The cable TV business can no longer be considered a low value business. On the other hand, thanks to the convergence of technologies, the valuations of such businesses are set to reach dizzy heights.
According to a report, Siti Cable, the cable distribution arm of Zee TV network, is valued at $ 3.5 billion. And naturally, the fight to control cable TV distribution is intense.
The strategic business agreement signed between Sumangali Cable Vision (SCV), Chennai, and Hathway Cable & Datacom Private Ltd, Mumbai, also takes into account their proposed net-over-cable venture in Chennai.
As per the agreement, each one will offer the broadband services only via their cable operators. As a result, the area of operations have been strictly demarcated.
While Hathaway Cable is all set to launch its services from June as its infrastructure is in place, SCV has signed an MOU with Mahanagar Telephone Nigam Ltd (MTNL) for the purpose.
According to Mr. E.V.S. Chakravarthy, vice president, Hathway Cable, the company is investing around Rs 25 crore to develop the needed infrastructure in Chennai. Already, the Rajan Raheja group company has rolled out its broadband service in Mumbai and Bangalore. On the anvil are similar services in cities like Hyderabad, Vizag, Pune, Delhi.
Apart from the commercial segment, Mr. Chakravarthy says that the potential in the household segment is huge. Each cable operator has at least 600-1,000 homes connected. Even if 15 per cent of that is tapped, there is good money, he remarks.
In order to tap the potential, Hathway Cable plans to arrange finances to enable individuals to purchase personal computers, cable modem, set top box and other accessories needed to access the web. The company will also extend finance help to its cable operators for upgrading their network and to install two-way amplifiers and other equipment.
According to Mr. Chakravarthy, the company will be charging around Rs 800 per month towards Internet charges. It should be remembered that net-over-cable offers unlimited access time. According to him, the pay back period for Hathway Cable is around five years. The revenue streams is similar to that of other Internet service providers.
On the other hand, the MTNL-SCV combine is planning to offer Net access using twisted pair technology, which is similar to Digital Subscriber Line (DSL) technology.
As regards the safety features, Hathway Cable provides 56 bits encryption facility for messages sent by its Net subscribers. The company will be following the Docsis data-over-cable services interface specification standards, an international standard followed by major cable TV networks the world over, says a company official.
While the gateway is provided by VSNL, Hathway Cable is talking to private parties such Sigma Online for the purpose. The bandwidth is about four-five mbps as against 20-30 kbps in the case of the dial-up Net connection.
According to Mr. Chakravarthy, Hathway Cable will initially offer only Net connectivity. Later, other services such as video conferencing, voice over internet protocol, voice chat, community radio are planned to be offered. The company is also talking to computer education companies for education programmes over the Internet.