Trend

Triple play gets off to a sticky start

Mohd Shariff PA finds that providers are set to expand their fixed-line revenues and that triple play marks a significant step towards broadband convergence

With service providers offering triple play services in India to grow their fixed line business, increase the ARPU of broadband services and heading towards broadband convergence things are set to change. Simply put, a triple play service is the ability for a carrier to deliver voice telephony, high speed Internet and Interactive TV (IPTV) services to a residential customer over a broadband connection. MTNL was first to launch its triple play services in India in 2007 and BSNL has recently joined the party. Both have competitive tariff plans in place while other players such as Airtel, Tata and Reliance are yet to enter this market. Airtel and Reliance have said that they can deliver voice telephony and IPTV over a broadband connection if a customer demands it [referred as value-added service].

MTNL’s bundle offers in Mumbai combines a landline with broadband, 150 IPTV channels and/or VoIP. Its Triband Combo subscription starts from Rs 250 per month for around 120 channels and an upfront payment of Rs 3,000 as rental for the set-top-box for providing IPTV services. It has 2,000 IPTV subscribers in New Delhi and 2,200 in Mumbai and an aggressive game plan of ramping up its IPTV subscribers to 50,000 by end 2008. In February 2008, TRAI put a break to its [MTNL] ambitious project to become a major player in the IPTV services. TRAI is seeking for a clarification as to why it has violated licence conditions under which a basic service provider (BSO) cannot offer value-added services such as IPTV. The regulator has pointed out that MTNL has reported IPTV tariff and providing it as a value-added service under the BSO licence.

Under the existing policy, operators with a Unified Access Services license (UASL), which allows an operator to provide a whole gamut of services such as mobile, IPTV, broadband and cellular telecom services are allowed to provide triple play services. Now MTNL is left with a choice of applying for a UASL for which it would be coughing up around Rs 401 crores for Delhi and Mumbai.

Meanwhile BSNL has launched its triple play services starting at Rs 150 for IPTV basic and an upfront payment of Rs 3,950 for the set-top-box and Rs 600 as installation charges for which the consumer gets a landline, broadband and IPTV.

BSNL, which started its pilot project in Pune, is now expanding it to other parts of the country. It makes sense for BSNL to take the IPTV route via ADSL broadband because of the abundant copper cable network it has to reach the end customer. However, Airtel has thin penetration of its broadband as well as land phones. Meanwhile sources from BSNL said that, this format is going to drive the market in urban areas where people are more aggressive in accepting new technologies.

Currently if you want high quality audio and video comparable to that of satellite TV you require at least a 1 Mbps broadband connection. Today the cost of such a line is too high.

After dominating the mobile telephone market, Bharti Airtel is all set to launch 3-in-1 services consisting of phone, Internet and cable TV for its fixed-line customers across 90 cities starting with a pilot in Gurgaon. Towards H2 2008 anybody who has an Airtel connection will be in a position to avail of triple play services.

In a separate development recently, Tech Mahindra announced their plans to offer IPTV solutions to Indian service providers.

Market drivers for triple play services

Here are some global statistics on how triple play services have increased operators ARPU. Though the ARPU would be different for Indian carrier but the trend should be the same.

• Heavy Reading (2006): ARPU can be increased by 100% when bundled services are running
• Gartner research (2006): Monthly European ARPU for fixed voice, Internet and TV is ¢93,70
• Fastweb (Italy) obtains an ARPU of ¢900 a year

Advances in technology and new regulations have made ISPs, cable and mobile operators competitors of telcos in voice and data access services. So, companies that were originally in different markets are now all racing to bundle and offer the same services, using their own version of a converged network. Bundling has become a protective strategy for incumbents, while for a competitive operator it is seen as a threat. Just a few years ago, companies such as telcos, ISPs, cable and mobile operators were not competing with each other. Mobile networks were irrelevant, cable operators were focused on TV services, and ISPs offered IP data services only, while the business of telcos was based on voice and datacom services.

Unfortunately for telcos, ISPs, cable and mobile operators are also offering phone services. The revenues of fixed telephony are declining, because mobile phones are so popular, and there is more competition now that cable operators also offer broadband access and voice services.

Turf battles

According to the market reports Reliance Communications Ventures (RCoVL) had frozen its IPTV services in India way back in 2006 but they are yet to launch the same commercially. The telco has been buying up TV and video production facilities over the last few months, including taking a 51% stake in Adlabs, a film production and distribution company. That will give it more control over the supply of video for the service—from making sure it has enough programming to simplifying the distribution process.

According to a source in BSNL New Delhi who does not want to be quoted, “The issue of provisioning of IPTV services has been in the limelight for some time. Since telecom service providers having Unified Access Services license (UASL) and Cellular Mobile Telephony Service (CMTS) license are permitted to provide a triple play service, they can also provide IPTV services as it is within ambit of triple play services.” ISPs having net worth of more than Rs 100 crores are permitted to provide IPTV services after obtaining permission from the licensor. The question was being raised time and again in view of the provision of Cable Television Network (Regulation) Act 1995 whether these operators needed any other regulatory clearances or registration to provide IPTV to their subscribers. It will be important to mention that Cable Television Network (Regulation) Act 1995 provides that no person shall operate a cable television network unless he is registered as a cable operator under this act.

No clarity

A source at BSNL informed us that there are many hurdles in the way as cable TV services stand to get affected badly by triple play. Reliance Communications has announced mega plans through its subsidiary, Reliance BlueMagic but it’s still not yet clear if they want to provide either satellite or IPTV or both. Dish TV that earlier obtained an order from TDSAT (Telecom Disputes Settlement And Appellate Tribunal.) has now moved to the Supreme Court over Star TVs high pricing reminds us of the ugly cable wars of late 90s in India.

Only the MTNL and BSNL had come out with the triple play package. There is big question among the people why then not private players such as Airtel, TATA Indicom (VSNL) and Reliance. None of these have triple play package as such. BSNL sources said that the others do not want to go through a process of experimentation through trial and error; only BSNL can afford to do so and private vendors are waiting for that. Once they realise that bundling is working, they will have that package too.

As is the case with telecom service providers (UASL and CMTS) having license to provide triple play services and ISPs with net worth of more than Rs 100 crores, cable TV operators registered under Cable Television Network (Regulation) Act 1995 can provide IPTV service without requiring any further license. Any breach of the provisions of Act/ License/ Registration/ Permission by telecom service provider/ cable operator/ Broadcasters shall be dealt with by designated agencies, which are responsible for administering.

Further the telecom licensee while providing TV channels through IPTV shall transmit only such channels in exactly same form (unaltered) for which broadcasters have received up-linking/down-linking permission from the Government of India (Ministry of Information and Broadcasting). In such cases, the responsibility to ensure that content is in accordance with the extant laws, rules, regulations etc. shall be that of the broadcaster and telecom licensee will not be held responsible. In case of contents other than TV channels from broadcasters, the telecom licensee shall be responsible for observing program code and advertisement code and such program code and advertisement code shall be the same as provided in Cable Television Network (Regulation) Act 1995 and Rules there under.

According to Vidyashankar Iyer, IT Secretary, Government of Karnataka, the Information & Broadcasting Ministry and IT ministry is monitoring content. It would therefore be appropriate that respective ministries regulate the content provided using IPTV. Operational procedures such as time to keep a copy of the content shown on IPTV, monitoring requirements etc. can be worked out by DoT based on the feedback from respective ministries. Any violation of prevailing Acts/ Rules/ guidelines relating to content by telecom service providers in provisioning of IPTV service shall be reported to DoT by respective ministries. The decision of the respective ministries regarding violation of the law/ direction/ guidelines in respect to content shall be final. DoT may perhaps seek the guidance of the respective ministries to ascertain the penalties for the breach to maintain uniformity and shall initiate suitable action for imposing penalties for violations in a time bound manner.

Telecom service providers providing IPTV will show only those news channels, which have been approved by the I & B Ministry.

At the moment broadband customers can test the triple play services and the success of this huge market is ironically at the mercy of TRAI and regulators. If they remove the hurdle the market would be wide open.

mohammed.shariff@expressindia.com