World over cable has become a hot property because a number of services can be provided through the single cable pipe. Services like high speed Internet, video on demand and Internet telephony are already being made available by the cable operators in the US and Europe to their customers. No wonder some of these players, even today after the NASDAQ debacle are trading at billion dollar valuations despite showing earnings losses. Analysts have in fact assigned strong buys to stocks of publicly traded cable companies. In India the story is no different. Valuations are high despite the fact that these companies are not providing the same kind of services that are offered by their international counter parts. Foreign investors have reposed faith in Indian cable companies as could be gauged from Star's stake in Hathway for US$75mn and Intel's 3% stake in the cable arm of Hindujas for US$49.3mn. Valuation of Indian Cable Companies

Company Siticable IndusInd Media Hathway Cables Sun TV RPG Netcom Others Total

Subscribers (mn) 5.4 4.3 2.5 1.0 0.8 21.0 35.0

Market Cap (USB) 2.3 1.9 1.1 0.4 0.3 9.0 15.2 45

Siticable has the highest market share with nearly 5.4mn subscribers under its belt. The company owns 73 head ends in 43 cities. The satellite television signals are redistributed to about 10,000 Access Cable Operators (ACOs) which feed the broadcast to the households through cable linked to the Siticable control room. IndusInd Media belonging to the Hinduja group comes a close second with nearly 4.5mn subscribers. Rajan Raheja controlled Hathaway Cable Network, RPG Netcom and Suns Sumangali are other major cable service operators in the country. These large Multi Service Cable Operators (MSOs) control 15mn of the 35mn cable television house holds. So the cable system in India is well entrenched and now needs to be upgraded for making it viable to provide a whole host of value added services

PITFALLS OF ACOS In India the cable laws are not in place. Even though the MSO controls nearly 60% of the total cable households the effective control is much lower because of rampant under reporting by the ACO. ACOs act as franchisee or collecting agents for the MSOs. In all there are around 25,000 ACOs through which the larger MSOs distribute their signals. According to the revenue model these ACOs have to pay something like Rs20-25 per household to the MSO. However in reality MSOs receive only 20% of the payments from cable operators. In such a structure the ACO retains 85% of the total subscription that is collected, whilst the MSO gets only 5% and the channel broadcaster retains the rest. Had there not been any under reporting the revenues would have accrued in the ratio of 10:20:80 to the ACO, MSO and broadcaster respectively. At the same time there is no respite on the cost front. It is

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because of this under reporting that MSOs like Siticable have not performed to their true potential WHAT GIVES DTH THE CUTTING EDGE

PICTURES & SOUND DTH signals are digital and beamed directly to your home via satellite. Hence, picture quality is excellent and the sound stereophonic. By contrast, the cable feed is analog (though they plan to go digital soon) which cant match DTHs picture and sound quality even in ideal conditions

INTERACTIVITY With DTH, you get programme listings for up to a week on your screen. Providers are offering interactive news channels that let you choose between hard news and feature programmes. You also have the option of watching four news channels simultaneously in the Tata Sky package

MOVIES ON DEMAND This paid feature allows you to watch a movie at the time of your choosing. The films are listed for a couple of days on dedicated channels with staggered starts, typically of 45 minutes. If you wish to see the flick, just inform the provider through SMS, internet or phone and you get access to the next show. Costs Rs 30-40 per movie

HINDI OR ENGLISH

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Does watching Nat Geo or Discovery in Hindi get your goat? DTH gives you the choice of watching these and other multilingual channels in your preferred language. The language option doesnt stop there. For instance, Dish TV will be giving the option of watching the forthcoming one-day cricket series in Malaysia in five languages

GAMING Both Tata Sky and Dish TV buy a digital video recorder you can download games from the internet and play it on TV after transferring it to the DVR using a USB port

PLAY-PAUSE TV If you never again want to miss the climax of a cricket match or a movie, record them in a digital video recorder. An 80 GB DVR costs around Rs 16,000 and has enough memory to record about 35 movies. With a DVR, you can record programmes in six other channels even as you watch TV. You can also pause a programme and watch the rest later or watch two channels simultaneously using picture-in-picture. DTHs digital feed enables the use of DVRs DOWNSIDE DTH providers offer dedicated set-top boxes which work only on their network. You cant use a Tata Sky viewing card on a Dish TV set-top box and vice-versa. Upshot: you are stuck with your DTH provider unless you invest in another set-top box. By contrast, consumers can buy set-top boxes compatible with any viewer card in the West. There are also questions about after-sales service. One, its costly. After your warranty period lapses, you may have to pay Rs 150 per visit by the company mechanic. Some consumers say, these mechanics arent proficient

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CAS

CAS stands for conditional access system, which is a digital mode of transmitting TV channels trough a set-top box (STB). The transmission signals are encrypted and viewers need to buy a set-top box to receive and decrypt the signal. The STB is required to watch only pay channels, not free-to-air channels, like Doordarshan

In the new system, Indian broadcasting companies will decide which channels would be 'non-pay' (free-to-air) and which would be 'pay'. The viewer will now be able to select the pay channels he wishes to watch and pay for only these. Each broadcasting channel will determine the rates for buying the channel. Currently, there is no segregation and subscribers pay a blanket rate for the entire service. There will soon be two levels of segregation. The first will be a broad differential according to lower, middle and upper classes of society across cable households. The second differential will be amongst pay channels, like premium channels, which will include focused news, entertainment, sports, music channels and niche channels like nature, health and fashion. The idea of CAS was mooted in 2001, which was followed by a furore over charge hikes by channels and subsequently cable operators. It was decided that it would be first introduced in the four metros. It has been in place in Chennai since September 2003. According to estimates, only 25 per cent of the people have subscribed the new technology. The rest watch only free-to-air channels. The inhibiting factor is the cost of the STB. According to a TRAI order, if one opts for all the existing channels then 49

the pay out will be less. For example, the Star bouquet at present comes for Rs 67 for eight channels. Under CAS, if one avails all the eight channels then the pay bill will be Rs 40 plus a 12.2 per cent service tax. The new tariff order will reduce the cable bills in Delhi, Kolkata and Mumbai.

ADVANTAGES OF CAS For viewers: Under, CAS viewers can watch only what they would like to watch, than what the cable operator has on offer. Subscribers save money they now spend on unnecessary channels. They will get better transmission (because of the use of optic fibre instead of metal cables). The cable operators will no longer have any control over the pricing of channels. For broadcasters: It benefits broadcasters as they always had to grapple with the issue of cable operators not declaring the actual number of subscribers, and hence suffering losses. With CAS, they can find out the exact number of subscribers with a cable operator. For cable TV operators: They need to pay a part of the subscription fees to the broadcasters only for the actual number of end users who opt for the channel. This allows operators to price their channels according to their popularity. For advertisers: It gives a far more accurate indicator of programme popularity with only the actual subscribers of each channel being accounted for. DTH VS CAS DTH does not compete with CAS. Cable TV and DTH are two methods of delivery of television content. CAS is integral to both the systems in delivering pay channels. Cable TV is through cable networks and DTH is wireless, reaching direct to the consumer through a small dish and a set-top box. Although the government has ensured that free-to-air channels on cable are delivered to the consumer without a settop box, DTH signals cannot be received without the set-top box. Besides, the monthly subscription cost for DTH and CAS on cable will vary. While you can opt for a number of channels in CAS, under DTH you have a limited choice 50

depending on the package you opt for. The quality of the broadcast will be of high quality with big players in the fray. Recommendations A STRATEGY FOR ALL DTH OPERATORS

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A DTH offer comprises six elements.

52

Content: The movies, news channels, sporting events, and/or general entertainment features that constitute an offer to consumers. Space: Ownership or access to sufficient transponders in the right orbital slot to broadcast an offer to a specific area.

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Ground: The ability to distribute, install and service dishes and set-top boxes (otherwise known as customer premises equipment, or CPE), combined with access to relevant technology and manufacturing capabilities.

Subscriber management: Ability to acquire and deactivate subscribers, bill and collect from them, activate pay-per-view movies and perform customer service.

Financing: The provision of credit to customer seeking to buy or lease CPE. Government relation: Ability to navigate government procedures and regulations to obtain permits and so on.

So diverse are these requirements, that no existing player in any market will be able to fulfill all of them on its own. This, the industry will be populated by consortia and it is unlikely that more than one or two DTH consortia will be able to achieve breakeven.

STRATEGIC AND SUCCESS FACTORS Exploit Bottlenecks: In this market, content and transponder capacity are scarce and controlled by a few players. With content, access to unique local language material is critical. In a market like India, all a DTH player may need to do is repackage existing channels that are not universally available. In sports, some players have won an advantage through longterm rights purchases. Broadcasting rights to cricket in India, for example, belongs to ESPN for the next five years. It also controls the right to football for West Bengal (the most popular league) for ten years. The second obvious bottleneck is in transponder capacity. A modest DTH offering is likely to require a minimum of 10 to 15 transponders-almost a dedicated satellite. The number of satellite that can broadcast to a particular region is limited by physics. Move First: In the DTH industry, a credible and well managed first-mover service has a tremendous advantage over others. In India, a first mover may effectively shut out competition. 54

Exploit Market Niche: In some markets, the segment of consumers who desire highly specific content may be large enough to form the core subscriber ship of a DTH service. An example of this could be again cricket in our country. Any DTH consortium must decide how it will deal with a number of strategic choices that will determine its success: Build an appropriate content offer: This is the single most crucial choice a DTH company will make. In a remote town with no access to television, for example, even a DTH bouquet of just two channels might seem attractive. Transponder costs are also a factor in an appropriate content offer. It is the bouquet size that determines how many transponders are needed, creating a tradeoff between the cost of transponders and the richness of the offering. Leverage killer content: A subscription service could use its rights more effectively. It might secure the exclusive right to broadcast a sporting event live, even if it is shown on free TV later. Offer superior services: Cable companies are frequently criticized for installation delays, billing errors and surly staff and the nature of cable plant makes signals prone to disruption. Staff and customer service issues relating to CPE installation and maintenance may yield a fine of differentiation above and beyond picture quality. Where to Place bets other strategic choice consortia must make are which markets to make bets in. A few rules of the thumb are: Number of TV households: the number of TV households and its rate of growth determine how easy it will be to break even and how quickly, if at all, a developing market will become attractive. TV advertising and its growth: Ad revenue are also available to a DTH service provider, so the existence of a robust or growing ad market is important. Technical barriers to access TV: Even if DTH offers are likely to be thin on the ground, it is possible for a company to own a piece of the chain that links a 55

service to subscribers. Until recently, Sky had a monopoly on the UK encryption standard, video crypt and could effectively dictate the terms of DTH competition; this was because it had a large installed base of set-top boxes using this standard. Ownership of key content: The availability of sports and film rights is a crucial determinant of market attractiveness. In India, such rights are divided among many separate players. In such a case, no rights owner is likely to be strong enough to play kingmaker. Position in a market: The most important asset is arguably an ability to play a unique role in the DTH value chain. This advantage may reside in business that has little or no obvious connection with DTH. A company that has pioneered a business offering credit for consumer durables in a developing country, for instance, might be well placed to supply finance to purchasers of CPE. FUTURE OF DTH IN INDIA (Conclusion) Over the last three years, the direct-to-home (DTH) satellite industry has come on strongly worldwide. It has grown from a niche delivery mechanism into a mainstream business. The spread of subscription-based DTH satellite TV promises to enhance choices for many households in developing countries. With the Government throwing open the DTH sector in the country, a handful of players have come up with grandiose plans to enter the market. Given the stiff level of competition this premium services will face from the existing multi-channel cable network, possible entrants need to clearly grasp a few of the winning rules of the game Direct to home (DTH) television service, more popularly known as direct broadcast satellite service, is coming to India after a government ordained delay of three years. In March 2001, government allowed Ku-band direct to home television broadcasting by issuing a notification and laying down the ground rules for companies wanting to enter DTH in India. 56

The initial excitement in media companies and even the public dissipated when details of the notification became available. Abroad, DTH acts as a strong alternative to cable TV. In the US it has broken the monopoly of local cable companies and offers two viable options in lieu of cable. It enables the customer to receive a minimum of 200 to 300 channels on a fairly economical basis. The other advantage of DTH is the availability of satellite broadcast in rural and semi-urban areas where cable is difficult to install. Due to digital compression techniques, many more niche channels are available than can be provided by cable operators. The services are more reliable vis--vis repeated breakdowns that can occur in cable transmissions as against satellite broadcast. DTH also offers digital quality signals which do not degrade the picture or sound quality. It also offers interactive channels and program guides with customers having the choice to block out programming which they consider undesirable. One of the great advantages of the cable industry has been the ability to provide local channels, but this handicap has been overcome by many DTH providers using other local channels or local feeds.

The Indian scenario is potentially exciting with a series of decisions taken by the Government to regulate the Indian DTH scene. But the initial excitement in Nov. 2000 has largely been transformed by a realistic look at the guidelines for DTH service in India.

The key features of the guidelines are: The total foreign investment cannot exceed 49 per cent. No broadcast or cable company can own more than 20 per cent.

57

The applicant company will have to pay an entry fee of Rs 100 million, pay 10

per cent annual revenue and execute a bank guarantee of RS 400 million for the duration of the 10 years license. Violation of license conditions can include revocation of license and / or

penalty of up to RS 500 million. The licensee will have to set up an Indian earth station in 12 months and

provide access to various content providers on a non-discriminatory basis. The set top boxes required to receive the encrypted signals will have to be open

standard boxes. The DTH license cannot be used for other modes of communication including

voice fax, data Internet unless specific licenses for these value added services have been obtained from the competent authority. On the face of it, the DTH regulations are quite in tune with media policy of the ruling alliance. However, there are many pitfalls in the policy some of which are outlined below. 1. A modest entry fee of RS 100 million and a bank guarantee of RS 400 million has been mandated with no restriction on the number of DTH operators in the country. However, the DTH operator will have to pass on 10 per cent of revenues as annual fees to the government. It is assumed that this is gross revenue without deduction of expenses and is not 10 per cent of net profit which would have been more equitable. 2. The period of license is for 10 years and non exclusive. However, there is no provision for automatic renewal of the license after 10 years based on performance of the DTH operator. 3. No broadcasters or cable television company is allowed to own more than 20 per cent of DTH. This has supposedly been done to prevent emergence of vertically integrated monopoly. This is despite the worldwide move towards convergence and even the provisions of the convergence bill

4. The DTH operator shall have to follow the advertising and programme code of Doordarshan and maintain a video record for 90 days of advertisements and 58

programmes. A DTH operator who does not own content will, like the present cable operators, be solely responsible for the implementation of advertising and programme code. No liability has been put on the content providers at all. 5. Apart from open architecture for STBs, the government has mandated that DTH operators should not discriminate between various channels wanting to get on the network. This is a welcome development as it will enable content providers to be available on all competing DTH platforms. 6. I&B Ministry will be the licensing authority until one is set up. There is no mention in this notification about the Broadcast Regulatory Authority as mandated by the Supreme Court in Cricket Association of Bengal Judgment in 1995.

7. The DTH operator is bound to carry all Prasar Bharati channels on most favorable terms offered to any other channel. No mention is made about the present requirements under the Cable Act to carry a minimum three Doordarshan channels on prime band, despite the fact that carriage of all Prasar Bharati channels may not be commercially desirable. Of course, it will not be easy to convince any government to leave it to the DTH operator to carry only specific Prasar Bharati channels. 8. The DTH operator is allowed to carry value added services such as fax, voice or broadband as long as it gets clearance from the right competent authority. While the government is willing to allow data, fax and broadband service from the DTH operator, the stipulations of getting clearance from the right competent authority without creating a single window approach will in effect delay provision of value added services by the DTH operator. A few things are assured in the DTH industry even in the face of paradigm shifts. First, the value of transponders is likely to fall as compression allows more and more content to go through the same satellite, and as more satellite are launched. Second, as bandwidth explodes, so will demand for content. Obscure sports and the like will become more valuable; conversely, much of the content that is currently valuable will face downward pricing pressure. Niche content providers will emerge.

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The industry is likely to be characterized first by a period of fragmentation and then by an increasing concentration of global consortia as unprofitable participants fold. What is clearer than ever is that satellite TV is here to stay and will play role in bringing television to mass around the world? IPTV based Reliance Blue magic is likely to be launched in 2007 and may have the upper hand with its established web of fiber optics across the nation. It would be easier for Reliance to offer fascinating services like high-speed internet, telephone, et al. Furthermore, IPTV users have a multitude of channels to choose from. Looking at the potential of IPTV, the DTH revolution may be short lived. Point is, it's a time of convergence, and Telco, to remain in the running, must now offer more than just basic connectivity. Players like Airtel, Idea & Hutch must not restrict themselves to just TV on mobile, but also spread into the living rooms. Critics argue that shifting consumer from local cable providers to corporate aficionado would require more bait. Though many telecom & media heavyweights like Reliance, Tata, Star, Sun et al are eyeing the huge potential in the organized Indian cable market; the bundling of various services holds the key to differentiate one's offering from another. Today, the consumer is willing to accept CAS because his monthly cable bill will be slashed and he will, apparently, not be at the cablewallahs mercy. But the unidimensional pricing scheme has stumped broadcasters who claim their business models will have to be completely overhauled. That is true. Many early players wrapped up operations once they realized that ad revenue is insufficient to maintain satellite channels. Whether by December 31, 2006, CAS will storm into metro houses is unknown. But one thing is for sure: it will take plenty more twists and turns for the industry to reach some semblance of order.

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QUESTIONNAIRE

1. What is DTH? What are its benefits over cable TV? 2. Why do you think DTH has more benefits? 3. What according to you are the pitfalls DTH? 4. Do you think DTH would have many buyers? 5. Why would you in particular buy or not buy a DTH? 6. What do you feel about the advertisement of the various brands of DTH?

GOVT LAWS TURNING CHANGING THE FACE 61

OF ENTERTAINMENT Cable battle lines drawn In Mumbai, 3,500-Odd Operators Come Together To Form An MSO The cable industry in Mumbai may never be the same again. The citys local cable operators have just decided they do not want to stay cable operators any more. All 3,500-odd cable operators and 19 big distributors, pushed hard by the spectre of direct to-home broadcast and the Conditional Access System, have banded together to form a cooperative that will function as a multi-system operator (MSO). This is the first cooperative venture in this sector of the entertainment industry, Cable Operators and Distributors Association president Ganesh Naidu said, adding they had decided to call it the SCOD (Smart Cable Operators and Distributors) Networking Pvt Ltd. The name has already been registered and a master control room has been set up in the western suburbs. Operators have started working on matching the best in the business. SCOD is negotiating with Handen, a Korean company, for the set-top box (STB). The digital system to be used in the head end is from Harmonic and the software required to control the functioning of the STB is being sourced from Iredeto. All this needs an investment of at least Rs 5 crore, say the brains behind the initiative. But why is 15-year-old system steering itself in an entirely new direction? We were left with little choice once the CAS became a certainty, Naidu said. Charged with fleecing by consumers and under-representation of consumer figures by channels, the cable operators were never really happy with the governments move to bring in transparency in the cable business through CAS. While initially the fear stemmed from the set top box that makes it very easy for the MSO to get the real subscription, the bigger problem has unfolded only recently. Now, as per the new TRAI regulation on the sharing of revenue under CAS, we are reduced to nothing, decries Naidu. Out of every 100 rupee that a consumer pays for cable entertainment, 45 will go to the broadcaster, 35 to the MSO with the cable fellow getting the least at Rs 25. Compare this with the non-CAS scenario: a cable 62

operator collects anything between Rs 50-300 per home on a monthly basis and if MSOs are to be believed, the undersubscription is more than 50 per cent. This is a 360 degree swing against us and now a matter of survival, says one cable operator whos joined in the Cooperative MSO. For people like Naidu who started off some 10-12 years ago with one VCR and a few homes, the pain is also emotional. We have ploughed this land and today we are facing extinction. Loss of revenue is certainly the bigger issue but loss of any say in the cable matters is equally painful, says an operator. When the MSO model came in 1995, with names like Hinduja, Sumnagli and Siticable, it was their money power which brought the local operators into their fold. We were like the field force of these guys bringing in new customers, winning new areas, he says. So why couldnt the operators join hands with the MSOs? We have been asking for some stake for the cable operators but of no avail, says Naidu.But why would consumers not take a CAS or better still adopt DTH. The biggest advantage, Naidu feels, is the familiarity bit.

Viewers rejoice! Its Rs 5/channel

Trai: New Rates in Metros From Dec 31 In a move that is set to reduce monthly cable bill, TRAI, as reported by TOI on Thursday, has capped the tariff for pay TV channels at Rs 5 a month. It also mandated that cable operators provide at least 30 free-to-air channels at Rs 77. Trai said the new rates will be applicable in three metros from December 31 and broadcasters can no longer sell channels only in a bouquet but make them available a la carte. There is, however, an option to sell a bouquet, but it has to come at a 63

discount. But you cant decide to watch a channel only for a month and then drop it from your most-watched list. Trai has fixed the minimum subscription period for a pay channel at four months. Broadcasters have also been mandated to give a months notice before they decide to convert a pay channel into free-to-air or vice versa. Despite protests from the cable operators, the regulator decided to stick to the price. While 30 free-to-air channels are to be made available mandatorily, additional channels also need to be accommodated within the above maximum amount, Trai said. In addition to fixing tariffs for channels, the regulator has also put in place norms for supply of set top boxes, which will be applicable from October 1. Multi-system operators have to compulsorily provide two schemes as part of the standard package. The first scheme will have a monthly rental of Rs 30 for digital set top boxes consumers will have to make a refundable deposit of Rs 999 per box. Under the second, the monthly rental has been fixed at Rs 45 for digital STBs and Rs 23 for analog STBs. If a consumer opts for this, the refundable deposit will be Rs 250 and Rs 3 will be deducted for every month of use. While MSOs can also offer other packages, they cant charge customers for installation, activation or reactivation, smart cards or viewing cards or for repair and maintenance for five years.

SCREEN TEST Trai caps tariff for pay TV channels at Rs 5 a month. It has also said that cable operators must provide at least 30 free-to-air channels at Rs 77 Trai says that the new rates will be applicable in three metros from December 31 and broadcasters can no longer sell channels only in a bouquet but make them available a la carte

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Ushering in CAS TIMES NEWS NETWORK [SATURDAY, AUGUST 19, 2006 12:23:17 AM]Telecom regulator Trai has issued a draft tariff order detailing rental schemes for set-top boxes (STBs) meant to be used once conditional access system (CAS) for cable TV kicks in. The tariff schemes are meant to protect consumer interest and aid the adoption of CAS. A rental system saves the consumer from getting locked into a particular service provider she does not have to incur a high initial expenditure on an operatorspecific STB. It also makes sense to usher in a similar system for direct-to-home television (DTH). The explanatory memorandum to the draft tariff order brushes away the immediate need for a similar system for DTH by saying that it is yet to emerge as an effective alternative to cable.

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DTH will never be able to emerge as an effective alternative to cable if the initial investment for it far exceeds that for cable. DTH requires initial investment for both a dish antenna and a TV-top box. It is also not clear how the issue of inter-operability will be addressed in the case of DTH. Trai also needs to mandate adequate disclosure requirements to ensure that where rental schemes are not possible or not desired, cable and DTH providers educate the consumer sufficiently about the lack of inter-operability. The experience with CDMA handsets which are not as flexible as GSM handsets when it comes to shifting service providers indicates that inter-operability is not always an inhibitor in furthering competition. In the case of CDMA, adequate consumer education has served to enlighten the consumer about this particular drawback. These rental schemes, tariff plans, etc, have their initial advantages. However, the long-term benefit lies in the furtherance of true competition and non-mandated pricing. Trai is being forced to bring in standard, mandated tariff plans for STBs and is even being compelled to evaluate the issue of pricing of individual/channel bouquet pricing. This clearly indicates that either there isnt enough competition or that players are unwilling to compete. This is not in the long-term interest of the industry as well as the consumers.

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