Cable, not IPTV, may be the Key to India's Broadband Digital Future

By Ritesh Gupta

A new study, Broadband Digital Networks: The Future of Cable in Accelerating India's Growth by Media Partners Asia, Ltd., Star Group, Macquarie Media Group and Liberty Global, Inc., says twenty million more homes are connected to cable than to fixed line telephony.

Of 71 million cable homes passed - by more then 30,000 operators -- only 350,000 have broadband, and hardly any of them subscribe to a bundle consisting of broadband and cable TV.

India's cable sector generates US$4.3 billion in annual revenue (subscriptions and advertising), making it one of the largest in Asia, yet, only a fraction of this figure – less than US$ 100 million - flows from broadband digital services, which pass less than 10% of cable homes. Projected to serve more than 100 million homes by 2010, cable -- as India's leading last mile network - holds a major potential to increase the country's broadband take up, but lack of capital is a significant impediment against making the requisite network upgrades. The cost to upgrade an existing 10 million subscriber analogue cable system to digital is estimated at US$2 billion, or about US$200 per home, which includes the upgrade to a two-way 750-850 MHz broadband digital network and the cable modem. This level of investment is simply not within the grasp of the average local cable operator, which serves a few thousand homes - or even fewer -- and therefore has insufficient cash flow or access to financial markets to fund the upgrade.

In addition, domestic media groups and international investors are expressing alarm over the degree to which the Telecommunications Regulatory Authority of India (TRAI) has decided to intervene in the strategic broadband digital cable market. Global investors are already limited to only a 49% foreign direct investment in cable, as opposed to 74% in telecoms and 100% in the ISP business