This is in response to Shailaja Neelakantan’s post at GigaOm, titled “India’s IPTV Unreality “. Consider this a counter argument. Shailaja says:
…broadband prices are still too high. You can get what operators here call a broadband connection (128kpbs-snort!) for $5-$6 a month. Though cheap enough, that amount only covers data transfers of 200-250 megabytes, and you have to pay by the megabyte if you run over. Unlimited broadband at 256 kbps can run as high as $40 for home users and even higher for businesses.
One sided viewpoint: In Delhi, Airtel charges $22pm for Unlimited @ 256kbps and $15pm in Noida for Unlimited @ 128kbps. MTNL charges $27pm for Unlimited @256kbps. You just have to see their websites for how competitive their rates are.
Yes, there are Tier-2 ISP’s who provide costlier and slower access too, but we’re talking about businesses here – they will have to adapt to the changing competitive landscape or face extinction. Even in smaller towns, BSNL is aggressive about rolling out faster, better access using ADSL: S.D. Saxena, Director Finance, BSNL had mentioned the same to HCL’s Ajai Choudhry at the CII Marketing Summit earlier this month. MTNL, in my opinion, is a case study for providing reliable Internet access and winning over customers. The word-of-mouth on MTNL (and Airtel) is very strong. This is one field where government owned companies have kicked some serious ass, in spite of tacky advertising.
From what I understand, IPTV is not being brought in to increase fixed line connections, but to provide an additional source of revenue. MTNL and BSNL fixed line subscriptions have been declining, or static at best, after a few years of decline. What happened in case of fixed line is that many people who had two or three phone connections (because one would invariably be down, with or without rain) have returned the extra lines because of improvement in service or the advent of mobile telephony. Amusingly enough, the exodus was also fuelled initially by a government regulation requiring those with fixed line connections to file Income Tax returns, particularly those in rural areas where agricultural income is tax free,and until then remained undeclared. (Ref: an ICFAI Case Study on BSNL)
Only less-established players like Airtel, Tata Indicom and Reliance are using broadband to push fixed-line services, but as Shailaja has mentioned, Internet users are a comparitively small demographic; hence this cannot be a primary driver of growth.
Broadband connections for MTNL have increased. From Voice & Data: “The broadband subscriber base grew to 211,935 during FY 2005-06, almost 40 times over 5,374 subscribers registered during FY 2004-05.” This is credited mostly to switchovers from other ISP’s like Sify, Spectranet, In2Cable, where quality of service was abysmal: imagine having to call customercare eight to ten times a day, and connections going down for three weeks at a stretch. It happened to me with Sify.
Also, it’s fairly obvious that IPTV cannot be given at the speeds currently on offer, or with those download limits. I’m sure Airtel, MTNL and BSNL are aware of that. Probably, there will be a deal similar to that which Indiagames struck with Airtel, wherein users are allowed to download unlimited games at Rs.199 a month; some of the games are over 1GB in size. It’s a question of when, and not whether, download limits can become immaterial.
Arguments similar to the ones made in Shailaja’s post were probably also made ten years ago about the acceptance of mobile connections and the spread of the Internet in India. Very, unfortunately, myopic.
The one argument that I do agree with is of the consumer accepting IPTV. Initially, I think it will attract those people who:
- Do not get access to some channels on CAS because of badly planned channel bouquets
- Those interested in international content
- Those who have one TV and one net connection at home, and keep fighting over the remote.
- Those who want to try out IPTV, and be seen as adopters of cutting edge technology (there are lots of those)
- Those expecting a WiMax rollout, and interested in watching TV on the move.
- Those wanting exclusive and live pay-per-view content.
- Foreign nationals wanting to view content from their home country. For example, via Jump TV.
Again, I’m very skeptical about how long telco’s will be able to skim the market, and how many early-adopters they’re going to get; but the infrastructure is being readied in India for a digital content boom. The consumer now has to be educated and attracted. It might take some time spreading to smaller towns, but I’m optimistic that it will happen. The success of IPTV depends both on subscription and advertising GRP’s. I’m expecting an IPTV rollout by the festive season (Diwali), and possibly a reduction in broadband rates.
A sign of things to come: MTNL is asking consumers in Mumbai for their opinion on IPTV before launching services – here. Two screen caps here and here. A mail was sent out to all subscribers in Mumbai asking them for their opinion. Looks like IPTV with 120 TV channels, 10 films in a month via VOD, 10 games, 10 chat sessions(?), 250 SMS from TV to Mobile will be offered at less than Rs. 1000 a month.
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