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‘Mobile, TV are life enhancers’

With the advantage of its mobile network, and a brand as strong as Airtel, Airtel DTH is pursuing its place in the DTH market with great aggression. The strategy is different now says, Ajai Puri, Director & CEO - DTH, Bharti Airtel, who claims the brand is acquiring the largest number of new customers. And two out of three of them are coming from outside the top 300 cities. Puri, who has also shared pictures from his frequent travels in rural India, spoke at length on the strategy for brand.

What is your gameplan for the brand?

I have a strong belief that the industry for five years has targeted cable as competition and therefore stayed focused on the top 300-500 towns and the 70-million plus cable and satellite homes. We decided to be game-changers and target 230 million households and all those 150-160 million households that are not part of C&S because they don’t have access to it. Because I believe as mobile telephony made people buy handsets, DTH, when made available, will make people buy colour TVs. We decided that 60-70 per cent of our business will come from cable-dry places and that’s paying off. Seventy per cent of new customer acquisitions come from rural and upcountry markets, outside of the top 300 cities.

You are just back from a long journey through rural India, what’s it looking like?

Let me tell you. I saw three boys in a small village just before Nadiad in Gujarat carrying a DTH box in a bag. I asked them if they had a TV. They said no, not yet, but had Rs 5,600 for a 21-inch television that they would get next week. This is a farmer community family with two mobiles, and Rs 3,000-4,000 additional income.

What’s the driver?

The need to be entertained. Channels are also big drivers. Particularly movie channels. Unless there is a Sony Max in rural Haryana, they don’t want it. Go to Chandigarh and unless there is an ETC, PTC and Chardi Kalaa, because the three showcase different gurudwaras, they won’t take your service. I think ETC shows the Golden Temple, PTC the Bangla Sahib and Chardi Kalaa shows the Sis Ganj Sahib. Rural sales in Maharashtra went up because we had IBN Lokmat which became the most poplar channel during the recent elections.

So, while marketers might scoff at a Total TV, we have decided that we would not focus only on urban India, not just on Warner Brothers or HBO, but go all out and push regional channels. So depending on your pin code, we can offer Kannada, Telugu or Tamil channels. It looks like a simple business, but it’s a deep-rooted consumer insight, segmented business. And I think channel diversity works for us.

What about carriage capacity? What’s an ideal number?

We have the advantage of being on MPEG 4 DVBH 2 technology and have seven transponders. We are also in touch with ISRO. At 210 channels we are pretty much there, maybe another 20-30.

What’s the average revenue per user (ARPU)? How do you explain a farmer with an extra income of Rs 3,000-4,000 spending it on DTH?

Most farmers cultivate two big crops, each of which gives them some extra money with which they buy something for the family. It’s not gold, it’s not refrigeration, it’s a means of entertainment.

The only thing they can have in rural India is television. The mobile and TV are life enhancers, every other gadget is a convenience. And now a locally-made, 14-inch television is available at Rs 3,500, that’s equal to two mobiles. All rural mobile households have two mobiles, one for the farm and one for the home, and if they can afford two mobiles they can afford a TV next.

The average ARPU for the industry is Rs 170-180.

How bad was this year? Did you at your end adjust expenditure?

This is a recession-proof industry, we grew more than last year. Possibly the least drop was seen in foods or basic FMCG, in mobile and maybe DTH because entertainment is becoming an essential need. We knew we are coming in as number five. If we have leadership today in terms of new customers it’s only because we have been very aggressive in the market, and we will continue with our plans.

Compared to others who would have 40,000 retail outlets mainly in the 300-500 cities, today we have a penetration of 1.5 million retailers in the mobile environment and rural penetration in every single village. We will ride on that network and put a differentiator on distribution that others can’t.

When do you break even?

It’s a long haul business with high investments. It’s almost like a money guzzler but we believe, from an Airtel perspective, it brings huge synergies across three screens – the mobile phone screen, TV screen and computer screen. So for us it’s a critical piece of our portfolio.

Almost all of our DTH customers have another Airtel service. We are experimenting with a game that can be played across the three screens, play it on DTH at home, then carry on on the mobile when you are commuting, and finish it at office ... though I’m not endorsing playing games at work.

How does the three-screen advantage work along with your rural plans?

We have already started using Airtel’s easy recharge that is running on mobile for DTH. So we are already looking at a common wallet.

Video on demand, for example, can only work on a single stream now, but once you have a hybrid model with broadband it will be different. We already have three million broadband households, it’s a potential 110 million on the mobile platform when 3G happens.

So you can plug your broadband connection to the box and pull the movie of your choice. We can create a hybrid model between DTH and broadband, and when 3G happens we can create a hybrid model between DTH and GSM broadband.

Apart from video on demand, what are the other revenue streams that you are betting on? Carriage fee?

I don’t think carriage fee will be a significant piece in our stream of revenues. Our business is clearly based on revenue from the customers. Advertising could be a relevant stream, we have lot of advertising space available. Value-added services, whether it is online ticketing or buying. We have tied up with Home Shop 18, and are tying up with eBay.

But DTH shopping for rural India?

Those are urban phenomena. Movies will be big. Whether it’s a rerun, or even content such as the best of football, cricket, a consumer can ask for it.

Movies last month grew 300 per cent. Kaminey did brilliantly well. Even producers have realised that even a 12,000 -16,000 screen release will still not take the movie to a large part of India for a couple of months. So producers have started understanding that to fight piracy DTH is a good alternative.

Why does DTH alone get pushed? Why not CAS in the larger interest of digitisation?

In fact, the Government need not do CAS, it will happen voluntarily and in spite of them. Something that starts as a consumer need/movement – you cannot stop it. Voluntary CAS is already happening either on the digitisation front or through DTH. If you digitalise India, everyone will make more money. The government will make more from taxes on cable. What it should look at, for example, is not allowing new channels, unless they are in digital mode.

Can you work with the cable industry?

It’s a very serious possibility. I was at a recent conclave and some of the cable association members also approached us with the same idea. They understand the market, know the customer premises.

Taxation is also an issue. India is adding a million DTH customers every month. The industry can double annual new customers to 15-20 million if the government rationalises the taxes, which amount to 50 per cent. If I sell in UP, after the entertainment tax of 30 per cent, my taxation is 70 per cent. No industry can create a business model with 70 per cent tax. If the Government, and the Information and Broadcasting Ministry dream of digitisation, then they should rationalise the taxes.

The second issue is a non-level playing field. The entire cable industry is under-declared with possible declaration levels at 10-15 per cent. Depsite being an addressable system, wholesale tariffs for DTH are at 50 per cent of cable, it should be at 15 per cent if that’s the level of declaration. The Telecom Regulatory Authority of India should hurry up on that front. Broadcasters will make more money. I am told 50 per cent of the broadcasters’ subscription comes from DTH which is only 15 per cent of the market. So let them not look at it as a short-time investment.

When are you launching your DVR? Is there a market for it yet?

DVR takes take time to grow the world over, but it’s important to be there. I personally feel that if you play the hybrid model, it might take away part of the growth of DVR. Like India sort of bypassed pagers, India may jump more directly to integrate DTH with broadband.

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a very good article...............very nice mr satish...
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In the article they have mentioned that still 20-30 channels can be added in the platform:happy:SmileSmile:happy:
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Very Good News for Airtel customers that more 20-30 channels can be added on ADTV platform and also after allocation of 3G spectrum, Airtel Digital TV Subscribers can enjoy broadband on stb as said by Mr. Puri ... :jump: :jump: Smile
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One more good news is that they r going to tie up with ebay for better shopping. I think that is the reason why IShop has been discontinued now.
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