Drop in set-up and service costs makes it an attractive option, but unclear policies remain a major hurdle.

Jawahar Goel, Head, Siti Cable

Seven years ago, launching a direct-to-home service could have been a recipe for disaster. Investment costs were very high so customers had to fork out much more.

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But today, the market has been transformed: prices of the dish and the set-top box have crashed through the roof, overall investment in putting up a DTH infrastructure has dropped and customers are also reaping the benefits of more attractive tariffs.

What is fortuitous for DTH operators is the fact that the service comes at a time when the government is pushing for the Conditional Access System, which will make cable television more expensive, narrowing the tariff gap between the two.

The cost of the installation equipment (which includes the dish and the set-top box) offered by Siti Cable is an attractive Rs 3,900. Apart from falling prices, the government has also offered a temporary relief -- a five per cent reduction in the duty on the set-top boxes that are being imported.

Just a few year ago, when Star TV made an abortive attempt to launch DTH, the same system cost Rs 14,000 to Rs 15,000. And because the costs were so high, companies that were planning to offer DTH services hit on the only survival strategy that they could think of: subsidise the box at Rs 5,000, but make it up by asking customers to fork out a steep Rs 700 a month for the basic bouquet on DTH.

But the fall in box prices have helped in offering the services at an attractive price, which is expected to start from as low as Rs 100 for 38 channels going up depending on the quality of the channels shown.

As a result, Siti Cable is looking at a large number of subscribers to get hooked on to the DTH channel. The target is to rope in as many as 1 million subscribers in a period of 15 months. This certainly isn't a niche product.

What has added to the viability is that the upfront cost of putting up the DTH platform has also fallen. We are investing Rs 250 crore (Rs 2.5 billion) on the project for 38 channels and the same infrastructure is being leveraged to run the company's head end in the sky infrastructure.

A similar infrastructure would have required an investment of Rs 2,000 to Rs 2,500 crore (Rs 20-25 billion) a few years ago.

What has added to the viability of DTH is the fact that cable TV will become more expensive. For instance, with the roll out of CAS (it has already been rolled out in Chennai), subscribers will have to fork out about Rs 2,700 for the CAS box. Now, if you pay another Rs 1,000, you can be a DTH-enabled home.

Secondly, subscribers will have to pay more under the CAS regime to see their favourite programmes. They will have to pay anything between Rs 200 to Rs 250 a month to see all the key channels, instead of the Rs 100 to Rs 150 they paid earlier. Even here, the difference between a DTH and a CAS subscriber is getting blurred.

But, of course, there is a large market that is waiting to be tapped for DTH services. While there are 85 million TV sets, there are only 43 million cable homes.

Even if we assume that 50 per cent of the remaining TV owners do not have the cash to go for cable services, there are still as many as 20 million households waiting to be tapped. Many of them live in remote areas, isolated pockets where cable TV is unviable, and DTH could be the only answer.

Roop Sharma, President, Cable Operators Federation of India

The government has started issuing direct-to-home licences to companies. DTH has found its biggest supporter in the Indian media, which believes it to be the answer to all cable woes.

But it must be noted that much needs to be done before DTH can actually succeed in India. It's not because DTH is not good for the country. It is the preparation, policies and attitude of the masses that will discourage its spread.

Conditional Access System (CAS) versus DTH: First, we need to understand that DTH does not compete with CAS as is projected in the media.

Several politicians and MPs have been vociferous in their views on CAS versus DTH. They've said that CAS should be implemented only after DTH transmissions start, so that people have the option of getting rid of their cable operators.

Cable TV and DTH are two methods of delivery of television content. CAS is integral to both the systems in delivering pay channels.

Cable is through cable networks and DTH is wireless, reaching direct to the consumer through a small dish and a set top box.

The difference between the two is akin to the difference between an ordinary land line telephone service and a mobile phone service.

Though the government has ensured that free-to-air channels on cable are delivered to the consumer without a set top box, no DTH signals can be received without the set top box.

So a set top box is a necessary expense for DTH. While a digital cable set top box may cost Rs 4,000, a DTH decoder is unlikely to cost less than Rs 7,000.

Besides, the monthly subscription cost for DTH and CAS on cable will vary. A cable connection with all the major pay channels is likely to be priced at Rs 300 to Rs 400 a month compared to DTH's minimum subscription of Rs 500. For adding premium channels, this cost could go up substantially.

Content: In India, content will be a major hindrance to the success of  DTH.  A person will opt for DTH only if he receives many more new channels that cable TV cannot offer.

Quality will not be deciding factor as the digital cables being installed by the multiple-service operators for introducing CAS is as good as DTH.

A DTH provider must provide all the existing cable channels and more to lure consumers to buy a set top box and dish out between Rs 7,000 and Rs 12,000 and pay a subscription of Rs 500 every month.

In India, two major DTH platform providers -- Zee and Star -- are archrivals and have not decided to share their content yet.

Their individual bouquets of 10 to 15 channels along with 40 odd free-to-air channels may not be an attractive proposition to drive DTH penetration when similar content will be available on cable TV for Rs 300 to Rs 400 every month.

As far as content goes, the government too may play spoilsport. It may not allow adult channels to come to India. The world over, DTH thrives on adult content, premium movies and sports. Till such policy changes are made, DTH has no pull.

Platforms: There are four serious contenders of providing DTH services in India -- Star, Zee, Doordarshan and Data Access. Experience in developed markets shows that not more than two platforms can co-exist.

It means that these companies may fight for supremacy till only two of them are left. The basic battle will be on content and cost.

Again, this may take a while. In the US, DTH took five years to become a force in content delivery. Even after over 15 years, it has cornered just 25 per cent of television households.

Value Addition: As digital cable networks have already started operating in India, cable operators may soon offer two-way path going right upto the consumer's home.

That will facilitate interactivity, high-speed broadband access, gaming, video-on-demand and many more services on cable. When it starts, DTH will still be a one-way transmission. Such value additions will take time and will be costlier on DTH.

As told to Surajeet Das Gupta