Over two years ago chennai was the first city in India to have the conditional access system. Then came the second wave to organise the unorganised cable television business in India, the Direct to Home (DTH) format. And the most recent attempt is by BSNL, through its IPTV venture.BSNL has decided to launch IPTV services in Karnataka from the 15th of august.
“About 150 television channels, movies, education from kindergarten, primary and high school students of higher levels, and much more will be available on internet protocol television. Digital quality is another benefit. Service charges are Rs 150 per month plus usage charges, thus giving cable operators a run for their money. A one-time investment includes a set-top box worth Rs 3,950 and installation charges of Rs 889.” (Link)
The catch with all these services is the upfront capital investment. A CAS set top box costs Rs 3000 (Chennai Prices), while DTH costs Rs 3000 + activation charges, and the IPTV has an upfront payment of roughly Rs 4500. Right now these systems are purchased by those who donot want to haggle with their monthly cable operator, and can have sufficient liquidity to pay the upfront capital cost.
For most people the biggest hurdle as of now would be the upfront payments required for these systems. For greater market penetration, all these players would have to offer the equipment on monthly rentals. This has two distinct advantages. first, more people would adopt the system. For instance, a Rs 100 monthly rental + Rs 500 deposit is affordable for a greater percentage of the population than Rs 3000 capital cost. Second, a rental scheme will generate more revenue for the company than an outright sale in the long run. An outright sale means that from each household the company gets Rs 3000, while a rental scheme will generate the same revenue over 25 months, and after that the amount is profit. This is of course assuming that households are on this system for more than two years.
Without a rental scheme, the DTH or CAS or IPTV system will not take off in India. Interesting times up ahead no doubt with BSNL launching IPTV, but the market leader will be the daring player who offers the capital equipment at nominal cost or who offers rental scheme.
