New Delhi: Having acquired government approvals for its Headend-In-The-Sky (HITS) business on 14 July, the Hinduja group on Wednesday said it will roll out its digital television distribution business in the middle of August under the brand name NXT DIGITAL. The new service will help cable operators in the country to make the transition from analogue to digital, offer specialized value-added-services, and also their local cable channels on the HITS platform.

“NXT Digital will strongly support the national mission to roll out Digital Addressable Systems (DAS) for broadcasting all over India," said Tony D’Silva, managing director, Grant Investrade Ltd, a wholly-owned subsidiary of Hinduja Ventures Ltd. DAS, which makes it mandatory to access television signals via a set-top box, was notified by the government in 2011.

Armed with an investment of nearly $100 million in back-end technology and its teleport in Noida, the Hinduja HITS venture proposes to enrol a significant number of cable operators on this platform.

To be sure, since Headend-In-The-Sky—as the name suggests—is a satellite-based service, it will have its footprint across India and will be able to roll out its offerings anywhere in the country. However, in view of the deadline for DAS rollout, NXT Digital will focus on smaller towns to provide its digital services, D’Silva said.

The government passed the HITS guidelines in 2009. HITS facilitates digitally compressed programming via satellite using a single headend. The television channels are downlinked by the HITS operator at a central facility and then again uploaded by it to a satellite after encryption. These signals are then downlinked by the local cable operators and delivered to consumer homes via cable.

D’Silva said that NXT will initially offer 500 channels to its operators. “This number could go up to 1,000 channels soon," he said, adding that the company’s set-top boxes will come with a recording facility.

Commenting on the number of homes that HITS expects to reach after rolling out its services next month, D’Silva said that in phase III of digitization an estimated 50 million homes need to be digitized. “At a conservative estimate, we should get 15 to 20% of that number," he said.

The Zee Group attempted to get into the HITS business twice and failed, and the existing Jain HITS platform in the capital has not made much headway.

“Hinduja HITS will be competing with a number of DTH platforms as well as MSOs (Multi system operators such as Siti Cable and Digicable, among others). The biggest killer for them will be content cost for which they will really have to negotiate hard with the broadcasters," said an executive at a DTH company who did not want to be named.

The new service provider will also have to suffer heavy taxation like DTH companies (they pay licence fee and service tax to the central government and entertainment taxes to the states). “We have managed to bring down our costs gradually over the years. HITS will have to go through the same cycle," the person said.

Mihir Shah, vice-president at Media Partner Asia consulting and information services firm, does not agree. He said that the structure of the industry has changed since Zee first tried to launch HITS.

“There was no DAS then and digitization was not mandatory. This time Hinduja’s HITS has a huge opportunity to convert analogue homes into digital. In phases three and four, our estimates suggest there would be 75 million analogue cable homes that need to be digitized."

He said that HITS combines the best of both worlds—DTH and cable. “The HITS architecture has some technical advantages over DTH. The platform can effectively compete with DTH on channel carrying capacity as it can avail of satellite bandwidth across multiple orbital locations," Shah said.

A spokesman for DTH operator Tata Sky did not respond to phone calls or text messages seeking comment.