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Harit Nagpal, the managing director and CEO of Tata Sky, is upset. In a rapidly digitising television market, he is not able to offer more channels to the company's 10 million subscribers because it doesn't have satellite space. The Rs 1,590-crore Tata Sky was the second operator to launch DTH or direct-to-home services, way back in 2006. At that time, it decided to use an ISRO or Indian Space Research Organisation satellite as policy favoured that. Since then, the market has grown to a total of about 53 million homes or roughly one-third of the total 153 million Indian TV homes. Vanita Kohli-Khandekar spoke to him on what holds back Tata Sky's growth in the Rs 39,000-crore television market. Edited excerpts:
Why doesn't Tata Sky have satellite space?
In 2005, we (Tata Sky) signed a contract with ISRO for provision of satellite space. At that time, we took 12 transponders on INSAT 4A. Under the terms of the contract, if we wanted more space anytime in the future, we had to write to ISRO and they would meet our additional requirement in two years.
In 2007, one year after our launch, we asked for 12 more transponders. We should have got those by 2009. But the launch of GSAT 10 kept getting delayed. In September, 2012, the GSAT 10 was launched; it went into orbit and was tested. But today in June, 2013, seven months after the satellite was launched, we still haven't been given the 12 transponders.
We have written to ISRO, met them and written to the Department of Space that manages ISRO. Since the Department of Space reports directly to the Prime Minister, I have personally written to the Prime Minister's Office thrice, requesting for our contracted satellite space to be given to us. But to no avail.
What are the implications?
It costs $200-250 million to put a satellite in space. ISRO stands to make $1 million a month from Tata Sky alone. In these seven months, it could have made $7 million. Plus, the government makes 33 per cent from my topline, so it is losing all that revenue.
Also, a satellite has a finite life of 12-14 years that cannot get extended. So, on one side, a contracted party is suffering and on the other, the government is losing revenue.
What pressure points does it create for your business?
The Ministry of Information and Broadcasting has given licences to 800-plus channels, of which, 650 are operational. However, my capacity to carry the increasing number of channels is limited to about 250 with 12 transponders. My competitors, on the other hand, can offer more (300). So, I stand to lose customers and revenues if I cannot add capacity.
Why did Tata Sky choose ISRO?
The DTH policy says that between an Indian and foreign satellite, the operator should give preference to the Indian satellite. In fact, Dish TV, the first DTH operator, started with ISRO and switched to a foreign satellite within six months, ditto for Airtel in 2010. Sun Direct lost customers when INSAT 4C, the satellite it was on, lost power all of a sudden (in 2010). But we stuck to ISRO.
Why can't Tata-Sky shift to another foreign satellite?
The choice of satellite is a lifetime decision, you can't change it just like that. A satellite operates in a certain orbital slot towards which the antennae of all my 10 million customers are turned. If I shift to another satellite, we have to physically go to each of these homes and shift the antennae towards the other satellite. That is why these contracts run for so long. GSAT 10 is in the same orbital slot as INSAT 4A, the satellite on which we launched the service. Therefore, offering more channels to my customers is possible only from that.
What are the options for Tata Sky now?
If all else fails, I am within my rights to approach the judiciary, since ISRO is four years behind the contracted date. There is a good chance that we will have to use the legal option. Meanwhile, we are migrating to MPEG4 boxes (MPEG refers to a compression technology). When we launched in 2006, MPEG4 was not available, MPEG2 was. So we are spending close to $200 million and changing all the boxes that subscribers now have, to MPEG4. This will increase capacity, in the short term, by 70 per cent.
