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Broadcasting & Digital Media Industry in India

March 2014

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Digital Media Industry in India

Table of Contents
Broadcasting Industry................................................................................................................... 2
Overview.................................................................................................................................... 2
Digital media ............................................................................................................................. 4
Market statistics ........................................................................................................................ 7
Regulatory issues..................................................................................................................... 10
Digital Media Industry ................................................................................................................ 19
Overview.................................................................................................................................. 19
Internet Protocol TV (IPTV) ...................................................................................................... 20
Operational development .................................................................................................. 20
IPTV broadcasters ............................................................................................................... 23
Pay TV ...................................................................................................................................... 30
Cable TV................................................................................................................................... 33
Market overview ................................................................................................................ 33
Cable TV regulatory environment ...................................................................................... 34
Digitalisation of Cable TV ................................................................................................... 37
Satellite TV............................................................................................................................... 40
Direct-to-Home (DTH) TV.................................................................................................... 40
Major cable and pay TV operators .......................................................................................... 51
Free-to-Air TV .......................................................................................................................... 58
Disclaimer ................................................................................................................................. 59

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Digital Media Industry in India

Broadcasting Industry
Overview
India has emerged as one of the largest TV markets in the world, after the
introduction of television to India back in 1959. At the same time with the
emergence of new technologies and broadcasting platforms the local industry has
been totally transformed. With the roll out of extensive networks for cable TV
services, the infrastructure available provides a real opportunity to operate
telephony and Internet services over these networks. Change flowing from new
technology has not been raid, however. Indian telecom operators seeking to
increase revenue and stimulate demand by offering Internet Protocol Television
(IPTV) services, for example, have faced hurdles of high costs, low broadband
usage and slow speeds.
In the meantime, the television programming landscape had been totally
transformed over the last decade. India has been producing the highest number of
feature films in the world in the shortest time and had become one of the largest
producers of TV programming outside Hollywood. At the same time sport has been
a major driver of the Indian cable and satellite TV market. Cricket, as the countrys
national game, has been a particularly strong impetus to the sector. All this has

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Digital Media Industry in India


means that there are opportunities for greater commercial gains and this in turns
feeds into the question of how best to exploit technology.
When revised legislation governing telecommunications came into effect back in
1999, this provided the basis for the more effective and efficient use of
infrastructure. The New Telecom Policy 1999 (NTP-99) included policies for:

opening up basic telephony to all;

allowing fibre optic cable operators to enter into basic services;

freeing up of domestic long-distance services.

Critically, the changes also helped the government to move on to its primary
objective of allowing the convergence of telecommunications and broadcasting
technologies. The initiative to permit cable operators into basic telephony was
considered radical. Cable operators were already providing TV services and were
also permitted to provide internet services. The provision of basic telephony
services could add value to their package and give them a more significant role in
the telecom market. Clearly the market was being presented with a range of
opportunities to make commercial use of the available range of technologies. Two
companies, InCableNet and SitiCable, had launched internet services over cable as
early as 1999. The scene was set for more change in the sector.

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Digital Media Industry in India


Digital media
India has more than 1,000 TV transmitters covering over 90% of the countrys
population and serving more than 140 million TV households by terrestrial mode,
with more than 100 million homes accessed by satellite and cable. Television has
reached more than 60% of all people (urban and rural) in India.
Cable TV remained the dominant media platform. Estimated cable TV households
had risen to 85 million by 2010, up from 28 million in 1999. (An accurate figure
was difficult to find because of the large number of unreported cable TV services
in the country.) The figures were expected to rise further as sales of TV sets
remained strong.
Following extensive testing, India chose Digital Video Broadcasting-Terrestrial
(DVB-T) for its digital terrestrial broadcasting standard. Doordarshan, the stateowned national Free-to-Air (FTA) TV broadcaster, indicated that it intended to
implement digital services on a phased basis. Services were being proposed as a
multiplex of four services to provide coverage for the metropolitan areas of Delhi,
Calcutta, Mumbai and Chennai.
Media development in India has continued to be fraught with problems arising
from battles between broadcasters and cable operators over rates. As well as that,

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Digital Media Industry in India


the under reporting of subscriber numbers remained a serious problem for the
industry as franchisees failed to declare 20% of their actual subscriber base.
NewsCorp subsidiary STAR TV, for example, had been demanding both higher
monthly subscription rates and higher reported numbers. The broadcaster won a
major court victory with InCableNet being forced to pay STAR for an extra 25,000
subscriber homes.
South Korea and India signed an agreement in 2006 to work together in the mobile
broadcasting sector, paving the way for South Korea to export its Digital
Multimedia Broadcasting (DMB) technology to India. DMB was a method of
multicasting multimedia content to mobile and portable devices, such as mobile
phones, by satellite or terrestrial services, or a combination of the two. South
Koreas Ministry of Information and Communication (MIC) said it had signed the
deal with the TRAI and Indias Tata Group. The MIC noted that the Tata Group was
interested in introducing the DMB service. South Korea has been leading the world
in the DMB industry, having launched two world firsts - a satellite mobile
broadcasting service and a terrestrial mobile broadcasting service both in 2005.
To help raise awareness of its DMB technologies, the South Korean ministry said it
was holding a number of demonstrations in India with local government officials
and business leaders in attendance.

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Digital Media Industry in India


The Government has notified for implementation of Digital Addressable Cable TV
Systems (DAS) in India, in four phases, starting from November, 2012 and
completing by December 2014. The final schedule notified by the Government for
migration to DAS is given below

Schedule for migration to Digital Addressable Cable TV System (DAS) 2012 - 2014

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Digital Media Industry in India

Market statistics

Broadcasting market overview 2012

Broadcasting Standard and major broadcasters

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Digital Media Industry in India

Cable and TV households 1995 2012

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Digital Media Industry in India

Total TV industry revenue 2000 2011

Cable and TV households and TV industry revenue: 2000 - 2011

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Digital Media Industry in India


Regulatory issues
Background
The government introduced the Broadcast Bill, the Prasar Bharati Act and an open
sky policy in 1997, with the aim of opening up the market to licences for terrestrial
radio, terrestrial TV broadcasting, satellite radio, domestic satellite TV
broadcasting, DTH and the cable market. However, Indias legislation guiding cable
and satellite broadcasting had been confusing and sometimes contradictory.
State controls on satellite broadcasting were eased during 1999, allowing private
domestic companies to uplink programs. The new rules, which encouraged foreign
broadcasters to seek Indian partners or launch domestic ventures, ended
mandatory requirements for TV companies to uplink broadcast signals through
Videsh Sanchar Nigam Ltd (VSNL). Amendments to legislation also made it
mandatory for cable networks to carry two Doordarshan channels and regulate
pay TV channels.
The government permitted Indian private companies to set up uplinking hubs in
2000 for hiring out to other broadcasters. The new policy also allowed uplinking of
any television channel from India. Indian news agencies were allowed their own

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uplinking facilities for news gathering and distribution. The DTH broadcasting
segment was finally opened up in late 2000.
The Telecommunications Regulatory Authority of India, (TRAI) issued a Tariff
Order in 2005 which was to see new pay channels as well as FTA channels
converted into pay channels. The regulator had issued a Tariff Order in 2004
which, inter alia, provided that if any new pay channels were introduced after 26
December 2003 or any channels that were FTA channels on 26 December 2003
were converted to pay channels subsequently, then the ceiling of charges,
excluding taxes payable by Cable Subscribers to Cable Operators; by Cable
Operators to Multi System Operators/Broadcasters and Multi System Operators to
Broadcasters prevailing on 26 December 2003, could be exceeded under the
condition that new channels be provided on a standalone basis, either individually
or as part of new separate bouquets and the new channels were not included in
the bouquet being provided as on 26 December 2003. In terms of paragraph 4 of
the Tariff Order, the broadcasters of such new pay channel(s) that had been
introduced after 26 December 2003 or of any channel(s) that as a FTA channel on
26 December 2003 was converted to a pay channel subsequently, shall furnish to
the Authority information in prescribed format within a specified period.

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A suggestion was received to the effect that the prices charged by the broadcasters
should be widely published in print and electronic media and put on TRAIs
website so that the consumers were made aware of the pay channel rates in an
appropriate manner. This suggestion was examined by the TRAI in consultation
with major broadcasters and the Alliance representing prominent Multiple
Systems Operators (MSO) particularly in the context of transparency; of
information value of publishing wholesale prices to the end consumers; and, of the
requirements of the need to maintain confidentiality of trade information. On the
basis of the examination and keeping in view the divergent opinion of
stakeholders, TRAI decided to publish on its website, for the present, only the
information as to the channels that existed and which were FTA on 26 December
2003 that have turned Pay subsequently and which were the new pay channels
introduced after 26 December 2003. This information was being published on the
basis of reports furnished by broadcasters in terms of paragraph 4 of the Tariff
Order of 2004.
In 2006 the Ministry of Information and Broadcasting (MIB) was drafting the
Broadcasting Services Regulation Bill with the aim of achieving the following basic
objectives:

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To promote, facilitate and develop in an orderly manner the carriage and


content of broadcasting. (Broadcasting had been defined as including not
merely traditional broadcasting but also Internet broadcasting and mobile
broadcasting);

To make provisions for regulation of broadcasting services in India in a fair,


objective and competitive manner;

The government shall be authorised to prescribe eligibility conditions and


restrictions with regard to accumulation of interest in the print and
broadcast segments of the media to prevent monopolies across different
segments of the media including the broadcast segment, to ensure diversity
of news and views;

To provide for the establishment of an independent authority - the


Broadcast Regulatory Authority of India (BRAI) for the purpose of
regulating and facilitating development of broadcasting services in India.

Cable Television Networks (Amendment) Bill


Indias lower house of parliament passed the Cable Television Networks
(Amendment) Bill in 2002, paving the way for the introduction of a Conditional
Access System (CAS) in India. The bill sought to regulate the operation of Cable TV

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networks through the mandatory installation of an addressable system for
accessing pay channels. This was set to see the introduction of Set-top Boxes (STB)
at the customers premises. Consumers who view FTA channels would not need to
use a STB. The proposal was heading for full adoption, despite the concerns about
the cost to the community. The cost of the STBs, which would only be required for
pay-TV channels and not for FTA channels, was to be borne by the consumer.

Convergence Bill 2001


The Communications Convergence Bill 2001 was adopted in early 2001, paving the
way for the establishment of the Communications Commission of India (CCI), an
authority designed to work along the lines of the Federal Communication
Commission (FCC) in the US. Encompassing all aspects of convergence
(communications, information and broadcasting) the CCI would be designed to
operate as a unified regulatory authority for issuing multiple licences for basic
telephony, mobile telephony, broadcasting and web-casting. It would also manage
spectrum, resolve disputes and determine the conditions for fair, equitable and
non-discriminatory access to network facility and services.

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Furthermore the CCI would monitor program content on all TV channels, both FTA
and encrypted pay channels. Content regulation may come through earlier than
renting out Doordarshan facilities to private parties as the latter had to be
approved by the Prasar Bharati board. This would treat FTA and pay channels on
an equal footing as far as the programming code was concerned. In the Act as it
existed, there was very little content regulation of FTA channels, while pay
channels were subjected to close scrutiny.

Foreign investment
The MIB policy on foreign investments issued for the sector at the start of 2000 set
out the following guidelines:

Foreign investment proposals directly linked to broadcasting would be kept


pending until the Broadcasting Law comes into effect. Companies with 80%
Indian equity may be allowed to uplink for satellite channels;

The proposals related to production of software and marketing of TV rights,


airtime, advertisements, etc may be recommended with the condition that:

all future laws on broadcasting would be applicable to them and they would
not claim any privilege or protection by virtue of this approval;

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Digital Media Industry in India

mentioned above, would observe the Program Law and Advertisement


Codes of Doordarshan.

Proposals having an Indian equity of at least 25% would be encouraged,


however, in genuine cases, even 100% foreign equity can be allowed;

There is no foreign equity allowed in private FM broadcasting.

By 2007 the MIB was confirming its position on foreign investment: Foreign
investment proposals involving up-linking from Indian soil may be allowed to
Indian Companies, who were broadcasters having minimum 80% of Indian
shareholding and Indian management control. There was no restriction on foreign
equity in proposals related to production of software, marketing of TV rights, air
times, advertisements, etc. No foreign equity was allowed in private FM
broadcasting. For a cable network company, not less than 51% of the paid -up
share capital should be held by Indian citizens.

Conditional Access System (CAS)


After the TRAI had outlined its Conditional Access System (CAS), in late 2006 cable
operators throughout India were campaigning against the regulations that limited

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their ability to control individual channel costs. The CAS, which was scheduled to
go into effect at the start of 2007 in Kolkata, Mumbai and New Delhi, was drawing
protests from the countrys cable distributors for its imposed financial limitations.
Under the TRAI regulations, the cost of the countrys 22 FTA basic cable channels
would be set at US$15.40. Cable channel costs had previously ranged from News
Corps US$13.47 eight-pack of channels to the ESPN-Star Sports channel, which
was offered for US$1.

Viacom Network18 joint venture


Viacom and Network18 completed the formation of their 50/50 Indian-based joint
venture called Viacom 18 Media Private Limited in late 2008. The companies had
originally announced their plans for the joint venture in 2007. Viacom 18 was set
to include television, film and digital media content across numerous brands as
well as consumer products to build a multi-platform entertainment company. The
joint venture was preparing to launch a new Hindi general entertainment channel
in India early in 2008. The service would consist of original, locally produced
programming, acquisitions and content from MTV Networks. The joint venture
would operate the local networks, MTV, VH1 and Nickelodeon India, of MTV
Networks (MTVN), a unit of Viacom. In the future, Viacom 18 was also planning to

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launch a suite of niche channels from the MTV Networks portfolio, as well as new
brands. Digital media content across all the television brands was to be developed
and distributed to Indian consumers. The joint venture would also syndicate MTVN
programming and newly-produced content.

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Digital Media Industry
Overview
Transitioning Indias mass TV broadcasting market to digital is a major challenge.
Whilst there are already rapidly expanding and inherently digital segments in the
TV market, notably IPTV/Broadband TV, the digitalisation of the traditional
platforms needs ongoing attention by the operators and regulatory oversight.
Following extensive testing, India chose Digital Video Broadcasting-Terrestrial
(DVB-T) for its digital terrestrial broadcasting standard. The TRAI has also
recommended (in a report submitted to government in 2010) that all cable TV
operators should have changed from the analogue system to the digital platform by
2013. As Indias Direct-to-Home (DTH) TV operators work to attract customers
away from cable TV operators, they have been helped by their being able to offer
digital-quality transmissions while the cable operators struggle to upgrade their
analogue systems.
In February 2011 there were moves to postpone the deadline for cutover to digital.
The Information and Broadcasting Minister said the ministry may look at
extending the timeline for digitising television distribution networks across the
country by a year. In the meantime, the regulator said it was proposing the
deadline be postponed to June 2014.

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Internet Protocol TV (IPTV)
Operational development
Mahanagar Telephone Nigam Limited (MTNL) and Bharat Sanchar Nigam Limited
(BSNL) were initially the only companies offering limited IPTV services. Bharti
Airtel and Reliance Communications subsequently joined the two state-run
operators with their own IPTV offerings. Operators needed to overcome a series of
challenges if they were succeed in their IPTV ventures. India Online (IOL) Netcom
and Aksh Optifibre were reported to be battling high costs as TV broadcasters
were charging telecom companies much more than cable operators for program
feeds. Broadcasters were also looking for minimum subscriber guarantees. Any
shortfall in subscribers has to be made good by the service provider, adding to
costs. Broadcasters need to be assured of revenues before offering our content,
one content distributer said. Another major obstacle to popularising IPTV in India
is the countrys low broadband penetration.
It was estimated that there were 20,000 subscribers to Digital Subscriber Line
(DSL)-based IPTV services in India by 2005. In an important ruling in late 2007,
the TRAI said that telecom service providers and cable operators could provide
IPTV services without any further clearances. The regulator said providers with
unified access services licences and mobile telephony service licences, as well as

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cable TV operators registered under the Cable Television Network Act were
included in its decision. According to the draft guidelines, telecom service
providers were permitted to provide triple play services. Prior to the
announcement the TRAI had been soliciting comments from stakeholders on a set
of draft regulations. On the issue of content, the regulator said only channels
approved by the MIB were allowed on the IPTV platform. For content other than
TV channels, the licensee would have to adhere to the programming and
advertising code provided under the Cable Television Network (Regulation) Act.
The TRAI announced in 2007 that telecom operators wishing to provide television
over Internet would be required to pay between 6-10% of their adjusted gross
revenue as licence fees, depending on the telecom zone they operated in. Telecoms
companies, cable operators and some Internet Service Providers (ISPs) had
already been authorised by the TRAI to provide IPTV in India, with telecom market
leaders like Bharti Airtel and Reliance Communications moving to deliver such
services. The regulator said that broadcasters should be permitted to provide
television signals to all distributors of the channels.
The authority further noted that regulations said broadcasters could only provide
equipment to decode the signals to cable operators or operators of multiple cable
television systems. Under the recommendations telecom operators would be

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restricted to transmitting those news television channels that have been approved
by the ministry for broadcasting. They must transmit television channels in the
same form as allowed by the government for up-linking or down-linking. The
companies must adhere to the countrys programming and advertising codes if
they transmit content other than provided by the television channels.
In 2008 the TRAI recommended that the government auction licences granting the
broadcasting of mobile phone-based television services, either via terrestrial or
satellite systems. Up to that time fixed line telecom operators that already had
bandwidth did not need a licence to offer mobile TV services. However, the
regulator said that those companies would be required to take part in the bidding
process if they wanted to offer mobile TV services via the broadcasting route.

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IPTV broadcasters
BSNL
BSNL said in 2006 that it would launch a pilot IPTV service in the city of Pune. It
would then expand IPTV to other regions, including Delhi, Mumbai, Kolkata,
Chennai and Bangalore, depending on the commercial success of the service. After
the launch of its pilot IPTV service in Pune later that year, BSNL launched a
commercial IPTV service in 2007. The service was initially made available to
broadband subscribers in Delhi, Mumbai, Kolkata, Chennai and Bangalore as
planned.

MTNL
In 2006 MTNL was preparing to be the first to market with IPTV in India. A
commercial launch of its Tri-band service had been set for October of that year.
The operator had been testing the service in Delhi for more than a year and in
Mumbai since mid-2006. The service was designed to support a range of FTA and
pay-TV channels, as well as Video-on-Demand (VoD). Tariffs had not been decided
but were expected to be similar to the then prevailing charges of cable TV
operators. In the meantime MTNL needed to seek regulatory approval to launch its
IPTV offering. Neither its basic telephony or mobile licences gave it the right to

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operate IPTV services, but the company said it was confident of launching by yearend at the latest. For its part, the TRAI had not yet formulated regulations for IPTV.
However, the government was allowing companies holding Unified Access Service
Licences (UASLs) to provide services in the interim. Because MTNL did not hold a
UASL it was required to gain special permission to roll out services.
MTNL signed a three-year deal with UTStarcom and its local partner Aksh
Optifibre in early 2007 that would enable the operator to roll out an IPTV service.
The service, which UTStarcom claimed was to be Indias first IPTV offering, was to
be delivered over MTNLs broadband network and included traditional broadcast
TV, video and music-on-demand services, time-shift TV and videoconferencing.
MTNL claimed a presence in more than four million homes in New Delhi and
Mumbai through its broadband service providing a strong base for its IPTV service.
The service had been soft launched late in 2006. The entry-level package was set to
cost INR125, a price MTNL believed would attract a large number of subscribers.
The IPTV service was based on UTStarcoms RollingStream end-to-end solution.
In the meantime, the TRAI declared that the launch of IPTV services by MTNL was
in fact illegal. The regulator said that IPTV was not covered by the countrys Cable
Televisions Networks (Regulations) Act and the service could only be launched by

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companies holding a USAL. MTNL held a cable TV operating concession, but no
Unified Access Service Licence.

Bharti Airtel
In 2007 Bharti Airtel was working with supplier UTStarcom to launch an IPTV
service. Bharti was already testing IPTV services in limited areas of Delhi, having
commenced these tests in 2005. The two companies said they would aim to launch
the service in Delhi by the end of 2007; they planned to provide around 150
television channels by the commercial launch.
IBM was contracted by Bharti Airtel in 2008 to help boost its service offerings.
Under the deal IBM would deliver services worth US$150 million to Bharti over a
six-year period that would strengthen the telecommunications companys
networks and develop expertise in providing television content over the Internet.
Bharti Airtel launched its IPTV service under the brand name of Airtel Digital
Television at the start of 2009. Offering services of voice, broadband, TV and video
entertainment, the service included up to 135 TV channels.
In March 2011 Bharti Airtel announced the launch of its Airtel Broadband TV
IPTV service, offering 28 live TV channels to subscribers via computers and
laptops. Three different tariff options were being offered, with prices starting at

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INR49 (US$1) per month. The most expensive option was offering all live TV
channels in addition to 19 Video-on-Demand (VoD) channels for INR99 per month.

Reliance Communications
Microsoft and Reliance Communications announced a partnership in 2007 that
was designed to deliver Internet-based television services to homes in India.
Reliance agreed to pay Microsoft about US$500 million in licence fees to use its
software for IPTV services. Reliance Communications said in May 2010 that it had
launched IPTV services in Delhi and Mumbai, to be followed by launches in six
other cities.

Aksh Optifibre
Aksh Optifibre was one of the first movers into the IPTV market. The company has
been providing television and telephony services over the Internet on a revenuesharing basis with MTNL and BSNL. The company claimed about 30,000 IPTV
customers by 2010; it also reported a monthly Average Revenue per User (ARPU)
of around INR200 at the time. The forecast growth was expected to see 100,000
IPTV customers and an ARPU of INR300 by mid-2011.

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Other services
India Broadcast Live (IBL), a division of Archer Entertainment Media
Communications, added five channels to its portfolio in 2006, bringing the total to
10 live streaming channels on its platform. India Broadcast Live had earlier
debuted what was claimed to be the first Indian IPTV platform India TV Live with
five channels in August 2006. The service carried these channels directly from
India, in real time, and delivered them worldwide, via broadband, to any webenabled device PCs, Laptops, PDAs and mobile phones. The company claimed
that India TV Live did not directly compete with broadcast, satellite and cable
television offerings, but was expected to become an additional platform to provide
on-the-go news, information relating to business and investment, and
entertainment. In 2007 IOL Broadband launched what it also claimed was Indias
first IP-based on-demand television service to more than 250,000 subscribers
using software, servers and middleware from Seachange International. Leveraging
off the networks of MTNL, IOL Broadband was set to offer an on-demand line-up of
film and music videos to its customers in Mumbai. Other IOL Broadband IPTV
services included interactive gaming, video conferencing, an e-education channel,
and live financial data from the Bombay Stock Exchange. The system also

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Digital Media Industry in India


incorporated an electronic program guide and content browser, and included
capabilities such as delivering complete DVDs in a single on-demand stream.
IOL Broadband acquired Magnaquests convergent Customer Management and
Billing (CMB) solution MQSubscribe in 2007. The contract encompassed IOLs
service deployments on its own network and deployment of a Content Delivery
Network (CDN) for MTNL and BSNL.
RRsat Global Communications Network, provider of content management and
global distribution services to the television and radio broadcasting industries,
signed an agreement in 2008 with WatchIndia TV, a video platform that enabled
live and on-demand broadcasting of Indian TV stations worldwide. WatchIndia TV
has been a subscription-based service enabling the global Indian diaspora to watch
Indian channels and programming through the Internet. It was a subsidiary of Live
Asia TV. According to the agreement, RRsat was to provide WatchIndia TV with
various transmission services including downlinking, turnaround, playout and
Internet connectivity. Using RRsats transmission services, WatchIndia TV was
planning to extend its platform and offer additional live and on-demand channels
broadcasting from India.
Reliance Big Entertainment acquired a majority stake in US based Willow TV in
2008 thereby acquiring a portal for live Internet streaming of all major cricket

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events from across the world. Willow TV, headquartered in Sunnyvale, California,
reportedly had more than a million registered users worldwide, predominantly in
the US, Canada, Australia and Europe. In 2007/08, Willow TV streamed all major
cricket events live, including all Indian cricket including the Indian Premier
League, all Australian, South African and English international cricket.

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Pay TV
Although pay channels existed, in reality consumers could not buy them
individually. They had to be purchased by cable operators. This made it difficult to
assess the viewers willingness to pay for individual channels. It was reported that
Indias pay TV market was likely to generate a turnover of US$10 billion over the
three-year period 2008-2010, according to Media Partners Asia; this compared
with US$4.2 billion in the 2007 year. Pay TV services had reached about 84% of the
cable and satellite households by 2011, up from 61% in 2007.
The number of registered pay TV channels totalled 184 by end-2012; this figure
was based on channels reported by 25 broadcasters and their distributors.

Pay TV subscribers by technology 2003- 2012

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Pay TV subscribers by technology 2003-2012

Broadcasters continue to see some hope for the market in the corporatisation of
cable operators that began through the efforts of SitiCable and InCableNet. The aim
was to bring fragmented cable operators together under one network umbrella.
SitiCable, which was established in 1995, had built a presence in over 50 cities and
provided 40 channels to its operators (from whom it levied 25% of their
subscriptions), while InCableNet provided transmission to more than 2 million
homes. Both had city-specific channels (SitiCable and CVO, respectively), which
were providing localised programming and also served as media vehicles for local
advertising.

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Pay TV piracy has been a serious issue in India. While it has generally been a
problem throughout Asia, Indian operators were by far the worst offenders. It had
been estimated that India accounted for about 72% of total piracy losses in the
region. The biggest revenue drain has been operators under-reporting subscriber
counts and thereby under-paying on royalties. Other problems were unlicensed
operators and illegal descramblers.
According to forecasts published by Media Partners Asia in 2008, Indias digital
pay TV market will lead the Asia Pacific region in revenue generation by 2015. The
major factors promoting market development were government regulation, high
GDP growth, increasing demand for quality content and delivery and new market
entrants offering both satellite and cable services.
NDS, a provider of technology solutions for digital pay TV, was increasing its
presence in India with the opening of a sales and support office in New Delhi in
2008. The company said it was optimistic about the growth of the Indian pay TV
market.

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Cable TV
Market overview
It has been very difficult to get a clear picture of Indias cable TV market.
According to one estimate, the country had an estimated 22,000 Local Cable
Operators (LCOs) in 2000, down from 30,000 a year earlier. Another source
estimated 60,000 operators in 2002. The Cable Association of India, which
represented the smaller operators, admitted that as the market fragments it was
becoming increasingly difficult to survive in the changing Indian cable market with
advertising revenues only. New players created fierce competition as they
scrambled to roll out the most sophisticated cable equipment within the shortest
amount of time. By 2010, it was estimated that there were over 85 million cable TV
subscribers, up from 55 million in 2004 and 28 million in 1999.
Cable subscription revenues grew rapidly from US$77 million in 1996 to around
US$1 billion in 2001.
As already noted, the cable TV industry in India remains very fragmented.
Although distribution continued to be dominated by a few major players, they
were competing with a large number of LCOs. These LCOs were controlling the
bulk of the last mile connection to households. It was noted that cable operators

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Digital Media Industry in India


who upgraded to digital were in a better position to also offer their customers
broadband Internet access and Voice over Internet Protocol (VoIP) services.
A further challenge to the cable TV sector is infrastructure. The cable TV
infrastructure available in India has generally been unreliable, with MSOs having
little control over the state of the fibre reaching into consumer homes. The coax
fibre had not been installed with a view to providing two-way connectivity and it
has not been of consistent quality all over the cable service area. It was said that
for every cable TV home receiving a good signal there were at least another twenty
homes receiving a bad signal.

Number of channels carried by cable operators 2010 - 2012

Cable TV regulatory environment


The MIB issued a Cable Ordinance in 1994. It set out several directives that were
designed to stabilise the chaotic cable market. The bill stipulated that:

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all operators of cable TV must be registered and must do so within 90 days;

programs transmitted or re-transmitted must conform with the prescribed


advertising code;

every operator would maintain a register of programs carried on the


network for one year after the transmission or re-transmission of the
program;

all operators must have at least 51% Indian ownership;

programming and advertising codes for all channels except those received
encrypted from a satellite;

a cable operator should transmit at least two Doordarshan channels of their


choice on the network without deletion or alteration;

the channels should be carried concurrently.

The bill also set conformation standards for all cable equipment.
Strict guidelines on cable and broadcasting content were set down, with specific
rules for programming and moral decency. However, there was still inadequate
regulation for cable distribution, no regulation on content and no technical and
service quality standards. There were no guidelines for programs and
advertisements applying to the foreign satellite channels which can be received.

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In 2004 the TRAI met with the State Governments of Delhi, Maharashtra, West
Bengal and Tamil Nadu where subscriptions to pay channels through CAS was
mandatory. Following the meeting, TRAI committed to establishing a special
committee comprising representatives of these state governments and TRAI to
work on various issues relating to cable TV and provide input to the authority to
finalise regulations in this regard.
Digital Entertainment Networks (DEN), a newcomer to the Indian digital cable
market, selected a suite of NDS digital broadcasting solutions to launch its digital
cable service in 2008. NDS, a provider of technology solutions for digital pay TV,
was contracted to provide DEN with the Videoguard Conditional Access System
(CAS), Mediahighway middleware and an electronic programme guide. DEN said it
wanted to drive digitisation in the cable distribution system and the NDS solutions
were expected to provide DEN with the flexibility to introduce future
enhancements including interactive applications and additional advanced services
for viewers. The TRAI in its draft recommendations to restructure cable television
services issued in 2008 proposed a separate licensing framework for local cable
operators and multi system operators. Indias cable television industry, which
covered an estimated 72 million households at the end of 2007, was facing

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challenges of technology, resources and fragmented distribution, leading the
regulator to examine possibilities of restructuring.
The draft recommendations included an entry fee for different areas of operations,
a five-year licence fee and encouragement of advanced transmission technology.
There has also been fierce competition with conventional cable TV operators from
those service providers using advanced distribution technologies like DTH, Head
end in the sky (HITS) and IPTV. Dish TV India and Tata Sky have both been
competing in Indias DTH market, with mobile phone operators Bharti Airtel and
Reliance Communications also planning to enter the market. The TRAI, which said
that the absence of a licensing and regulation framework could slow future
development, was also encouraging a voluntary CAS which would allow viewers to
select pay channels.

Digitalisation of Cable TV
The TRAI released a set of recommendations on digitalisation of cable TV in 2005.
The recommendations were issued after a detailed process of consultation with
stakeholders. The recommendations provided for a national plan for digitalisation
whose first phase was set to commence in 2006 and end in 2010 to coincide with
the Commonwealth Games. The expansion of digital services in the country was to

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be adopted to help to provide the public with better quality pictures as well as the
ability to watch more channels. With digitalisation of cable television having
already started in the country in a limited way, the policies proposed were
expected to give momentum to the process as well as providing a framework for
regulation.
The TRAI recommendations provided for a voluntary approach to digitalisation on
behalf of both the operators and the consumers. During the first phase (20062010), it was proposed that digital services be made available in all cities/urban
areas with a population of one million plus. In all these cities the existing analogue
service would continue simultaneously. Digital services had already commenced in
the five cities of Delhi, Mumbai, Chennai, Pune and Bangalore. The authority had
suggested that the government should recommend to the states that the proceeds
of the entertainment tax should be used for an intensive consumer education
program during the 2006-2010 period.
The recommendations also provided for a framework for licensing. This was to
involve automatic licensing for existing operators and a non-exclusive automatic
licensing process for new operators subject to compliance with certain minimum
conditions. This licensing framework would help in future regulation as well as in
administering the incentives proposed in the recommendations. The

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recommendations also envisaged the development of digital decoders whose
adoption would, however, be voluntary and left to the operators and consumers to
decide upon.

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Satellite TV
Direct-to-Home (DTH) TV

DTH subscribers 2008 2012

Apart from a free DTH service offered by Doordarshan, there were six private DTH
operators licensed to provide service to the market.

Operators issued DTH licences March 2012

By 2011 the DTH operators had a combined subscriber base totalling 44.2 million.
The number of private satellite TV channels registered with the Ministry of
Information and Broadcasting (MIB) as of March 2012 was 831.

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Regulatory environment
DTH broadcasting from within India was banned in 1996. This was despite a court
ruling in the same year that ended decades of government control of the airwaves
in India. The rulings stated that airwaves were public property and that the free
flow of information was covered by a constitution guaranteeing the right to free
speech. In the past, operators had beamed directly to the home in an effort to avoid
the cable operators. As a result hundreds of satellite dishes had sprung up on
homes, but the 1996 ruling rendered these dishes illegal. In a 1996 DoT
notification, the possession of equipment to transmit and receive signals above
4800MHz (that included the Ku band used to transmit DTH signals) was made
illegal. This effectively thwarted attempts by companies such as Star TV, which was
set to launch a DTH service in 1997. No private company was allowed to operate a
DTH service until the Broadcast Bill was passed.
Throughout 2000 there was much debate on the governments policy on
convergence and DTH broadcasting. The policy was being reworked by the MIB.
When introduced, the bill was expected to outline a new telecom-IT convergence
legislative framework to replace the Indian Telegraph Act 1885, as well as
recommending whether there should be separate legislation for telecom,

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Digital Media Industry in India


broadcasting, cable TV, Internet and satellite communication. The bill was also
expected to outline the broad parameters for DTH broadcasting.
The government gave its approval in 2000 for Ku-band DTH satellite TV
broadcasting. In early 2001, the government formally authorised DTH
broadcasting, setting down the conditions for its licensing.
The following eligibility criteria for applicants for DTH licences were to be applied:

the applicant company to be an Indian company registered under Indian


Companys Act, 1956;

total foreign equity holding in the applicant company not to exceed 49%;

within the foreign equity, the Foreign Direct Investment (FDI) component
was not to exceed 20%;

the proportion of the paid up equity share capital to the total issued equity
capital of the Indian promoter Company, held or controlled by the foreign
investor, shall form part of the FDI limit of 20%;

the applicant company must have Indian Management Control with


majority representatives on the board as well as the Chief Executive of the
company being a resident Indian;

broadcasting companies and/or cable network companies shall not be


eligible to collectively own more than 20% of the total equity of the

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applicant company at any time during the licence period. Similarly, the
applicant company not to have more than 20% equity shares in a
broadcasting and/or cable network company;

the licensee shall be required to submit the equity distribution of the


company in the prescribed proforma once within one month of start of
every financial year.

There were to be no restrictions on the total number of DTH licences to be


awarded and licences were to be issued to any person who fulfilled the necessary
terms and conditions and subject also to security and technical clearances by the
government.
The DTH licence was to be valid for a period of 10 years from the date of issue.
However, the licence could be cancelled or suspended by the Licensor at any time
in the interest of the Union of India.
The licensee would be required to pay an annual fee equivalent to 10% of its gross
revenue as reflected in the audited accounts of the company for the particular
financial year, within one month of the end of that financial year. The licensee
would also pay the licence fee and royalty for the spectrum used as prescribed by
Wireless Planning & Coordination Authority (WPCA), under the DoT. The
Parliamentary Standing Committee on Information Technology said in 2002 that

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the government had been in an unseemly and unnecessary hurry to allow DTH TV
services in India. It criticised the government for allowing DTH without any indepth study and before establishing a regulatory framework, instead of leaving it
completely to the discretion of a service provider and market forces. The 10 year
DTH licence was questioned for being an unusually long period. The committee
said that monitoring needed to be increased and should not be restricted only to
the issues of security, morality and vertical monopoly given the fact that DTH
would be more powerful and more sensitive compared to cable TV. DTH was also
criticised for being expensive. The committee felt that before allowing DTH, the
government should have waited till the enactment of the Communications
Convergence Bill.
Bharti Airtel was set to launch its DTH satellite television broadcast operations in
2008 as it moved to strengthen its non-mobile operations. The company said it
was initially launching services in 62 cities in the first phase of its roll-out. It
believed that the DTH segment in India offered immense growth potential.
Analysts expected non-wireless operations such as DTH and Internet television to
sustain Bharti Airtels revenue levels as growth in the wireless segment slowed
down due to more competition, falling tariffs and higher mobile penetration.

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By 2008 the DTH market in India was still in the early stages of its development
with only 3% penetration and 7.5 million customers out of 225 million potential
customers (households), but it was expected to grow to four times that size over
the next five years. The growth rate in 2008 had been running at 80% per annum,
while five DTH players, including Reliance Communications Ltd, Dish TV India Ltd.
and privately owned Tata Sky, part of the Tata Group, competed for subscribers. By
end-2009 the TRAI was reporting 19.1 million DTH customers.
As already noted, the TRAI reported that there were 142 satellite-based pay TV
channels in operation by December 2009 and that they were being
broadcast/distributed by 23 broadcasters or their distributors.

Market developments
The DoT and the Wireless Planning Commission (WPC) approved a proposal by a
Tata-Star partnership in 2005 to provide DTH digital television services. Prior to
this, Tata-Star had signed an agreement with the Indian Space Research
Organisation (ISRO) to lease all twelve Ku-band transponders on the INSAT-4A
satellite. The satellite deal would enable the transmission of around 150 digital
channels to homes across India, including those in the most remote regions. The

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planned DTH service was set to become the countrys largest digital TV platform,
offering consumers a wide array of programming choices and interactive features.
Prior to receiving clearance from the telecoms authorities, the INR16 billion
(US$347 million) project was approved by the MIB. Tata-Star was established in
2004 with the Tata Group holding 80% and the Star Group, News Corps Asian TV
subsidiary, holding 20%. The company structure conformed to the limits India has
placed on the amount of foreign investment permitted in broadcast and other
media sectors.
NDS, a provider of technology solutions for digital pay TV, announced that its endto-end solutions have been chosen by Tata Sky in 2006 for the launch of the
operators DTH pay TV service in India. The Tata Sky launch was scheduled for
mid-2006. The NDS Video Guard conditional access solution provided broadcast
security and was expected to enable Tata Sky to offer multiple programming and
pricing packages.
In early 2006, DTH service provider Dish TV announced its Dish Freedom Package.
The plan was to allow viewers to watch over 40 channels in digital quality without
having to incur monthly subscription fees. The company said that customers who
wished to access more channels have the option of upgrading their package to the
next entertainment level for a nominal subscription cost.

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Tata Sky was launched as a DTH satellite TV service in 300 cities across India in
2006. The project had been plagued by delays. First there was a long wait for
government approval and then legal wrangles over directives requiring rival TV
networks to carry each others channels on their respective platforms. The launch
was to see Tata Sky become the third player to enter the DTH market, following
Zee Telefilms Dish TV and Doordarshans DD Direct Plus. The latter offered
subscription-free viewing. By mid-2006 DD Direct Plus had an estimated two
million subscribers and Dish TV had 1.25 million.
Tata Sky said it had confidence in the enormous potential of the Indian market,
noting that cable and satellite had penetrated over 60 million of the countrys 110
million TV households and a further 110 million homes did not yet have
television. Industry analysts were predicting the number of DTH subscribers could
grow from around 3.5 million in mid-2006 to 10 million by 2010. As well as
competition between themselves, Indias DTH operators faced the challenge of
attracting customers away from cable TV operators. They held an initial advantage
in being able to offer digital-quality transmissions while many cable operators had
been struggling to upgrade their analogue systems. Cable operators would also be
faced with the costly requirement in major cities of delivering service via digital
STBs.

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It was reported in the meantime that a number of other players planned to enter
the DTH market. However, one of them, the Chennai-based Sun Network, suffered
a setback. It had leased seven transponders on an Indian satellite which crashed
soon after launch causing a major delay in the start of Suns DTH venture. In 2007
Irdeto, a provider of content security for digital TV, IPTV and mobile networks,
signed an agreement with Sun Direct TV to protect Sun TVs DTH service. Sun TV
was already running direct-to-operator and cable TV systems in southern India
utilising Irdetos security technology. It had opted to employ Irdetos PIsys
conditional access solution to secure the launch of its DTH pay TV platform. Sun
Direct TV had been set to introduce its DTH pay TV network following the launch
of a new INSAT satellite by the Indian Space Research Organisation in late 2007.
Sun Direct TV was set to use Irdetos conditional access system to manage content
and revenues in its satellite broadcasting venture and had placed an initial order
for 500,000 Irdeto smart cards as part of that system.
Tandberg Television, part of the Ericsson Group, announced in 2007 that Bharti
Telemedia, a subsidiary of Bharti Airtel, had chosen its IP head-end for the launch
of a DTH satellite TV service. Bharti Telemedias DTH system was to use a range of
Tandberg Television solutions. The system was said to be one of the first satellite
DTH platforms in the world to benefit from the compression efficiencies of

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standard definition MPEG-4 AVC, increasing transponder capacity and potentially
doubling the number of available channels. The DTH service was to be launched
nationally across India and Bharti was setting up infrastructure near Gurgaon for
the purpose of up-linking and broadcast.
Bharti Airtel also signed up NDS in 2007 to deliver a suite of digital broadcasting
solutions for the launch of its DTH satellite service. Bharti Airtel had earlier
announced that the MIB had granted the company a Letter of Intent (LoI) licensing
the DTH platform. The solution NDS was set to provide Bharti Airtel included
VideoGuard conditional access, MediaHighway middleware and a customised
Electronic Program Guide (EPG).
Sun Direct TV contracted OpenTV in 2007 to provide an end-to-end solution for its
DTH television service. Sun Direct TV was also being provided with a collection of
applications including EPG and multi-angle interactive news. The broadcaster said
it expected to use programming from multiple broadcasters and deploy MPEG-4
based technology to provide a nationwide service with its main focus on Southern
India.
In 2008 Sun Direct TV deployed Harmonics digital video solutions for what it
called Indias first MPEG-4 AVC (H.264) DTH broadcast service in southern India.
The end-to-end solution included latest generation DiviCom Electra encoders,

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Digital Media Industry in India


DiviTrackIP statistical multiplexing, the ProStream 8000 digital mosaic solution
and NMX Digital Service Manager. The Sun Direct TV service was launched in early
2008 with 120 standard definition (SD) channels, the operator announcing plans
to add high definition (HD) video to the service. The Electra encoders were used on
the system to provide better video quality. The ProStream 8000 digital mosaic
solution was being used by Sun Direct TV to add digital audio channels to its DTH
line-up.

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Digital Media Industry in India


Major cable and pay TV operators
Doordarshan
Doordarshan (DD) has been positioning itself to counter the commercial threat of
foreign investors increasing their control over Indian media. The company
reorganised its six basic cable-channels into 10 regional networks dedicated to
different languages and simplified its transponder situation from 17 transponders
on three satellites, to relaying all signals from the INSAT-2B satellite. The PAS-4
satellite had also been commissioned to transmit DDs domestic and regional
programs as well as the Doordarshan International (DDI) channel.
To enhance its programming line-up, DD teamed up with a number of western
media companies. It had also received approval to distribute CNN International
(CNNI). The news channel was distributing international news and current affairs
24 hours a day via the INSAT 2B satellite, including several hours daily of CNN. The
news network was previously only able to distribute to hotels with dishes that
could receive its signals. CNNI was the first non-Indian news channel to broadcast.
The agreement with Turner Broadcasting (which owns CNN) also meant DD
supplied 90 minutes of Indian news on CNNI. A new addition included The Family
Channel, from International Family Entertainment, launched on the INSAT satellite
system. DD also launched its first pay TV channel, Doordarshan Sports.

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Digital Media Industry in India


Doordarshan had leased transponders on the following satellites:

INSAT-2E;

INSAT-2DT;

INSAT-2B;

INSAT-2C;

PAS-10;

ThaiCom.

Asianet Communications
Started in 1993, Asianet Satellite Communications Pvt Ltd was the largest cable
network services company in the state of Kerala. Operating from over 40 centres
throughout Kerala, the network reached over 3 million homes and establishments.
Carrying up to 70 channels, Asianets cable network included five exclusivelyowned channels that were only cable-cast over its network, namely Asianet Cable
Vision (ACV, a news, events and movie channel), Jukebox (interactive video music
channel), Medley (interactive video music channel), Swathi (audio music channel),
Info (network information channel) and Jyothi (education channel).

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Digital Media Industry in India


Asianet also provided Internet services in Kerala and has set up its own
International Satellite Gateways at Trivandrum and Cochin. Asianet Internet
Service had been available in Trivandrum and Cochin since 2000 and was
expanded to other cities in 2001. The company also became involved in the
provision of broadband network services. Asianets ISP operations had helped
create a synergy with its Cable TV (CATV) services. Ongoing network upgrades to
Hybrid Fibre Coax (HFC) would enable the company to offer up to 500 channels in
the future and open up new prospects in the form of web TV and interactive
multimedia services.

Hinduja Group (InCableNet)


The Hinduja groups subsidiary, IndusInd Media and Communications Ltd, had
been providing cable TV services in 15 cities in India, and reached around 4.5
million homes at end-2000 through its InCableNet service. Hinduja acquired 100
local cable franchises in the Mumbai area as part of a US$60 million plan to
consolidate and dominate the New Delhi and Mumbai markets and give the group a
32-channel cable TV system. Hindujas had also expanded and upgraded its cable
network to HFC cable.

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Digital Media Industry in India

Star TV
Star TV deployed its own digital compression system and the first of its pay
channels by hooking up with about 1,000 regional Indian cable operators 100 in
each of the five metropolitan areas and an additional 500 throughout the country.
Imported decoders were being sold to operators. The company had also built up its
software package through its 49% acquisition of United Televisions of Mumbai.
The Cable Operators Federation of India (COFI) had failed to endorse Star TVs Star
Movies subscription channel, citing overpricing and other issues.
India was one of the most successful early markets for Star TV, with annual
revenues of US$600 million back in 2000. Star TV rose rapidly in prominence in
2000, on the back of very successful programming in the local Hindi language.
Game shows were popular, especially one Kaun Banega Crorepati which
rescued a struggling network and catapulted its host Amitabh Bachchan back to
superstar status.
Star gained approval to set up a wholly owned subsidiary in India, establishing a
cable TV company and programming base. It rapidly built up its customer base and

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Digital Media Industry in India


by mid-2001 was seriously challenging Zee TV for market share. The company was
not however being allowed to uplink from India.
Star pulled out of its planned ISkyB DTH project in 1999, cancelling a 10-year
contract for seven Ku-band transponders on PanAmSats PAS-4 satellite, citing the
unfriendly regulatory environment for DTH services.
In 2002, Star TV announced that it was considering an Initial Public Offering (IPO)
of its Indian subsidiary in order to raise funds for expansion, including a proposed
new push into DTH. The company expected to offer about 10% of equity to the
public.
The Tata group and Star Group launched a DTH television venture in India in 2006.
Company officials advised that Tata Sky, which was set to offer a mix of Hindi,
English and regional language channels, was being launched simultaneously across
300 cities and towns. Subscribers were to pay a monthly subscription after a oneoff payment for a STB. Subscriber were to be offered 100 channels comprising a
mix of news, sports, movies, entertainment and childrens programs. The company
said that 10,000 Tata Sky dealers were about to begin marketing the digital
broadcasting service. Tata held an 80% stake in the joint venture while the
remaining 20% was held by Star. Unofficial reports claimed that the initial
combined investment was around US$86.9 million.

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Digital Media Industry in India

Zee Telefilms Limited (SitiCable)


Indias top private broadcaster, content provider and cable distributor, Hindi pay
TV operator Zee Telefilms Limited (ZTL) had successfully expanded its cable
network around the country by buying up other networks as well as trialling new
technology in order to keep up with its competitors. Zees second channel Zee
Cinema went to air in 1996 on the AsiaSat 1 satellite along with a third channel EL
TV. SitiCable, Indias largest MSO had about 5 million subscribers in 50 cities by
end-2001.
SitiCable had progressively invested US$550 million over a three year period to
build a fibre optic backbone spanning 26 cities and also installing STBs in
subscriber homes to provide programming tiers. At the same time work on its HFC
network begun in New Delhi, Jabalpur and Calcutta.
Star TV merged its joint-venture assets Zee TV, Zee News, Zee Cinema and SitiCable
into ZTL in 1999. Following the merger and the buy-out of Stars 50% shareholding
in ATL, Zee Telefilms began creating gateways and portals on the Internet, as well
as establishing new brands for its various businesses. ZTL launched three new
English language channels in 2001, including a news channel Asian News

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Digital Media Industry in India


Network in competition with Star TV. Zee negotiated transponder space on
AsiaSat 3F for the new channels.
A subsidiary company, Zee Interactive Learning Systems, was launched in 1999,
offering university courses through iTV and pay channels, selling courses through
the Internet and offering videos, books and software to subscribers. By mid-2001,
Zee had started to lose its market share to STAR.
The Zee group had a reach of around 140 million people in more than 25 million
homes in India and another 70 million viewers in 15 million homes overseas.

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Digital Media Industry in India


Free-to-Air TV
Doordarshan
Founded in 1959, Doordarshan, the Indian National Television Network, laid claim
to being one of the largest broadcasting organisations in the world. Doordarshan
has been operating 21 channels, together with a network of over 1,300
transmitters and broadcasts around 1,500 hours of programs weekly. The
operator also had 56 program production centres. Doordarshans terrestrial
signals could reach more than 88% of the countrys population.
The primary service, DD-1, reached the largest number of people (43% of the
population) while the Metro entertainment channel, DD-2, targeted urban viewers.
About 69% of urban population and 33% of the rural population watch DD-1.

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