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Do you enjoy watching your favourite serials and cricket matches on HD channels? If you are a Direct-To-Home (DTH) television customer, there may be some bad news for you. Your DTH provider may be facing some capacity constraints in offering you more television channels, especially in the HD format. HD, or high definition, format allows a viewer to enjoy much better picture quality as it offers a resolution that is much higher than that of standard definition TV. And to do that, it takes up more bandwidth on a satellite transponder.

The KU-band transponders are the lifeline for DTH operations. Limitations on the availability of KU band transponders can critically hamper their growth.

That there is a looming capacity crunch in the satellite transponder industry that could affect any expansion plans of your DTH operator has been captured in a report prepared by consulting firm PricewaterhouseCoopers (PwC). The report was released by Casbaa at its India Forum 2016 held on 22 March in New Delhi. Casbaa is Asia Pacific’s non-profit media association for the multi-channel television, audio-video content and distribution industries.

According to the report, the projected channel growth in India will result in a huge demand-supply gap in transponder capacity in the country. It is not that transponders are not available, but accessing those transponders is a cumbersome process, the report observed. But more on that later.

Currently, DTH operators offer close to 50 HD channels, three times what they were offering in 2013. This number is expected to go up to 130 by 2017. That is not all. As India moves ahead with Phase 3 and Phase 4 of digitization, especially with the growth of television consumption outside the urban areas, the DTH share of Indian pay-TV subscribers will increase to 41% by 2019. “This expanding customer base along with the proliferation of HD channels will mean a large need for transponders," the report added.

Surprisingly, the transponder capacity requirement of the DTH industry has always been met by foreign satellite firms. Today only 25% of India’s DTH transponder capacity is being served by Indian satellites. This happened because, as the DTH industry grew, its demand for transponders outstripped the Isro ability to increase supply. Isro, or the Indian Space Research Organisation, is the space agency of the Indian government that also allows broadcasters and DTH operators to use its satellite transponders for their businesses. Out of a total of 78 transponders used by DTH providers, 59 belong to foreign satellite operators.

Take a look at some more statistics to understand the crunch faced by DTH providers. Today, most DTH operators are able to carry only 50% of the total channels available through cable networks owing to the limited number of transponders that are available. This puts them in a disadvantageous position vis-a-vis cable operators. According to the report, this gap will only widen going forward. The DTH industry will require 200 transponders in the next three years.

Why is accessing more transponders such a big deal for Indian DTH firms considering most foreign satellite system operators claim there is sufficient capacity available? To be sure, it’s more of a regulatory challenge. The process of identifying and securing the transponder mandates the involvement of Isro and its marketing arm Antrix.

All transponder demands are routed through Antrix. How this works is that Antrix sources international transponder capacity and sub-lets it to Indian DTH operators through back-to-back agreements. This delays the process and limits the Indian operators’ ability to procure favourable commercial terms through direct negotiations, according to Smita Jha, leader of the media and entertainment practice at PwC. (Interestingly, Isro’s intervention is required only when DTH operators need to get KU band transponders. When broadcasters want to launch new channels on C band transponders, they can talk directly to foreign satellite operators.)

The other major issue troubling the industry is that the contracts with foreign satellite suppliers are short term. Antrix offers them three-year deals. The original thinking behind the move was to limit the term so that the foreign satellites could be replaced by Indian satellites when they were ready. This clause also puts significant constraints on commercial negotiations with transponder suppliers, most of whom are looking for 10-15 year contracts. Foreign satellite operators pass the cost of the uncertainty to Indian DTH service providers, the PwC report said.

However, it recommended that the DTH providers be allowed to directly secure incremental capacity from existing satellite providers that have been authorized to provide the service. The report also pushes for longer-term contracts between capacity suppliers and DTH providers.

The good news is that, speaking at the Casbaa India Forum, J.S. Mathur, special secretary in the information and broadcasting ministry, said: “Scarcity of transponders is a major issue…stakeholders should get together to see how we can resolve the issue."

Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.

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