Of STBs, IPTV & other paraphernalia

There seems to be a major battle happening on the Set Top Box front. Out here, it would seem that one of the critical-to-success-factor would be any entrants level of tie-ups with the local cable operators or the MSOs, rather - I would say that the CSF would be the ability to ensure that ones own STB penetrates and reaches the house. Of course, post acquisition service would be the next big thing to determine longer term success, but the short term success would clearly lie in the former.

One issue is technology itself. Even as the industry seems to be settling for IPTV in favor of content-delivery-on-PC, the need for high end digital televisions comes up and a more hidden component - the software for the IPTV. Microsoft seems to be running ahead on this, leaving even the Telco's it took with itself on this journey. I cant claim to completely understand the linkages, but it would seem that there is a Microsoft based software that would run on the TV or the STB (knowing msft, it would be a customer interfacing experience) using which the user would control his/her experience of the TV - say, switching channels or recording programs or Picture-in-picture etc. Most telcos though, even globally, seem to have decided to go slow on the new product and evaluate multiple vendors when the need does arise at that point in time.

The 'constraints' or rather, the complications posed by technology do not affect only the telcos, but even the Cable TV industry. The concerns and issues they seem to be grappling with deal with the CPE upgradation required from their end to make them capable of delivering IP content. Here CPE would be both the in-premise equipment of the LCO/MSO and the cabling that has been used to deliver TV thus far. There is also the question of the standards/protocols to be used to send such signals - globally DOCSIS has gained acceptance, particularly in the US and Korea - given the nature of this industry and its experience on non-standardized protocols, it would seem that there will be still time to go, this more so since there will be pressure on the system to enable tCommerce (Television Commerce) in a more effective manner. Incidentally, there is this wonderful chapter by John Battelle (Author of The Search) in his book on the impact that convergence & data storage+analytics will have on the way the world gets presented to us by marketing companies! Yet, while the debate on standards and protocols continues here, the same has its version happening on the regular networking and telephony front, where Open Source is making a minor entry. This could transform business models in the business sector, just as Google's spreadsheet may transform the fortunes of Msft's office application. Of course, a true collusion model will see them both start to price it at a pay-per-use model, time will tell.

There is operating a three tier structure in the Cable TV industry as well. There are three levels of operators whom the consumer is going to fund through his monthly subscription - The content provider (aka broadcaster), the MSO and LCO (Local Cable Operator). The jury seems to be still out on what the revenue sharing mechanism between these three would be. In an IPTV scenario, both the MSO and the LCO are obviated, leaving a single telco in the fray simplifying negotiations, as compared to a three-party-agreement. On the DTH front however, which has opened yet again the pricing issue of channels, TRAI now proposing a ceiling price on bouquets (something akin to MRP on goods) and allowing broadcasters/MSOs to discount and offer schemes accordingly. The basic argument on revenue sharing stems from the lack of transparency today on the subscriber numbers & hence the duel between the operators and the broadcasters. The argument has also taken a turn for the philosophical, as to whether TRAI should use pricing for regulation in a non-competitive scenario (since the three players on this sector offer different sets of channels completely) or whether TRAI should use pricing to enable growth!

While these revenue sharing debates prolong here, the phenomenon of equity deals/mergers is taking hold in the west, with Home Choice (Video Networks) & Tiscali's recent announcement. If its not equity, it strategic partnerships in the backend at least, like mPhase with Oracle - clearly the need for sophisticated data management systems will drive such relationships & it would appear that there would be an industry here in the waiting to integrate with traditional media firms that measure spends and advertising money effectiveness. BT too has done its homework and is readying itself through tie-ups with content providers to deliver its IPTV solution, branded as BT Vision. The article here also talks of AT&T's tie up with GoITV, which is not entirely an IPTV solution, rather one custom built for Msft TV.

While this happens, the court has mandated the use of STBs in key metros. This is another interesting industry twist, if one may say so - and one needs to look at the various players involved & the methods of regulation. There is also going debate on the pricing structure to be adopted and another nested debate on who would decide it - TRAI, BRAI, some other new body etc - the key decision though seems to have been reached on the base price of the Free-To-Air channels, which is pegged at Rs. 77. Thus the scenario seems set for Level1 and Level2 boquets of channels, and knowing the price points, it may either be at 25/49/99/149 kind of Bata-Shoe pricing.

I wonder what the government will do to prevent the imminent cartelization & price fixing, will the regulator be appointed in time, will guidelines emerge and will the government vest the regulator with teeth, for there are numerous cases such as the recent Short-code-SMS issue, where the DOT and TRAI in this case have differed in their approach and the DOT has overruled the TRAI. Quite a unique case for the consumer versus citizen debate!

Linked to the convergence of these services & their pricing is the Broadcast Bill, and one of my favorite topics - the Citizen versus Consumer debate. It seems that the broadcast bill is not in the public domain (and this is such a wonderful article), given the sensitive nature of its contents and implications. Indeed, it would seem that there is need for a complete relook into and overhaul of the MRTP regulations in India and what constitutes monopolies and resulting restrictive trade practices that would harm the citizen. However, in a debate organized by indiantelevision.com, the issues discussed seem to be much more trivial and bordering on the generic in comparison, that either one is forced to believe the incompetence of the debaters (on public policy, not their functional domains, no offense meant) or one is forced to believe the deliberate attempt to mislead. I would assume its probably unintentional misleading, since the opening assumption equates the government and private sectors as the same with reference to the consumer (ref Lulla's quote), however he seems to have missed what I perceive as the Citizen versus Consumer aspect.

If any Telco intends to do the same, it should probably start communicating with existing customers and get a basic customer profile sheet filled out in their call center through a locally designed application, that captures the customers name, number and contact details and sends out the message to the customer once the telco is ready. This should be the way on launching IPTV!