Interoperable set tops arriving in India – inspired by US failure?

TRAI (The Telecom Regulatory Authority of India) has decided to take a leaf out of the country’s ever-growing mobile market book to support the longevity of cable and satellite TV operators – by introducing the idea of interoperable set tops. Remember the FCC’s controversial open set top proposal in the US? Fast forward a little over two years since the plans were abandoned and we have a similar initiative sprouting in India – one which is unlikely to face anything near the same levels of opposition expressed by FCC Chairman Ajit Pai.

Chairman of the Indian telecommunications regulator, R S Sharma, has said TV viewers in India will be able to switch their service providers for cable and DTH by the end of this year by “changing the SIM card of their company just like mobile phones.”

Most set tops in the US and Europe have evolved to accommodate third party services, primarily Netflix, to better compete with connected TV devices and other cord cutting enticements. Yet the notion of pay TV operators agreeing to an initiative which allows pay TV subscribers to switch to rival services without replacing their existing set top is an alien concept.

But despite India’s DTH market being nowhere near saturated and the potential for cable TV largely untapped, TRAI has recognized that there is a very real and immediate issue facing the pay TV market in India and has decided that interoperability is the best way to go about maintaining competition. India is a unique market in that pay TV is extremely cheap and, in many cases, full TV subscriptions undercut OTT services.

Another reason behind TRAI’s decision to create an open set top ecosystem could be the dominant position of DTH players Dish TV and Videocon d2h since completing the merger last year, boasting a 41% share of the Indian pay TV market. This powerhouse threatens to become even more dominant as rumors surfaced recently regarding discussions about a mega merger with DTH company Airtel Digital. Consolidation in India is therefore reducing choice among consumers, so TRAI could be betting on interoperable set tops to provide the solution, rather than doing the obvious thing, which would be to block mergers of such exorbitant scale in the first place. Clearly the Indian regulator sees the consolidation of pay TV in India as essential for competing with mobile giants.

But surely this could not pass regulatory muster, with the merged entity creating a behemoth guarding a 63% share of India’s DTH market with a combined 38.6 million subscribers. The proposed move is a retaliation to disruptive operator Reliance Jio buying controlling stakes in cable TV companies Den Networks and Hathway Cable.

Sharma cited unlocked smartphones as being a key driver of growth in the country’s mobile sector, referencing a recently published report on open source operating systems with KPMG and ICEA (Indian Cellular and Electronics Association).

Yet certain cable operators in the US have backed the shift in technologies towards open set tops, particularly with regard to security, namely Altice USA developing a system for broadening security support within an open set top environment by coexisting with legacy cable systems without duplicating bandwidth.

Of course, the US open set top proposal was more about creating an open environment embracing internet technology titans like Google and Amazon, as opposed to opening them up to direct rivals in the pay TV space. Pai eventually caved in under pressure from fellow Republicans on the House’s Energy and Commerce Committee in early 2017, who stated in a letter that the open set top initiative was “an unnecessary regulatory threat to the content creation and distribution industries and will limit high quality video programming.” Nobody considered at the time that the program could be viable before Donald Trump’s presidential win.

“Once the consumers pay money for purchasing the set top, they should own it,” said Sharma. Presumably though, if a consumer has not paid an upfront hardware fee, then they must see out their contract before the set top is “unlocked” and a new provider can be tapped at will. This is just one of many ambiguous factors at play here, which is why the confidence about rolling out the open set top initiative country-wide by the end of this year is a surprisingly optimistic timeframe from TRAI.

Perhaps no technology today is more representative of how pay TV operators are changing tack to embrace open set top ecosystems than the rise of Android TV operator tier. Abandoning the open set top proposal left the door wide open for Android TV operator tier and boy is it making the most of it – thriving in Europe and on the rise in Asia while we predict the US invasion is just around the corner.