Lack of Capacity Impeding DTH Progress in India

India has a population of more than a billion people, multiple languages and a developing economy. At the start of the last decade, DishTV had the DTH market pretty much to itself; however, with a number of new entrants in recent years, such as Tata Sky, Bharti Airtel with Airtel TV, and Reliance Communications with BiGTV among others, the marketplace is now getting crowded.

Tata Sky launched services in 2006 and has already amassed over 10.5 million connections. The company has quickly become a major force in the Indian pay-TV market, but now one problem stalks the operator, and it is one that Yigit Riza, CTO, Tata Sky, believes impacts every single operator in India: a lack of available satellite capacity. “All of the DTH operators could do with double the capacity we have right now. DirecTV is apparently uplinking 3,000 channels today in a fairly homogenous market. Can you imagine the capacity that India will need going forward with its linguistic and cultural diversity? We use 12 transponders right now. We could double the number and that would still not meet our needs,” he says.

DishTV, which has more than 13 million subscribers, is also one of Asia’s major acquirers of satellite capacity. The company uses 14 transponders in a mix of 36 MHz and 54 MHz, and a total bandwidth of around 616 MHz of capacity. Rajiv Khattar, president of projects at DishTV, says access to capacity has become a major issue.

“The recent study on satellite capacity was emphasizing an Open Sky policy as ISRO has not been able to keep pace on the availability of the transponders to DTH players. DishTV is of the opinion that in case this is not possible, then DTH operators be assured of faster allocation of the transponder space in a time-bound manner in case they are able to work out bandwidth availability with a satellite provider whose satellite has been coordinated with ISRO. It is to be appreciated that bandwidth at the right slot has a value for one operator, but may not for another operator on that slot,” he says.

Shashi Arora, CEO, DTH/Media, Bharti Airtel, admits while the operator currently has enough capacity, gaining access to more capacity has become a “key focus” for the company.

“Additional capacity has to be developed to be able to enhance the current DTH industry channel capacity base of 300 with 200 more channels and create a level-playing field with the digital cable operators who have to mandatorily carry 500 channels,” he says.

There is little doubt that India is a rich market for TV services on satellite. With ineffective cable competition and lack of terrestrial alternatives, the DTH players have a great opportunity to build strong, sustainable businesses. Access to capacity, however, is not the only issue facing operators. Sudhir Gosar, head of technical operations, Reliance Digital TV, says that more than 30 percent of the company’s revenues go on to various state taxes. Gosar believes others need to recognize the importance of satellite in the country.

“DTH has a dependence on Ku-band like nothing else. For us, our satellite [capacity] is a life and death situation. A lack of capacity could really impact us in the future; this is very worrying. With seven DTH players, there is sufficient competition, but there needs to be recognition of the importance of satellite, and that we are in a position to offer the best service to customers,” he says.

Less than 60 HD Channels

The lack of satellite capacity is impacting the potential take-up of HD services and all operators are being impacted. DishTV, Airtel, BiGTV and Tata Sky offer just fewer than 60 HD channels all together, a relatively small amount when you consider the four operators have well over 30 million subscribers between them.

DishTV carries 20 full HD channels, and Khattar says the company plans to add another 10 to 12 this year. Tata Sky carries 13 HD channels although Riza admits the company “would like to carry 30,” but can’t due to lack of capacity. BiGTV has one transponder dedicated to HD services, and launched its HD PVR back in 2010. It now carries 8 to 10 HD channels and would like to triple this number over the next year.

“Today, we are [a] little behind the other DTH operators in terms of our HD services offering, but we have issues in terms of access to satellite capacity. We don’t have available capacity. That situation will be eased by this time next year, when there will be a lot more transponders available. We will get an additional 12 transponders from Measat in the same slot,” Gosar says. Likewise Airtel offers 15 HD channels, and Arora says he expects the market for HD to significantly increase over the coming years.

Bandwidth Efficiency

Such is the lack of capacity, that the importance of compression technologies becomes magnified. Riza admits that Tata Sky is now in constant touch with compression vendors and is in a position where it expects to do a compression upgrade every year. Bandwidth efficiency is a major topic for DTH operators. Getting the most of the capacity available has become a number one priority for technology executives in India. Khattar admits the operator is evaluating various compression and modulation schemes to use bandwidth more efficiently.

“To make efficient use of bandwidth is key for every operator, and every operator wants to use the best technology available without compromising on the quality of the picture. But, the operator also needs to keep in mind the cost of the CPE that they are going to deploy. It is a balance we are looking at, and our quest will be to bring in the efficiencies at reasonable costs,” he says.

Some operators such as DishTV and Tata Sky are using MPEG2, while others are on MPEG4. “Three to four years ago people thought all the compression vendors were going to focus on MPEG4 and not put much effort into MPEG2,” Riza adds. “But, that has been far from the case.

There are a number of major operators worldwide still on MPEG2 as they are not prepared to swap their set-top boxes to MPEG4.” There is, therefore, still a significant market for MPEG2 compression and the vendors are consequently making investments in improving performance.”

Most DTH operators around the world are looking to supplement satellite with other technologies to increase their reach to customers and explore further revenue opportunities. Working with wireless operators is something that could happen “Two to three years down the road” in India, according to Khattar.

“The wireless solutions are starting to develop,” he says. “We are seeing base stations being put up. But, it will only be in two to three years time where I see wireless solutions being an option, but how far will they go to deliver the video is yet to be seen. It might be easier than using a wired solution. We are not holding discussions right now with any wireless operator but, going forward, there are always possibilities to work together.”

DishTV is also working on key technology projects this year. “We see the return path via IP as an important aspect. In India the wireless route may be one option as wired connectivity is limited. We are working on three to four technology projects. Firstly, we are looking at bandwidth efficiency,” says Khattar. “That is the most important thing. Secondly, I am looking at how I can get more capacity in nearby orbital slots. So, we are talking to various satellite providers. Thirdly, we are looking at the CPE, so we are looking at where we can get a cost advantage, or where we can add more value to consumers as last year we did the USB DVR which [gave] DishTV an edge in the market,” he says.

For Aniraj Ramabhadran, head of Devices, Reliance Digital TV, 3G and 4G is starting to pick-up across India. “It will be another one or two years before we see a strong take-up of wireless broadband. While the devices are getting more proliferated, the bandwidth and last mile connectivity is not so encouraging to consider as a good business case. The government said in a recent declaration that India as a market has less than 13 million broadband customers. Unless the sustained last mile bandwidth goes beyond 2 Mbps, it is not sufficient to get a good business case for OTT.”

An OTT offer is something an operator like Bharti Airtel could consider, and Arora admits the operator is “watching this space closely.” While the OTT market is in its infancy, according to Arora, given the operator has its own data network, it has a more natural progression into an OTT offer than perhaps others have.

Likewise, Reliance Communications could also look to launch an OTT offer to supplement its DTH offer. “There are two operators that have launched OTT services in India. The forecast is not very positive in terms of OTT for two reasons. The number of channels you can watch on a DTH service is huge. There are hundreds of channels available in different languages,” says Ramabhadran. “The business case for a VoD type system is very low. We can see that from the current VoD systems that are running, the business case is not that interesting. We believe when you can have a service that offers more channels, the business case for this will pick-up. That is when we would look to launch an OTT service. From a technology standpoint, we will be ready to launch an OTT service in six months time.”

Satellite Broadband Play

With a huge population spread over a large territory, satellite naturally fits into India’s communications landscape. Broadband penetration is still relatively low, but Khattar believes there might be a Ka-band satellite in India in around two year’s time. “One of the main issues right now is the cost of the CPE. If equipment costs come down, you might see something start to happen. I would not rule it out for the future. Currently the economics do not allow it to be a commercially viable model which can be deployed on a mass scale, though it will be a good alternative for the remote sites where the accessibility is difficult due to terrain and geographical limitations,” Khattar says.

Riza believes it is hard to make a business case for a Ka-band satellite given that people pay so little for pay-TV services in India. With an ARPU figure of around the $5 mark, it is understandable why satellite broadband could be a difficult play. “The government is looking to connect every town and village and go to a national broadband network in India,” Gosar adds. “This will drive the deployment of broadband in towns with more than 100,000 population. There are two Indias: you have the cities and the towns and villages.”