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[RSTV The Big Picture] DTH v/s OTT

Penetration of the television market in India is at 64 % and is intensely competitive. Television networks continue to increase their programming hours, offer new content and TV shows in many genres. However, with cheaper internet and less expensive mobile data plans, more people are taking to watching video content online through mobile phones rather than on television.
By IT's Video Summary Team
October 11, 2019

Contents

  • Introduction
  • IT’s input
  • Why there is more demand of OTT than DTH?
  • Are the new rules of TRAI the main reason for switching over to OTT service?
  • Will OTT services take over DTH providers?
  • Regulations of OTT services
  • Conclusion

[RSTV The Big Picture] DTH v/s OTT

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Introduction

Introduction

  • As per Telecom Regulatory Authority of India (TRAI), the average active subscriber base of Direct-to-Home (DTH) services has seen a sharp decline of 25 percent, from 54 million in April to June quarter in comparison to 72 million in January to March quarter in 2019.
  • This also coincides with the new DTH tarrif regime implemented from 1st April. The decline in subscriber base highlights the challenges faced by DTH operators during the transition to new tariff regime.
  • Meanwhile the rise of OTT services also seems to have impacted the DTH subscription numbers. With high competition in the segment, OTT service providers give the consumers a combination of both attractive content and subscription package.
  • However, regulation for OTT platforms continues to remain a contentious issue with the government mulling over its options.

IT’s input

Television broadcasting

There are two ways for TV broadcasting:

Broadcast networks include:

Satellite TV: Television from providers like DirecTV, delivered via radio waves.

Cable TV: Television from providers like Time Warner Cable, delivered via coaxial cable connection.

  • As the name suggests, broadcast networks operate by broadcasting content from a central point. In the case of cable, content is broadcast through a dedicated coaxial cable network.
  • In the case of satellite, it comes as radio waves that is pick up by satellite dish (or cable box).

Internet networks include:

IPTV (Internet Protocol Television): Television from providers like Prism TV is delivered over the Internet via a privately-managed network.

Over-the-top (OTT) Streaming: Television from third-party services like Netflix and YouTube is delivered over the open Internet which any one can access.

Over-the-top (OTT) Streaming

  • Internet networks differ from cable and satellite by offering content through Internet-based services. (IP stands for Internet Protocol which is a language used to transfer packets of data between computers attached to the Internet network). In both cases, the consumer requests and receives content via Internet Protocol.
  • The primary difference between IPTV and OTT streaming is that OTT streamed content comes over the same open, unmanaged network as email and web browsing while IPTV uses a private, dedicated network to deliver more consistent service.
  • Unlike cable or satellite where content is broadcast in real time, IPTV and OTT streaming allow users to request the content over the Internet at any time.

New framework announced by TRAI

  • In January 2019, TRAI has announced new rules.

Under this,

  • Customers have an option to select and pay only for only those TV channels they want to watch at an MRP decided by the respective broadcasters. Consumers can either choose free-to-air channels, pay channels, bouquet of pay channels or any combination thereof for the base pack.
  • Consumers will have to pay a basic amount for 100 Standard Definition (SD) channels in base pack. The base pack will cost maximum of Rs 130 plus taxes and will include all the Free-To-Air channels.
  • Users will have the choice to either rent the set-top Box from DTH service provider or they can buy their own set-top box.
  • DTH companies will have to resolve problems quickly. If a TV connection is faulty then there is a provision of Call Centre. If the connection is not restored in 72 hours, then one can deny the payment to service provider.

Why there is more demand of OTT than DTH?

Why there is more demand of OTT than DTH

  • 55% Indians prefer DTH over OTT. This due to the new regulation that TRAI bring in January 2019. Moreover, the convince and ease of viewing that OTT platforms provides is much higher than DTH.
  • 87% of Indians are viewing video on their mobiles as data service charges in recent years have been decreased.
  • Due to increase in cable bills, the DTH operators witnessed an unprecedented 25 per cent fall in subscribers in the April-June quarter of 2019. However, this numbers are not correct as TRAI has changed the method of computation of calculating decline in DTH subscribers. Hence, there is no such drastic reduction in DTH subscribers.
  • Also, it is a tedious task for consumers to decide which channels they want to watch. This could be one of the reason for switching to OTT services. However, TRAI has launched a mobile application which helps consumers to choose channels easily and at the same time allow them to decrease their monthly bills.
  • Everyone has mobile with him/her every time which creates a trust factor. For instance, a person will more likely to believe even a fake news coming in mobile through OTT service rather than believing a news show on DTH service.
  • According to KPMG report, India will have more than 500 million subscribers to the OTT platform by 2023.

Are the new rules of TRAI the main reason for switching over to OTT service?

  • After the implementation of new TRAI rules, the consumers have started complaining that there DTH Bill have gone up. However, bill of some consumer’s bill have also gone down.
  • After the new rules, the more number of TV channels one watches, higher he/she has to pay than previously. Hence, before the implementation of new rules, it can be said that the people who are watching less number of TV channels were subsidizing who were watching higher number of TV channels.
  • Hence, it cannot be said that new rules are only responsible for increasing in view in OTT services.

Will OTT services take over DTH providers?

Will OTT services take over DTH providers

  • OTT services solely depend upon internet services and Internet services are not evenly distribute in India. Moreover, internet access is not available to more than 50% people of India.
  • In addition, approximately 2/3rd of India does not actively use internet. Hence, the OTT choice of such users are very limited.
  • The DTH and OTT service are different from each other as the content one see are different. OTT services, such as on phone, is more personal while watching TV is sort of a social activity. However, they complement each other. For instance, OTT will tell user to watch the entire episode of a show on television at a specific time by showing just trailer of that show.
  • Moreover, it is not suitable to watch long 3 hour show on mobiles through OTT services instead of on Television.
  • Considering the new dynamics of telecom industry as fiber optics suppliers coming in telecom industry in a bigger way (Jio fiber), the discussion on whether the OTT service provider will take over the DTH and cable providers is still premature.

Regulation of OTT services

  • The major challenge that OTT services are facing for OTT regulations is to find a way to separate out the OTT services from larger internet.
  • In India, the mobile telephony is a license service. There are concerns about whether the OTT services like Whatsapp which provide call services on internet over internet should have such license or not.
  • Moreover, the mobile phone license services in India are heavily regulated. In fact, the issue is not the regulation of OTT but regulation of telephone service.
  • In more developed countries such as in Europe, there is not much tension between regulation of OTT and provincial sale tax (PST) services as found in India.
  • However, OTT providers are governed by the Section 79 Of Information and Technology Act, 2000 exempts intermediaries (OTT service providers) from liability in certain instances. It states that intermediaries will not be liable for any third party information, data or communication link made available by them.

Conclusion

  • There is lot of churning in DTH and OTT services in India. As far as the regulation is concerned, there is more lot needs to be streamlined for OTT platforms.
  • Ultimately, the consumers will decide who is the winner among OTT and DTH.

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