Sucheta Dalal :Headend In The Sky: What about last mile connectivity?
Sucheta Dalal

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Headend In The Sky: What about last mile connectivity?  

November 16, 2009


Last week, the Union Cabinet approved the much awaited Headend in the Sky (HITS) policy which would enable a digital delivery platform for cable operators and with increased competition it may also result in reduction in subscription rates.
HITS will serve the whole country providing its signals through satellite to many Multi System Operators (MSOs) and cable operators who can further send the signals to customers using their local network.
MSOs also do the same but they use cable to send television signals to end-users, whereas HITS transmits a bundle of channels to cable operators using a satellite.
Under the HITS policy, the operator uplinks signals of TV channels of different broadcasters to their satellite, enabling cable operators to downlink these signals for further distribution to subscribers through their cable network in a digital form.
Though the policy is 'not mandatory', it would enable existing cable network operators to switch to HITS technology and go digital to transmit TV signals to their subscribers, said minister for information and broadcasting Ambika Soni.
According to the estimates of the Telecom Regulatory Authority of India (TRAI), the cost for conversion of around 6,000 existing analogue cable headends to one-way digital cable network from one-way analogue network is about Rs15,000 crore. But with HITS the same can be done with just Rs1,200 crore.
Currently, digital headend costs about Rs10-Rs15 crore, but after the implementation of HITS it would decline to just Rs4-Rs5 lakh for unlimited channels. This will increase competition in the broadcasting sector as HITS provides same quality of picture, sound that is available with direct-to-home (DTH) platform. At present, analogue cable operators cater to about 83 million subscribers in the country.
"HITS with lower set-up cost as compared to DTH but having similar quality would further increase competition between analogue and digital platforms in the subscription market. This will force analogue cable operators to shift to HITS, leading to reduction in under-reporting of subscriber base by the operator which will eventually improve the earnings of big broadcasting players like ZEEL and IBN18 through subscription revenue," said Rohit Maheshwari, research analyst, KR Choksey Shares and Securities Pvt Ltd, in a report.
However, there are some concerns in the broadcasting industry, like infrastructure. Even if the cable operator receives HITS signals, he needs to have a digitised network, instead of analogue cable, to send the signals to end-users. Even today, many cable operators get digital signals from the satellites but distribute them in analogue form.
Roop Sharma, president, Cable Operators Federation of India (COFI), said the HITS policy will further create problems for the last-mile cable operators and jeopardise the livelihood of more than 20 lakh people employed in the industry.
"All the incentives have been given to HITS owners to help them take their services to cable operators whereas there are no incentives announced for local cable operators (LCOs) for upgrading their networks to take the HITS signal to consumers in the best manner," Ms Sharma told PTI.
She said, "For the LCOs, HITS has no meaning unless they spend Rs3-Rs4 lakh to get the HITS Headends installed and upgrade their networks. There is no revenue-sharing policy or tariff regulations for pay-channels in the non-conditional access system (CAS) areas.”
However, as the cost of setting up of one HITS station is cheaper than that of an analogue station, the subscription segment would be able to expand into the 139 million untapped households or about 58% of total households in the country, which are still using the traditional antenna mode.
Jawahar Goel, additional vice chairman, Essel group, told PTI that the HITS policy will help in achieving the government's target of digitising the country by 2012. "The HITS policy is another (source of) competition for DTH operators but good for the country as under-declaration by LCOs will be take care of, but there should have been a tariff order in the policy,” he said.
HITS will also benefit subscribers with an offering of a wider choice of digital channels, better picture quality and value-added services at affordable prices. HITS would be able to provide greater channel capacity from the present capacity of channels placed in the prime and non-prime band.
Currently, there is only one player—Dish TV—in the HITS services arena and many players would queue up, following the Cabinet nod. Earlier, companies like DEN, Sea TV and Digicable had shown interest in HITS licences, but that time the policy was not approved.

"We believe the major beneficiary would be the broadcasting players as first, it would reduce the underreporting by cable reporters and second, subscription market will increase its presence. This would increase competition in the digital subscription market, and prompt distributors to come up with attractive price offerings," added Mr Maheshwari.
-Yogesh Sapkale [email protected]

-- Sucheta Dalal