Will cable operators sustain a 5G assault on linear TV?

Cable operators in India have been going through a rough phase. Nearly a decade ago, when the government directed the digitisation of cable TV, those who did not want to spend money on new set-top boxes stopped paying for the subscriptions.

However, amid all this, DTH continued to grow among the people who could afford it.

With the introduction of the New Tariff Order by telecom regulator TRAI in 2019, both Cable and DTH have seen a consistent decline - largely due to increased costs for the consumer.

In the quarter ending March 2022, the DTH operators lost 1.6 million subscribers, according to the Indian Telecom Services Performance Indicators report by TRAI.

Cable television is estimated to lose similar numbers every quarter.

In effect, linear TV is losing a million subscribers every month and all the stakeholders are very much aware of the situation unfolding on the ground.

The situation is feared to worsen with the launch of 5G services, especially JioAirFibre - which will connect households with high-speed wireless internet giving further push to the connected TV and OTT viewing.

There are about over 20 million Connected TV households currently in India. According to a FICCI-EY report, smart CTVs will exceed 40 million by 2025, thereby ending the monopoly of broadcasters on the large screen and leading to around 30% of content being consumed on large screens comprised of social, gaming, digital, etc.

CTV is currently not a problem for cable operators as much as OTT, is what one of the broadcast veterans believes and even if it is, it is only an urban phenomenon. He said CTV has a long way to go in Tier-1 and Tier-2 cities in India.

Highlighting where the cable operators are lacking in the current competitive market, he said that cable TV operators have lived their own cocooned lives for over the last two decades without investing in new technologies or business models. The problem is that with their mindset, they want to remain a small market.

Citing an interesting example to this, he said, “Once former chief economic advisor Krishnamurthy Subramanian said the small and medium scale industries (SMEs) in India want to remain in the small-scale market because they get a lot of concessions from the government, if they grow big, they’ll lose out those concessions. This means the government unintentionally incentivises them to remain small.” 

Subramanian has been appointed to the post of India's Executive Director at the IMF, with effect from November 1, 2022

The same issue plagues cable TV. Due to the quality-of-service standards being subpar and the regulator unintentionally incentivising the cable operators, their growth is literally stalled.

“Plus, they can hide their revenue collection from the public because they don't have to share it with the broadcasters and exchequer by paying taxes. For example, the network capacity fee (NCF) never comes to MSOs from the local cable operators,” said a leading MSO. 

The cable TV distributors haven't invested in new technologies or business models over the past two decades, but when their commercial interests are threatened by the entry of new digital technologies, they play the victim card before TRAI, claimed the broadcast veteran.

He also highlighted, “They want to stop the advancement of new technology because it is better positioned to serve the entire value chain, including the consumer, and this is a typical Indian mentality of trying to bring down those who succeed. If they change their mindset, they can easily adapt with the new technology but they will not do that. Their main aim is to remain small and earn black money.”

But lately, the cable operators have started realising the mistakes and shortcomings that they have been committing. 

Local cable operators realise that technology has intruded in their walled garden. 

“We always thought this is our area and we will not let any other service provider including DTH enter our area. Now we can’t stop people from watching content on their phones. We won’t be able to stop people from using JioAirFibre,” said an operator.

A distribution veteran, however, said that cable is here to stay and will continue to thrive.

Explaining this in detail he continued, “Today India has 210 million TV households out of which 120 million are on cable and DTH. Connected TV is estimated at 30-35 million. This leaves about 60 million TV households on DD Freedish.”

“If the broadcasters, cable operators and TRAI make linear TV affordable, the cable operators have the opportunity to tap these 60 million DD Freedish households,” the distribution expert said.

According to local surveys, people are only willing to spend about Rs 100 to Rs 150 per month on cable TV. If not, they are content with watching DD Freedish channels.

Who is to blame if cable operators did not upgrade their offerings?

Another distribution executive said that the situation which is unfolding right now is unfortunate. “The mindset and the attitude of the LCOs and the cable operators needs to change with the changing technology.”

“We have to stop complaining and start actioning in order to save and grow our share in the TV households,” the executive concluded.

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