Cable business began in India in the mid-80s. The friendly neighbourhood small time entrepreneurial genius hit upon the idea of showing popular Hindi and English movies using second hand VCR, poor wiring and hired video cassettes at a rate of Rs 50 per month. Disillusioned with lack of entertainment offered by Doordarshan, a family could enjoy a movie at Rs 1.66 per day. This made the business an instant hit.

During the Gulf War, entrepreneurs started offering satellite channels on their network. The signal was received through a c-band dish antenna manufactured and distributed locally.

One can make a start in the business by installing a 8-feet diametre dish antenna on the roof top and providing the service through cables. Once you invest something in cable operation, the question of further investmenthardly arises. As majority of viewers are interested in entertainment programmes and movies, VCR/VCD become a necessity.

Though monthly subscriber fee varies, it averages to Rs 100 per month. This means that if an operator has 3,000 subscribers, he will earn around Rs 3,00,000 per month. After deducting depreciation and loan charges of Rs 1,00,000 per month, he is still in profit of Rs 2,00,000. The investment cost is a little high due to cabling and networking. But entrepreneurs get it back as installation charges which is non-refundable.

There are mainly five pay-channels--ESPN, Star Sports, Star Movies, CNBC and Zee Cinema--in India. With almost all of them increasing their charges, a war of words has emerged between them and operators. There is no mechanism to regulate the pay channel charges though per connection it works out to be not more than Rs 26.

Cable operators also make money from local advertisements. There are also other sources of income, like different channels paying them for showingtheir channel on the prime band. "During elections, political leaders pay them for image building through cable network," says Roop Sharma, president, Cable Operators Federation of India (COFI).

Sharma, however, sees a number of threats to the business. One of them is the proposed merger of Star and Zee. After the merger, the media house will have control over majority of popular channels like Star Plus, Star News, Star World, Channel V, National Geographic, CNBC, Star Movies, Star Sports, ESPN, Zee Cinema, Zee India, Zee TV and Music Asia. Of these four are pay channels, six are digital and the rest are free to air. "With control over majority of channels coming under one roof, cable operators will be forced to be at their beck and call," says Sharma.

COFI has urged the Union government not to consider any new project in telecom or broadcasting field. Says Sharma, "In order to safeguard the interest of cable operators, no merger of media companies should be permitted before the finalisation of broadcastpolicy."

It has also asked the government to strictly implement 20 per cent cap on cross media holding and disallow ownership of ground networks by broadcast companies. "Policy on digitalisation of the broadcasting sector should be finalised and all plans for pay channels and digitalisation should be approved by a government agency."

The only way to survive the intense competition is through value-added services.

Some small cable operators are merging with multisystem operators (MSOs) to get better signaling options. "It helps cable operators in overcoming problems with pay-channels," says Harnam Singh, a cable operator from South Delhi. Singh, who started as an independent cable operator, is now a part of a MSO.

Franchise system found acceptance in 1994 when Star Movies became a pay-channel. A decoder at that time cost about Rs 40,000. "Operators with low clientele, opted for being a part of the MSOs instead of making further investment," says A K Rastogi, president of All-India Avishkar Dish AntennaSangh.

On the technology front, small players are apprehensive about upgrading. "At times, they are misguided by big players," says Sesan. But cable operators are scared of making fresh investment. Small cable operators are often forced to sign franchisee agreement.

Business rivalry has become the part and parcel of the business. In every area, small cable operators are sceptical of being eaten out by other players of their locality. "Some even receive death threats," says Manjit Singh of Xl Cables. Some time back, one of his workers was allegedly attacked by another cable operator.

Following recent killings of cable operators in different parts of the country, minister of state for information and broadcasting Mukhtar Abbas Naqvi requested the state governments on Wednesday to give necessary protection to operators. He said it was unfortunate that mafia groups were terrorising operators.

Though entertainment tax is eating into their margins, Sesan welcomes it but demands a proper implementationsystem. Sharma, on the other hand, favours waiving of tax. "Big business houses operating channels get tax benefits. Even a small cable operator should be given some opportunity to grow." She feels a minimum of five-year tax holiday should be granted to small cable operators who number around 70,000 and services to be provided by telecom and cable companies should be well defined.

The cable business, as rightly pointed out by an analyst, is like the internet business in America and Europe. "It is growing from all dimensions but is unregulated. This makes the highly profitable venture utterly chaotic."

Together we stand

When almost all cable operators are scared of multisystem operators (MSOs), one operator is giving them a tough time. Sunil Sesan of Sky Channel shows as many as 68 channels including all Doordarshan channels. "We don't want any of our subscribers to be unhappy," says Sesan. He claims to be showing the largest number of channels.

In fact, they are three cable operators who havegot together. "This has helped us in reducing the cost of investment." Each of them has a share of 23 channels. With a fully trained staff, they have managed to change the whole complexion of the service industry. "For the quickest possible service, we provide walkie-talkies and pagers to our employees," says Sesan.

In the age of exchange offers, Sky Channel follows one-line marketing strategy--"don't exchange the television, change the cable operator". Sesan's secret of success lies in increasing the number of prime brands. "By putting the channels in UHF, we increased the prime band to 30," says Sesan.

Value-added service is the buzzword for this cable operator. "Right from the beginning, we have tried to increase our service but without increasing charges." Sesan charges Rs 125 per month.

The three partners have met the burden of additional investment by local advertising. They even have a special channel devoted exclusively to local events. Sesan's is a business which has evolved to overcomecompetition, setting new standards on the way.