The Telco versus Broadcast battle

I am blogging after a long time – – on a break evaluating couple of priorities and a new avatar possibly

As I write this, there are couple of things happening in the Indian telecom industry level

1. Reliance Jio is investing in a FTH (Fibre to Home) network mesh.
a. I am assuming that this being a costly exercise will be limited to top 40 towns and most possibly to residential and office densities.
2. Telcos such as Airtel, Reliance and Idea are aggressively investing in media houses.

If you put the two together, there appears a paradigm in the near future, where Telcos of the current day morph into broadcasting organizations – offering data, voice-over-data/telephony and television. Most of us have heard of triple play services – but given the erratic nature of Indian networks coverages and the widespread geography – these have never fulfilled into real time.

FTH operations will allow Telco model migration to broadcasting model. Why do I call this broadcasting model? Because these will typically involve a larger eco-system to share holders – targeting a customer and in return subsidizing services.

Sample this: “Super A” category localities get different TV ads versus Sec.A localities. So for the same program, a “Super A” category individual gets to see a Jaguar Ad where as a Sec.A locality person sees a Corolla Ad.

What is the potential of this? Google created the No.1 company of the world, basis online analytics. Broadcasters/Telcos have the opportunity to create more wealth by combining geography/location, content, analytics, real-time onground profiles of users. Additionally, Telcos cater to one platform at a time, Broadcasters will typically be multi-platform presence.

Is it a Telco battle in the first place? It would be the hybrid Broadcaster Telcos to initiate this change to broadcasting – there first level revenue pool would be the core Telcos. There would be a disruptive pricing across all current voice and data plans. Plain Vanilla Telcos will have difficulty in preserving revenue/profit pools in the face of such disruptive pricing. The user subsidy would be made good with advertising revenues from the service. The multiplicative effect on advertisements from multiple screens and the analytics would drive the advertising revenues. Depending upon the plan scalability, the ad revenues would account for service subsidy as well as the bottomlines for the broadcasters. Then there could be the fillip to online / digital wallets – we shall mention this as fringe benefits.

It is the Telco’s battle to loose anyway. There could a few questions about laws and regulations – but they are all expendable and changeable – we all know that, don’t we?

Data pipes as the new broadcasters

In the course of business, large orgaanizations often diversify in other unrelated (and out of core) businesses and sectors. But over the course of last 2 months, two such advancements have caught my eye and i fancy a trend.

Aditya Birla has taken a 27.5% stake in Living Media– this includes TV Today also.

Earlier in the year, Mukesh Ambani had bought a stake in Network18 group of media properties.

The perspective that needs to be brought in here is that both Birla and Ambani have/or soon will have stakes in the telecommunication industry. Now, why does a data pipe buy into a media company. RIL and Birla purchases provide them access to captive content base for 4G networks. Amongst other things, RIL and Birla media-led purchases would mean that data pipes (Telecom operators) will start creating content, and controlling media networks for access through smartphones, tablets and other means. So lets say in a medium term future -after the roll out of the 4G enbaled mobile internet technology, data pipes will become the new broadcasters.

A trend showed be followed by a forecast. So, here’s how i see it – Bharti Airtel would possibly buy out a media company pretty soon. They aalready have the pipe for streaming entertainment through their satellite TV service already. Now its about joining the dots!

Wager a bet anyone?